‘Reprehensible’ Tesco fire and rehire plans halted by landmark court ruling

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A “reprehensible” plan by Tesco to fire and rehire hundreds of workers in a bid to cut their salaries has been halted by a landmark legal ruling.

The supermarket was planning to terminate and reissue the contracts of up to 250 employees at its Livingston depot in a move that could have seen the workers lose between £4000 and £19,000 a year.

However, the Court of Session has issued an eleventh hour reprieve for the staff following a legal challenge by trade union Usdaw.

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An interim interdict has been issued preventing Tesco from using the controversial tactic, however the supermarket – which has seen its profits grow by more than a quarter during the pandemic – has indicated that it plans to challenge the decision.

A Tesco spokesman said the retailer had decided to “phase out” additional payments received by these workers as the majority of distribution staff across the UK do not receive them.

However, Usdaw said the payments were the result of a long-standing agreement at the site.

Paddy Lillis, Usdaw general secretary, said: “Tesco has a longstanding agreement with our union that the team pay would be protected for the life of the contract and they took the decision – without any consultation with the union – to issue notice that they were going to terminate that agreement.

“We made it clear that it was unacceptable and that we would challenge it in the courts, hence the interdict.

“At the minute they are prohibited from following through with it at this time and if they decide that they’re going to appeal it, then we will strenuously challenge that.

“These workers have continued to work throughout the pandemic. The company was part of the clapping for heroes, they called their own workers exceptional, and at the same time were planning to cut the pay of hundreds of their key workers. It doesn’t sit comfortably with us.

“Tesco have sold off their Asian business and £5bn is going to be paid out between shareholders, at a time when they’re still attacking 400 workers over their pay.

“Whether they can legally do what they’re doing is almost a separate issue for us, morally, it’s reprehensible.”

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The pay row stems back to an additional payment which was agreed between Tesco and the union almost ten years ago.

At that time, Tesco made it clear that this payment would be in place for as long as the employees worked in the same roles.

However, staff were told recently that the payments were being removed, with those who agreed to contract changes voluntarily being offered a lump sum payment equivalent to 18 months’ worth of the additional pay.

Staff were given until Saturday to make a decision, with those who refused being told that their contracts would be terminated and they would have to re-apply for their roles.

Employment law expert David Martyn, of Thompsons solicitors, who acted in the case, said: “Firing and rehiring is a controversial tactic that unions will normally try to resist.

“We’re seeing a lot of these types of moves at the minute in industries such as aviation and hospitality and these industries are more able to make out a case that there is a really pressing need to restructure the workforces and cut costs.

“However, with Tesco, who have just made record profits, it’s a bit odd to say the least. The company didn’t even say that it needed to cut costs.”

Mr Martyn, who said the decision appeared to be a first in legal history, added that it was a “powerful sign” and “encouraging” to see the courts “uphold the promises that employers have made to their staff”.

“I think it will give trade unions a real boost in fighting against these sorts of tactics,” he said.

“The court has effectively said that Tesco cannot go ahead and dismiss and re-engage anybody until the final hearing.”

There are a further three distribution centres in England where staff have also been threatened with the same action, with more than 400 workers affected overall. Usdaw has said it will pursue further legal action there if necessary.

The Scottish interim interdict will proceed to a full hearing at a later date if necessary.

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A Tesco spokesperson said: “We are surprised by the court’s decision and we are looking at how we can legally challenge this.

“We will continue to engage with Usdaw and the very small number of colleagues at our Livingston Distribution Centre who are affected by this.

“Retained pay was offered a number of years ago as an incentive to retain colleagues. Today we have over 16,000 colleagues working in distribution, the vast majority of whom do not receive this top up, so we have taken the decision to phase it out.

“We made a fair offer to those colleagues affected, and many of our colleagues have chosen to accept this. This decision does not affect the voluntary process.”

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