Court of Appeal overturns Tesco fire and rehire injunction

In February this year we reported on the unusual case of USDAW and Tesco Stores Limited in which the High Court granted USDAW an injunction to prevent Tesco firing and rehiring staff on less favourable terms without the benefit of a Retained Pay scheme. A link to that article is here.

As we anticipated at the time, the case was appealed, and the Court of Appeal have now overturned the decision and removed the injunction. The High Court had implied a term into the employees’ contracts that Tesco would not dismiss the employees so as to remove the Retained Pay, but the Court of Appeal said that there was nothing in the discussions which led to the Retained Pay agreement which would prevent Tesco exercising its right to end the employment agreement on notice.

The Court of Appeal held that language used by Tesco such as “guaranteed for life” in the negotiations that led up to the Retained Pay being agreed was too vague to lead to an implied term, and in any event a permanent injunction would have prevented Tesco exercising their contractual right to dismiss indefinitely, meaning that they could inadvertently breach the injunction at some point well in the future if, for example, there was redundancy situation.

The case was always dependent on its own unique facts, but the decision is no surprise to us as employment lawyers, and means that the concept of fire and rehire (aka dismissal and re-engagement) remains one of an employer’s options when seeking to change contractual terms. However, as we covered in our previous article, using this approach does pose its own risks, and employers should certainly seek advice before going down this route.