This question was considered by the Court of Appeal recently in USDAW v Tesco Stores Ltd.
In 2007, Tesco planned to expand and restructure its distribution centre network, which would result in some sites closing and others opening. To help avoid losing experienced warehouse staff, it offered a significant enhancement of pay (“Retained Pay”) to employees at its Crick distribution centre for them to move to Lichfield or Daventry, as an alternative to redundancy.
The entitlement to Retained Pay was written into a collective agreement which said it would be a “permanent feature” of employees’ contractual entitlements, and that it could only be changed on promotion to a new role or with the employee’s consent.
In January 2021, Tesco gave notice to staff in receipt of Retained Pay that it intended to seek their agreement to remove the Retained Pay clauses from their contracts in return for an advance payment equal to 18 months of Retained Pay. Employees who did not agree were to have their employment contracts terminated, and to be offered re-employment by Tesco on different terms without Retained Pay.
The Union of Shop, Distributive and Allied Workers (USDAW) successfully sought an order from the High Court, preventing Tesco from terminating the relevant employment contracts.
Tesco appealed, and the case reached the Court of Appeal.
The Court of Appeal found that there was no contractual term addressing fire and rehire. There was no implied term that the employees had the right to remain in their roles for the rest of their lives. Ultimately, the High Court’s order was not justified.
Find out more about Tesco’s successful appeal here: Union of Shop, Distributive & Allied Workers (claimants/respondents) v Tesco Stores Ltd (defendant/appellant) | Courts and Tribunals Judiciary.
