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| 1 minute read

Union's case against Tesco: "fire and rehire" under pressure

“Fire and rehire” tactics are prevalent in the UK, with many employers emboldened from seeing its widespread use during the pandemic. The practice is a means to push through less favourable contract terms. Although controversial in nature, there is arguably sufficient statutory protection for employees in these circumstances. 

“Fire and rehire” practices are deeply unpopular with the general public, as they are viewed as exploitative of an imbalance in power between employer and employee plus inequitable and undignified, requiring employees to effectively reapply for their existing position but on inferior terms. In July 2024, a new Code of Practice on Dismissal and Re-engagement is expected to be launched by the government (subject to Parliamentary approval). Although the Code does not outlaw the practice, it discourages its use as a negotiation tactic when making changes to employees’ contracts. 

In this case, Tesco is seeking to use the practice of “fire and rehire” to remove a retained pay arrangement for a particular group of warehouse operativesThe retained pay arrangement is alleged to have been couched as a permanent change when agreed in 2007. The Supreme Court will determine the lawfulness of Tesco’s actions and will be looking at wider issues than simply the lawfulness of firing and rehiring. The workers are acting through the Union of Shop, Distributive and Allied Workers (Usdaw).

The Court of Appeal found in Tesco’s favour holding that an employer’s freedom to make employment decisions was paramount. However, we are seeing a sea change towards worker protectionism following the Uber decisions and there is a real risk that the Supreme Court may swing the other way and find in the employees’ favour. If the Supreme Court prioritises the protection of workers’ rights over employers’ freedom to act in the best interest of their business, this will make it more challenging for businesses to make unilateral changes to employment terms and concentrate more power in the Unions. 

The Labour party have promised to eradicate the practice of “fire and rehire” if elected at the next general election which would dilute the potency of a pro-employer decision here.