Tesco loses High Court legal battle over plans to ‘sack and rehire’ distribution workers

Tesco has lost a High Court battle with its store workers’ union over its ‘fire and rehire’ plans.

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

After the Supreme Court ruled in favor of the union in 2022, the supermarket chain successfully appealed the decision that same year.

However, yesterday the High Court ruled that Tesco cannot dismiss the staff.

This comes as Labour plans reforms to workers’ rights that include a ban on redundancy and dismissal policies and zero-hours contracts.

There are fears that the new business rules – combined with the prospect of higher taxes – will prevent companies from hiring staff.

The row arose after Tesco planned to close a number of distribution centres in 2007 and offered staff higher wages, known as ‘deferred pay’, so they could relocate.

In 2021, the supermarket chain attempted to end the ‘withheld wages’, telling staff they would abolish them in exchange for a lump sum payment. Otherwise, their contracts would be terminated and they would be rehired on the same terms but at a lower salary.

Usdaw argued that the higher pay was described in the contracts as permanent and could not be withdrawn.

Tesco said it was using a “contractual mechanism” open to employers.

But the Supreme Court ruled that it was “inconceivable” that “Tesco would retain a unilateral right to terminate employees’ contracts to put an end to withheld wages where this served Tesco’s business purposes”.

“That would have been viewed objectively by both sides as unrealistic and contrary to industrial common sense,” the report said.

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

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

The ‘vast majority’ of distribution staff do not receive the additional allowance, the report said.

‘In 2021 we decided to phase it out. We then made a competitive offer and many of them accepted.

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