Tesco’s attempt to overturn a legal judgment concerning employee rights has been unsuccessful, marking a significant ruling in employment law.
- The Supreme Court ruled that Tesco cannot terminate contracts with the intent of removing ‘retained pay’.
- This ruling concludes a prolonged legal battle between Tesco and the Usdaw union.
- In 2007, Tesco promised ‘retained pay’ to employees in relocation agreements, later challenged by the company.
- Employees had previously secured a high court injunction, barring Tesco from terminating contracts to remove ‘retained pay’.
Tesco faced a definitive legal setback as the Supreme Court upheld a ruling that prevents the company from terminating employees’ contracts solely to strip away ‘retained pay’. This decision affirmed that employment contracts cannot be altered unilaterally to disadvantage employees, setting a critical precedent in UK employment law.
The legal dispute, initiated by the Usdaw union, centred on Tesco’s attempt to nullify the ‘retained pay’ term in employee contracts. According to the union, this term was part of a collective agreement dating back to 2007, which provided financial incentives for staff transferring to new distribution centres in Daventry and Lichfield. The union argued that Tesco’s subsequent actions to re-offer employment on less favourable terms were unfair and amounted to ‘fire and rehire’ tactics.
In a previous High Court ruling, the union achieved an injunction preventing Tesco from terminating the employment of workers to remove this term, a decision now confirmed by the Supreme Court. Usdaw general secretary Paddy Lillis described the outcome as a triumph for collective bargaining rights and condemned Tesco’s strategies as inappropriate for modern industrial relations.
A spokesperson for Tesco acknowledged their acceptance of the Supreme Court’s decision, mentioning that they respect the critical role of distribution centre staff and recognise their efforts. Tesco clarified that ‘retained pay’ had been introduced to retain certain staff and that most of their workforce did not currently receive it. The company had sought to phase out this supplement starting in 2021, offering affected staff competitive alternatives.
This judgment underscores the significance of adhering to established employment agreements and highlights the judiciary’s role in protecting worker rights against potentially exploitative employer strategies.
The Supreme Court’s decision reinforces the importance of upholding fair employment practices within corporate governance.
