Supreme Court Overrules Tesco's 'Fire and Rehire' Strategy

The UK Supreme Court ruled that Tesco cannot terminate some employees' contracts to rehire them on less favourable terms. The ruling supported the shopworkers' union Usdaw, which filed a case against the retailer. Tesco's practice aimed to remove warehouse workers' entitlement to increased pay through termination and re-engagement.

The United Kingdom's Supreme Court has ruled against Tesco's attempt to terminate certain employees' contracts and then rehire them on less favourable terms. The landmark decision, delivered on Thursday, prohibits the UK’s largest supermarket chain from utilizing the controversial 'fire and rehire' strategy under these circumstances.

The legal action was initiated by the shopworkers’ union Usdaw against Tesco, in response to the retailer’s efforts to end some warehouse workers' entitlement to enhanced pay. The Supreme Court ruling reinstates an earlier injunction that prevents Tesco from dismissing these workers and offering them less favourable terms for re-engagement.

Having originally won an injunction in 2022 which blocked Tesco from proceeding with its plan, Usdaw saw that ruling overturned on appeal. The Supreme Court has now reversed that decision, asserting that Tesco’s termination rights cannot be leveraged to strip workers of their enhanced pay rights. Tesco remains the UK's largest supermarket group and private sector employer, with around 270,000 workers.

(With inputs from agencies.)