Skip to main content

Union of Shop, Distributive & Allied Workers (claimants/respondents) v Tesco Stores Ltd (defendant/appellant)

Thursday 9 June 2022

Tesco appeals against the order made by Ellenbogen J dated 3.2.22 granting final injunction to the Claimants.

The claim was a Part 8 claim brought by the Union of Shop, Distributive and Allied Workers, USDAW, and three Tesco employees who were members of USDAW.

The claim concerned the proper construction of employment contracts between Tesco and 43 individuals who are in receipt of retained pay.

Retained pay was the subject of collective bargaining negotiations where a particular distribution centre was to be closed and as incentive to relocate to a different distribution centre rather than accept redundancy, certain employees were offered additional pay based on pay at previous location.

In early 2021, Tesco sought to renegotiate those contracts containing retained pay clause, offering lump sum advance payment in return for removal of retained pay. Where agreement was not possible, Tesco said it would consider terminating employment contracts of relevant employees and offering reemployment on terms without retained pay.

USDAW applied to Court of Session for injunctive relief re USDAW’s 286 members receiving retained pay at Tesco’s Livingston Distribution centre. Lord Armstrong gave interim order preventing Tesco from withdrawing retained pay from members of USDAW employed at Livingston without employees’ consent.

Tesco then gave undertakings to the Cs that pending judgment in the Part 8 claim which the Cs were issuing in Queen’s Bench Division, Tesco would not unilaterally withdraw benefit of retained pay and would not serve termination notice.

Ellenbogen J found against Tesco, holding that the employment contracts of affected employees contain implied term that Tesco’s right to give notice to terminate the contract cannot be exercised for purpose of removing or diminishing right of employee to receive retained pay.

Judge also granted final injunction which is subject of penal notice. Tesco sought confirmation from judge that the order would not preclude Tesco from dismissing any affected employee for reasons wholly unrelated to removal/diminution of retained pay. The judge so confirmed.

On appeal to the Court of Appeal , Tesco submit that the order is highly unusual in preventing any dismissal for reasons related to retained pay, thus requiring Tesco not only to maintain the relevant term but to maintain the employment of those who benefit from it.

View hearing:

Part 1

Part 2