Tesco’s recent legal loss marks a significant moment in employment law in the UK.
- The Supreme Court ruled against Tesco’s ‘fire and rehire’ strategy for altering contracts.
- Usdaw, the shopworkers’ union, was central to challenging Tesco’s employment practices.
- The decision reaffirms workers’ rights to previously agreed ‘retained pay’ benefits.
- This outcome could influence future employment disputes and corporate strategies.
The UK’s Supreme Court has rendered a critical decision, rejecting Tesco’s attempt to employ ‘fire and rehire’ tactics to modify employee contracts. This move by Tesco aimed to replace existing contracts with less favourable terms, a practice opposed by the shopworkers’ union Usdaw. The ruling is a landmark victory for the union, reinforcing the rights of workers to their ‘retained pay.’
In 2022, Usdaw had initially secured an injunction to halt Tesco’s actions, preventing the dismissal and subsequent reemployment of workers on inferior terms. Although Tesco’s appeal initially overturned this decision, the Supreme Court has ultimately upheld the right of employees to maintain their original contractual compensation.
The judgement, endorsed by Lords Reed, Leggatt, Lloyd-Jones, Burrows, and Lady Simler, highlighted the unrealistic notion of Tesco maintaining the unilateral power to terminate contracts at will. They underscored the absence of provisions for negotiated ‘retained pay’ cessation, illustrating that contract termination for business convenience was not a mutual intent.
Tesco has acknowledged the Supreme Court’s decision, asserting the importance of their distribution centre colleagues while noting that only a small fraction of its workforce was affected by this pay supplement phase-out. Despite the retailer’s claims of pursuing fairness, the legal outcome supports Usdaw’s position on preserving workers’ contractual rights.
Usdaw general secretary, Paddy Lillis, expressed satisfaction with the verdict, citing it as a triumph for the trade union movement. The case underscores the judiciary’s willingness to uphold employee benefits agreed upon in contracts, setting a precedent for addressing breaches where damages alone may not suffice.
The Supreme Court’s ruling against Tesco reinforces the importance of honouring employee contracts and may shape future employment practices regarding contract negotiations.
