Tesco loses legal case against 'fire and rehire' tactics for factory staff

The Union of Shop Distributive and Allied Workers, which represents 360,000 members across the UK, originally took legal action against Tesco in 2021 after the supermarket attempted to sack staff at its distribution centres in Daventry and Lichfield only to recruit them on lower pay.

The case centred around Tesco's use of "retained pay", which it offered staff willing to relocate after it closed distribution centres in 2007.

In 2021, Tesco attempted to remove retained pay from individual employment contracts in exchange for a lump-sum payment. If a staff member did not agree, Tesco would cease their employment then re-offer them their jobs but with the retained pay element removed.

The High Court initially ruled in Usdaw's favour in 2022, but Tesco successfully appealed the decision the same year. The case was then taken to the highest court where five Supreme Court justices ruled unanimously that Tesco should not be allowed to dismiss staff in this way.

Paddy Lillis, the general secretary at Usdaw, said retained pay should have always been seen as "a permanent right".

"These sorts of tactics have no place in industrial relations, so we felt we had to act to protect those concerned. We were very disappointed with the outcome in the Court of Appeal but always felt we had to see this case through. We are therefore delighted to get this outcome, which is a win for the trade union movement as a whole," Lillis said.

In their judgment statement on Thursday, the justices said: "The employment contracts contained a term implied by fact with the effect that the employer’s right to terminate could not be exercised for the purpose of depriving the employees of their right to RP."