In USDAW and ors v Tesco Stores Ltd [2022] EWHC 201 (QB), the High Court (HC) granted an injunction to restrain U.K. supermarket giant, Tesco, from ‘firing and rehiring’ employees who did not agree to the removal of a permanent right to a benefit.

The employees were contractually entitled to ‘retained pay’, a type of pay protection which was rolled out in the late 2000s. The employees were told that this entitlement would be permanent and remain in place for as long as they were employed in their current roles. However, in January 2021, Tesco announced its intention to remove retained pay and asked the employees to agree to its removal in return for a one-off payment. Tesco further told the employees that those who did not agree would be dismissed and re-engaged on new terms which were identical to their previous terms, less their retained pay entitlement.

The HC held that if Tesco was allowed to dismiss and re-engage the employees, their entitlement to retained pay would not be permanent, which had been the intention of the parties. Therefore, it concluded that a term should be implied in the employees’ contracts to the effect that Tesco’s right to dismiss them could not be exercised for the purpose of removing their right to retained pay.

This decision is significant as it offers a potential new legal remedy for employees whose employers are looking to ‘fire and rehire’ them in order to remove a permanent entitlement. The practice of ‘fire and rehire’ was already...

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