Supermarket Tesco has lost its Supreme Court case against Usdaw over what the trade union called proposals to fire and rehire workers on less favourable terms.
In 2007, Tesco planned to close some of its distribution centres and offered staff retained pay for them to relocate. It wanted to bring this to an end in 2021 and told staff that it would be removed in return for a lump sum, or their contracts would be terminated and then reoffered without the increased salary.
Usdaw, which represents the affected staff, argued that retained pay was described as permanent in contracts, so could not be removed. It then took legal action in 2022, with the High Court ruling in its favour.
Tesco successfully appealed the same year, while the union took the case higher, resulting in five Supreme Court justices ruling unanimously that it should be blocked from dismissing the employees.
Paddy Lillis, general secretary at Usdaw, said: “Usdaw has been determined to stand by its members in receipt of this valuable benefit that constituted a key component of their pay. We recognised that they had been afforded this payment because of their willingness to serve the business, and it was on that basis that we agreed with Tesco that it should be a permanent right. We are delighted to get this outcome, which is a win for the trade union movement as a whole.”
Neil Todd, a partner at Thompsons Solicitors, which represented Usdaw, added: “This decision illustrates that a court will intervene to give effect to the parties’ intentions when entering into a contract. It also demonstrates that a right to an injunction is available regarding a breach of contract of employment when damages are not an adequate remedy, as was the case here.”
A Tesco spokesperson said: “We accept the Supreme Court’s judgment. Our staff in our distribution centres play a critical role in helping us to serve our customers and we value all their hard work. Our objective in this has always been to ensure fairness across all employees. The judgment relates to a contractual dispute brought on behalf of a very small number in our UK distribution network who receive a supplement to their pay.
“This supplement was offered many years ago as an incentive to retain certain staff and the vast majority today do not receive this top up. In 2021, we took the decision to phase it out. We made a competitive offer to affected colleagues at that time, and many of them chose to accept this. Our aim has always been to engage constructively with Usdaw and the small number of staff affected.”
