Usdaw succeed in ‘fire and rehire’ claim against Tesco in the High Court

The Union of Shop, Distributive and Allied Workers (Usdaw) are celebrating what has been described as a “huge” win against ‘fire and rehire’ tactics at Tesco Distribution Centres. The staff, represented in court by Thompson’s Solicitors, faced changes to their terms of employment which would have meant a loss of pay, but the victory means the company cannot now force new contracts on them, after a High Court ruling by Mrs Justice Ellenbogen.

Usdaw brought the case on behalf of 42 workers, employed at Tesco Distribution Centres in  Daventry, Northamptonshire and Litchfield, Staffordshire. The workers had previously been given an entitlement known as ‘retained pay’ to keep them at Tesco’s, which the company proposed to remove, essentially by firing and then rehiring them.

Fire and rehire has become a common tactic over recent years, especially prevalent during the Covid lockdown, but similar tactics have been used to undermine terms and conditions throughout the UK’s industrial history.

Neil Todd of Thompsons Solicitors (who specialise in trade union law), yesterday said that the firm were “proud to have represented a trade union in taking on corporate giants” and added:

“This is a huge win for the workers and for Usdaw. The practice of firing and rehiring staff on less favourable terms and conditions has been in widespread use over the last 18 months as employers try to erode rights that have been hard fought for and are there to protect some of the lowest paid in society.”

Tesco have indicated that they will appeal the decision, adding: “We made a fair offer to colleagues, and many of them chose to accept this. We are disappointed with today’s outcome and we are currently considering whether we will appeal this decision.”

Usdaw is the UK’s fifth biggest trade union with over 360,000 members. Most Usdaw members work in the retail sector, but the union also has many members in transport, distribution, food manufacturing, chemical industry and other trades. Joanne McGuinness, their national officer, said:

“Companies are more frequently resorting to using fire and rehire tactics when they want to reduce employees’ terms and conditions of employment. The group faced having their wages cut as part of a change to their terms and conditions of employment by Tesco.

Today’s High Court ruling will prevent the supermarket’s ‘fire and rehire’ practice in this case where it had sought to lay people off and re-employ them on new contracts, with less favourable terms and conditions, in England.

The court noted that the 42 workers had been guaranteed an entitlement to a specific payment labelled ‘retained pay’ to keep them within the business, which Tesco intended to remove by firing and then rehiring them. The judge held that there was an implied term in the workers’ contracts that the right to terminate employment could not be exercised if the aim was to remove a right to ‘retained pay’.”

Recent research by the TUC revealed that nearly one in 10 (9%) workers has experienced ‘fire and rehire’ since the first lockdown in March. On hearing the news, Frances O’Grady, TUC General Secretary, said:

“This is a resounding victory in the battle against fire and rehire – and, thanks to Usdaw, a win for the union movement. Too many employers think they have free rein to threaten workers in secure jobs with the sack if they don’t accept a new contract on worse pay or conditions.

Today’s judgment is an important win against an employer trying to use this scandalous practice to end a promised permanent benefit. But we can’t just rely on the courts to protect working people using current weak laws – we need action from government too. It’s time for ministers to finally deliver on their manifesto promise to protect and enhance workers’ rights – that means stopping fire and rehire without delay.”