USDAW & Ors v Tesco (Supreme Court)

Readers of the MILS seasonal update will be aware that the process of fire and re-hire is presently under the microscope and this Government are talking about some changes to curtail use of the process.  

Essentially, fire and re-hire can be the only recourse for an employer where agreements to changes of terms and conditions cannot be agreed and there is a substantial business reason to do so (and in cases where the definition of redundancy is not met).

In this case you have to go back to 2007 when in negotiations with the Union (USDAW) Tesco negotiated with the Union and in return for widespread relocations, Tesco agreed to grant a term relating to “Retained Pay”.  This was to be paid to employees who stayed in the restructure and was termed “permanent” in the contracts of employment.

Some 14 years later in 2021, in further negotiation on terms, Tesco attempted to effectively remove Retained Pay in a fire and re-hire scenario. 

Legal Developments

Originally the Union got an injunction preventing Tesco firing and re-hiring.  This was at the High Court and the Judge found that the express employment law rights were curtailed by an implied term that because of what happened in 2007, notably because of the description of Retained Pay as ‘permanent’, there was an implied term in the contract preventing Tesco from removing it.  This was then appealed to the Court of Appeal who agreed with Tesco and overturned the High Court, but was then finally appealed to the Supreme Court, which has now given its decision.  The Supreme Court has now disagreed with the Court of Appeal and upheld the decision of the High Court that there was, indeed, an implied term in the scenario. 

Comment

Terms can be implied into an employment relationship in a number of scenarios and add to express terms.  Some terms are implied because they are too obvious to be written, e.g. not stealing from your employer.  They might also be implied to a custom and practice and because they derive anyway from employment law so there is no need for an express term.  Terms will also be implied if they are necessary for business efficacy, i.e. they are needed to make the working relationship possible, or where the parties’ behaviour suggest they have agreed something even though it is not expressly written down or spoken about.  

One can therefore see why here, although the Court of Appeal agreed with the employer, the Supreme Court ultimately held that the very concept of ‘permanent’ Retained Pay in the context of the 2007 negotiations prevented Tesco from subsequently firing and re-hiring simply to remove that clause.