In Tesco Stores v Union of Shop, Distributive and Allied Workers and others, five Justices of the Supreme Court reimposed an injunction preventing Tesco from dismissing staff.
In 2007, Tesco embarked on a reorganisation of its distribution centres, closing some and opening others in new locations. It offered a significant enhancement to the pay of staff willing to relocate from closing centres to new centres. This enhanced pay was referred to as Retained Pay. The terms of the Retained Pay were confirmed in a collective agreement made between Tesco and its recognised trade union, which was then incorporated into individual employment contracts with the words that the Retained Pay provision would “remain a permanent feature” of an employee’s contractual entitlement, subject to certain qualifications.
In 2021, Tesco decided to end the Retained Pay provisions. It told affected staff it would either provide them with a lump sum in return for removing Retained Pay from their contracts or terminate their employment and offer to re-engage them on the same terms minus Retained Pay (fire and rehire).
Delivering his judgment, Lord Reed said the intention behind offering retained pay “would be completely undermined if the contract permitted Tesco to dismiss the employees whenever it pleased… No reasonable person in the position of Tesco or the relevant employees could have intended the contract to have that effect.”
This comes amid a shake up of fire and rehire generally with the Labour government’s Employment Rights Bill set to put an end to the practice.