A workers’ union has claimed victory against Tesco in a Supreme Court case over controversial “fire and rehire” practices. The dispute arose when Tesco proposed changes to pay and contracts at some of its distribution centres in 2021.
The Dispute
Tesco aimed to reduce costs by ending a pay incentive called “retained pay,” offered to staff in 2007 as part of a relocation agreement. The supermarket giant proposed either a lump sum or rehiring workers on lower pay after terminating their contracts.
The Usdaw union, representing the workers, argued that the pay had been promised as a “permanent” benefit, and legal action followed.
Supreme Court Verdict
In a significant ruling, the Supreme Court sided with the union, blocking Tesco from dismissing workers and rehiring them on lower pay.
The justices found it “inconceivable” both Tesco and the union intended for the company to have the right to reduce pay whenever it suited its business needs. The ruling affects roughly 50 workers at Tesco’s Daventry and Lichfield distribution centres.
In their ruling, the judges wrote:
“This would have been viewed, objectively, as unrealistic and as flouting industrial common sense by both sides.”
Union’s Reaction
Usdaw welcomed the decision, with General Secretary Paddy Lillis saying the union was “determined to stand by its members” and criticized Tesco’s use of “fire and rehire” tactics. The union emphasized that the retained pay was a “valuable benefit” and an integral part of workers’ compensation.
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Tesco’s Response
Tesco acknowledged the court’s ruling but noted that the judgment only impacted a “very small number of colleagues.” In 2021, the company had offered a competitive exit package to affected employees, many of whom accepted it. Tesco emphasized that its distribution workers remain critical to its operations.
Broader Impact
The ruling comes amid growing criticism of “fire and rehire” tactics, which gained attention during the COVID-19 pandemic. Several major companies, including British Airways and British Gas, faced similar accusations. In 2022, P&O ferries also made headlines when it fired 800 workers, later replacing them through an agency.
What Lies Ahead
The Labour Party has pledged to ban the “fire and rehire” practice as part of its election manifesto, while the UK government has hinted at upcoming legislation to regulate the issue. For now, this ruling is seen as a win for workers and unions seeking greater protections.
