Tesco PLC (LSE:TSCO) has lost a legal case in the UK’s Supreme Court over laying off staff at certain distribution centres and then rehiring them on lower pay.
Five justices unanimously agreed Tesco should be blocked from the practice on Thursday, following a legal case from the Union of Shop Distributive and Allied Workers.
This came after Tesco moved to end its ‘retained pay’ scheme in 2021, which had previously offered workers higher wages to relocate from closing distribution centres.
Staff instead were to be offered either a lump sum or see their contracts terminated and then re-offered on the previous terms without the higher pay.
The union had taken legal action against Tesco over the move, which it said violated workers' contract terms, and won the case in the High Court in 2022.
Tesco subsequently successfully appealed the decision, leading the case to the Supreme Court.
Thursday’s judgement from the five justices read: "The employment contracts contained a term implied by fact with the effect that the employer’s right to terminate could not be exercised for the purpose of depriving the employees of their right to retained pay."