In a landmark ruling, Tesco’s attempt to alter contracts using ‘fire and rehire’ practices was thwarted by the UK Supreme Court, cementing workers’ rights.
- The court’s unanimous decision stopped Tesco from terminating contracts and rehiring on less favorable terms, marking a significant legal victory for employee rights.
- The ruling reinforced an injunction against Tesco’s plans to abolish ‘retained pay’, a crucial benefit for affected workers.
- This case is a pivotal moment in labor relations, showcasing the legal boundaries of corporate contract restructuring.
- The decision is celebrated as a triumph for the Usdaw union and aligns judicial interpretation with industrial common sense.
The Supreme Court’s decision on 12 September 2024, marks a critical juncture in employment contract law by rejecting Tesco’s ‘fire and rehire’ strategy. This ruling prevents the supermarket from modifying employee contracts to eliminate the ‘retained pay’ benefit, crucial for many warehouse workers. The judgment underscores the judiciary’s role in upholding fair labor practices.
Shopworkers’ union Usdaw initiated this legal challenge as Tesco sought to strip some warehouse workers of their higher pay, proposing to end contracts and offer reemployment under less favorable terms. After a multi-year legal struggle, the Supreme Court upheld the original injunction obtained by Usdaw, solidifying protections for employees’ contractual rights.
In 2021, Usdaw secured an initial restraint against Tesco’s intentions to remove ‘retained pay’ from their contracts, a decision that Tesco successfully appealed. However, this latest judgment reverses that appeal, reaffirming the workers’ right to this pay. The court emphasized the unrealistic nature of Tesco’s attempt to maintain a unilateral right to terminate and renegotiate contracts when such terms were noticeably absent from mutual agreements.
Lord Reed, along with other justices, articulated that Tesco’s proposed actions were inconceivable within the norms of industrial relations, advocating that the supermarket chain could have addressed the pay terms with clear contractual limitations or longstop dates. This judgment invalidates such corporate tactics that disregard mutual contractual intentions.
Tesco acknowledged the court’s decision, affirming the importance of its distribution center colleagues and explaining that the supplement in question was an incentive from prior years, phased out since 2021. The supermarket noted that most colleagues accepted a competitive offer at that time.
Usdaw’s General Secretary, Paddy Lillis, expressed satisfaction with the ruling, emphasizing the permanence of the ‘retained pay’ and denouncing Tesco’s prior threats as inconsistent with industrial ethics. Lillis reiterated the ongoing commitment to protecting union members’ rights against such strategies.
Neil Todd from Thompsons Solicitors, representing Usdaw, highlighted the broader implications of this ruling in employment law, noting the precedence it sets in reinforcing the judicial support for agreed employee contract terms over potential corporate overreach.
This landmark decision by the Supreme Court exemplifies the critical oversight of employment rights and fair contract practices in the UK.
