Tesco wins appeal over ‘fire and rehire’ tactics

Tesco has won a legal battle over its use of so-called “fire and rehire” tactics.

The retailer had been barred from the practice after a case brought on behalf of more than 40 warehouse workers at its Daventry and Litchfield distribution centres.

However, on Friday a Court of Appeal judgment dealt a “significant setback” to lawyers representing the workers after overturning the initial court ruling.

Thompsons Solicitors won what was described as a landmark legal victory in February against the supermarket giant over its decision to dismiss a number of its staff and seek to re-engage them on inferior terms and conditions.

Lawyers claimed staff were informed that if they did not give up their entitlement to a considerable proportion of their wages known as retained pay, they would be dismissed and then re-engaged on the less favourable terms.

The High Court originally found that the payment was “permanent” and “guaranteed for life” and that Tesco was not entitled to serve notice on the contract when its sole purpose for doing so was to remove the benefit in question.

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However, the Court of Appeal found it was unable to accept that the phrases “permanent” and “guaranteed for life” showed a mutual intention on behalf of both parties that the right to retained pay would continue if the employee in question performed the role in which they were currently employed to undertake.

It said there was a lack of clarity as to what both parties meant by “permanent” and that it could not imply a term into the contract to prevent the employer serving notice, even in circumstances where it was doing so solely in order to remove the right to retained pay.

The Usdaw union said it was determined to fight on against the “shameful” fire and rehire tactics and would seek leave to appeal from the Supreme Court.

“We remain steadfast in our view that the workers concerned were given unequivocal commitments by Tesco that retained pay would last for as long as they performed the role they were currently employed to undertake,” said Neil Todd, a trade union specialist at Thompsons Solicitors.

“We do not agree there was anything unclear about what “permanent” meant in this context. It is difficult to imagine the contemporaneous documentation could have been any clearer that the intention of both Tesco and the workers at the time the agreement was reached was that the right to retained pay could not be unilaterally removed.

“The judgment is a significant setback, but we will seek leave to appeal and will do all that we can to continue to fight for justice on behalf of all of those affected. This is not the end of the road for the workers concerned.”

Usdaw national officer Joanne McGuinness added: “It has always been clear to us what we agreed with Tesco in respect of our members in receipt of retained pay. That is that they would have a right to this payment for as long as they remained employed by Tesco in their current role.

“The agreement was reached at a time when the organisation needed these individuals to remain in post as it could not have been operationally effective if they had chosen to leave. The workers agreed to remain in the business and relocate on the basis of the guarantee of these payments when they otherwise may have taken redundancy.

“We were therefore shocked when Tesco adopted fire and rehire tactics to try and strip this right away and this is why we sought an injunction from the High Court. Today’s ruling overturning that injunction will not deter us. It is simply not right that very clear commitments to loyal workers can be simply set aside on a whim as it is no longer convenient for the company to have to continue to make the payments concerned.

“We have instructed our solicitors to prepare grounds of appeal to the Supreme Court and we will exhaust every avenue to protect our members’ terms and conditions of employment.”

A Tesco spokeswoman said: “A very small number of colleagues in our UK distribution network receive a supplement to their pay, which was offered a number of years ago as an incentive to retain colleagues. The vast majority of our distribution colleagues today do not receive this top-up, and so we took the decision to phase it out. We are considering our next steps following last week’s ruling, and will continue to work constructively with the small number of colleagues affected to agree a way forward.”