chester

Chester 01244 405 555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

shrewsbury

Shrewsbury 01743 443043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Greater Manchester 0333 241 6886

Kennedy House,
31 Stamford St,
Altrincham WA14 1ES

2nd August, 2022

‘Fire and rehire’ Tesco Injunction overturned

Man signign contract

Our article in May 2022 titled “Should you ‘fire and rehire’ in order to change the terms of the employment contract?” discussed the process of fire and rehire and alternatives to it, along with the USDAW v Tesco case. The High Court in USDAW v Tesco had granted the Claimants an injunction to prevent Tesco from firing and rehiring its staff to remove a contractual entitlement to enhanced pay which employees were offered during a reorganisation of its distribution centres. It had been made clear to the employees at the time that the retained pay would remain, but Tesco subsequently sought to remove it. The High Court injunction prevented them from doing so.

However, the Court of Appeal has now overturned the injunction on the basis that the High Court’s finding that both parties had intended the entitlement to be permanent (meaning in this case for as long as the relevant employee was employed in the same substantive role) was incorrect: it was not the mutual intention that the contracts would continue for life; or until normal retirement age; or until the closure of the site in question; or that the circumstances in which Tesco could bring the contracts to an end should be limited.

The Court of Appeal found that there was a lack of clarity in USDAW’s case as to what both parties meant as permanent, with phrases such as “guaranteed for life” not being sufficient, and that Tesco would have the right to give notice in the usual way meaning the enhanced pay entitlement would only last as long as the particular contract. This would allow re-engagement on different terms and conditions.

The Court of Appeal also held that even if the High Court had been correct in its interpretation of the contract, an injunction was not justified.  It also noted that it was not aware of any other case in which a court had granted such an injunction preventing a private sector employer from dismissing an employee for an indefinite period, and that the remedy for wrongful dismissal is in any event almost always financial.

In Summary

Whilst the Court of Appeal decision represents more familiar ground for employers, as always this case is fact specific and the process of ‘fire and rehire’ is not without risk, as discussed in our previous article. Claims for unfair dismissal are a risk, but also other claims including breach of contract and for a protective award for the failure to inform and consult.

A key take-away from this case is that employers should strengthen their position from the outset with clear, carefully drafted contracts, and that any changes should be well-thought through so that future eventualities are catered for. How those changes are communicated is also something that should be considered. We can advise and assist on all of these aspects.

This decision is not necessarily the end of the matter, as it is understood that USDW intend to seek permission to appeal to the Supreme Court.

If you are in need of advice relating to a fire and rehire matter or any other employment law matter, please contact us using the form below.



Contact Us

You might also be interested in...

A Sponsor Licence and Skilled Workers: Employing overseas nationals

22nd November, 2022

With a growing labour shortage in the UK, it is becoming more prevalent for UK businesses to begin... Read More »

Health and Care Worker

Routes to the UK: The Health and Care Worker Visa

22nd November, 2022

It is well reported that the UK has been experiencing labour shortages in the health sector for a... Read More »

The World Cup 2022: HR and employment law issues employers may face

18th November, 2022

With the 2022 FIFA World Cup just around the corner, and a month of football ahead, our employment... Read More »

Contact Us