Tesco loses Supreme Court legal battle over plans to ‘fire and rehire’ distribution workers

Tesco has lost a Supreme Court battle with the retail workers union over ‘fire and rehire’ plans.

The supermarket giant faced legal action by the Union of Shop, Distributive and Allied Workers (Usdaw) after it tried to sack distribution centre staff and rehire them on lower pay in 2021.

After the High Court ruled in the union’s favour in 2022, the supermarket giant successfully appealed against the decision the same year.

But the Supreme Court yesterday ruled Tesco should be blocked from dismissing the staff. 

It comes as Labour plots workers’ rights reforms that will ban fire and rehire policies and zero-hour contracts.

It is feared the new rules facing business – alongside the prospect of higher taxes – will put companies off hiring staff.

The row broke out after Tesco planned to close some distribution centres in 2007, offering staff a higher salary – which was known as ‘retained pay’ – for them to relocate.

In 2021, the grocer tried to end ‘retained pay’ and told staff they would remove it in return for a lump sum payment, or their contracts would be terminated and reoffered on the same terms at a lower salary.

Usdaw argued that the higher salary was described as permanent in the contracts and could not be removed.

Tesco argued that it was using a ‘contractual mechanism’ open to employers.

But the Supreme Court judgment said was ‘inconceivable’ that ‘Tesco would retain a unilateral right to terminate the contracts of employees in order to bring retained pay to an end whenever it suited Tesco’s business purposes to do so’.

‘That would have been viewed, objectively, as unrealistic and as flouting industrial common sense by both sides,’ it said.

Paddy Lillis, Usdaw general secretary, said: ‘These tactics have no place in industrial relations, so we felt we had to act to protect those concerned.’

Tesco accepted the ruling, adding: ‘Today’s judgment relates to a dispute brought on behalf of a very small number of colleagues in our UK distribution network who receive a supplement to their pay.’

The ‘vast majority’ of distribution staff do not receive the top-up, it said.

‘In 2021, we took the decision to phase it out. We made a competitive offer at that time and many of them chose to accept this. 

‘Our aim has always been to engage constructively with Usdaw and the small number of colleagues affected.’

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