LONDON, Sept 12 (Askume) – Britain’s Supreme Court ruled on Thursday that Tesco (TSCO.L) did not have the right to terminate the contracts of some workers and rehire them on less favourable terms.
Shop workers union Usdo has taken legal action against Britain’s biggest retailer after Tesco tried to end the right of some warehouse workers to a pay rise.
Tesco terminated their contracts and offered to rehire them – a controversial process often known as “fire and rehire”.
Britain’s ruling Labour Party said it would ban “fire and rehire” tactics, but has not yet explained how it would replace the current code of conduct.
The Supreme Court has ruled that Tesco cannot cancel pay rises by “firing and rehiring” some staff, reinstating a ban on the retailer doing so.
Tesco, which has a market share of about 28% of the UK grocery market, said it had accepted the decision. A spokesman said it concerned “a very small number of colleagues across our UK distribution network who have received additional pay”.
“Our goal has always been to ensure fairness for all distribution center employees,” the spokesperson said.
Paddy Lillis, general secretary of the American Organization of Labor, said in a statement that the decision was “a victory for the entire union movement.”
“These types of tactics have no place in industrial relations, so we believe we need to take action to protect those involved,” Lillis said of “fire and rehire.”
The issue is that some warehouse workers are entitled to a pay increase when they agreed to move to a new distribution center in 2007.
When Tesco sought to remove the right in 2021, it asked workers to agree to its removal in exchange for a one-off payment or have their contracts terminated and offer new deals that did not include increased wages.
The US Department of Labor initially won an injunction preventing Tesco from laying off warehouse workers and offering them new contracts, but Tesco reversed that decision in 2022.
Union lawyer Oliver Segal said in an appeals court filing in April that Tesco had erred in Thursday’s ruling by saying it had “unfettered freedom to terminate the relationship at will”.
However, Tesco argued that the affected staff had been receiving pay rises worth thousands of pounds for more than a decade.
