Tesco has faced a significant legal defeat in the Supreme Court regarding employee contract terminations, reinforcing employees’ rights.
- The court ruled against Tesco’s attempt to terminate contracts for the purpose of withdrawing ‘retained pay’ from certain employees.
- The case stems from a 2007 agreement where Tesco offered ‘retained pay’ to incentivise relocations to new distribution centres.
- The Supreme Court’s decision upholds previous rulings that protect employees from ‘fire and rehire’ practices.
- Tesco’s objective to ensure fairness across its distribution centres contrasts with the court’s support for employee contract rights.
Tesco has experienced a notable legal setback following the Supreme Court’s decision, which prevents the termination of employee contracts with the intention to remove ‘retained pay.’ This ruling marks the conclusion of a longstanding legal battle spearheaded by Usdaw, a prominent trade union representing the employees.
In 2007, Tesco introduced a ‘retained pay’ scheme designed to encourage employees to relocate from closing distribution centres to new facilities in Daventry and Lichfield. This scheme was part of a collective agreement with Usdaw and has become a contentious issue in this legal dispute.
The Supreme Court’s judgement affirms previous legal victories for Usdaw members, safeguarding employees from being dismissed and rehired on less favourable terms. The court’s verdict supports an injunction previously granted by the High Court to prevent Tesco from eliminating the ‘retained pay’ clause from contracts.
Paddy Lillis, General Secretary of Usdaw, expressed satisfaction with the ruling, citing it as a triumph for the trade union movement. Lillis criticised Tesco’s ‘fire and rehire’ tactics, stating they are inappropriate in fair industrial relations.
Tesco acknowledged the judgment, with a spokesperson emphasising the company’s appreciation for its distribution centre employees. They noted that while the ‘retained pay’ scheme applied to a small number of colleagues, the majority do not receive this supplement anymore. Tesco sought to phase out the supplement in 2021, offering competitive alternatives to affected employees.
The Supreme Court’s verdict underscores the importance of protecting employee rights within contractual agreements, highlighting a legal precedent in employment practices.
