In 2007, Tesco and USDAW entered into a collective agreement that provided for an entitlement to "Retained Pay" for certain employees to incentivise them to relocate to new distribution centres rather than opt to be made redundant. The payment was a key component of the salary of each employee who chose to remain with the business. 

 

In January 2021, Tesco sought to terminate this entitlement to Retained Pay by warning the employees concerned that if they did not agree to receive a lump sum to forgo their right to it they would be dismissed via a “fire and rehire” strategy and re-engaged on new terms without the right to Retained Pay. 

 

In February 2022, the High Court initially granted USADW and three of its employees an injunction that prevented Tesco from proceeding with its attempt to dismiss all those who were not willing to give up their right to Retained Pay and accept the buyout. The court ruled that an implied term prevented Tesco from serving notice to terminate the contracts when its purpose in doing so was to remove the right to Retained Pay. 

 

However, in July 2022 the Court of Appeal overturned this decision, stating that Tesco retained the right to terminate the contracts of employment by serving notice in the ordinary way and the entitlement to Retained Pay ended when the contract ended. 

 

USDAW, represented by Thompsons Solicitors, appealed to the Supreme Court, arguing that as Retained Pay was a permanent feature of the contract of the individuals concerned it could not lawfully be removed by through 'fire and rehire' tactics and that this was contrary to the contractual commitments made to its employees. 

 

The appeal raises important questions concerning contractual interpretation and the right to injunctive relief whilst shining further light on employers adopting   'fire and rehire' practices to force through changes to terms and conditions.