6th May, 2021

Paul Gilroy KC leads USDAW’s High Court challenge to plan to remove Retained Pay from Tesco staff

The High Court is considering a claim by USDAW and several “lead” claimants against Tesco in relation to the proposed removal of the contractual benefit of “Retained Pay”.

In the late 2000’s, the company agreed to confer the benefit of Retained Pay upon many of its staff employed at distribution centres in England and Scotland, in return for the staff concerned agreeing to remain in Tesco’s employment, to transfer to new work sites, and not to participate in industrial action. The employees affected by the High Court trial work at distribution centres at Lichfield and Daventry.

At the time the benefit was conferred, the company gave assurances, variously, that the benefit would be “guaranteed for life” and “permanent”.

In early 2021, Tesco announced its intention to phase out Retained Pay, seeking the agreement of affected employees to its removal in the first instance, and offering a “buyout” equating to 18 months’ worth of the benefit as an incentive for employees to agree, but indicating that in the absence of agreement, the company would proceed to the termination of employment contracts with the substitution of new contracts containing identical terms and conditions whilst excluding the right to Retained Pay.

Tesco defends the claim, maintaining that it is entitled to “fire and re-hire” in the manner intended. USDAW contends that whilst the company has the right to terminate the employment of the employees concerned “for cause” (such as gross misconduct or redundancy), the contracts of employment of affected employees contain an implied term that Tesco will not exercise the right it would otherwise enjoy to give notice to terminate for the purposes of removing the right to Retained Pay.

During the trial, which is taking place under the CPR Part 8 procedure, the Court is, in particular, giving consideration to the line of authority on implied contractual terms dating back to Aspden v Webbs Poultry & Meat Group (Holdings) Ltd [1996] IRLR 521.

In parallel proceedings in the Court of Session, interim interdicts have already been obtained in relation to employees based at Tesco’s Livingston distribution centre in West Lothian.

USDAW, which seeks declaratory and final injunctive relief, is represented by Paul Gilroy KC, leading Stuart Brittenden of Old Square Chambers.

The case has been the subject of media coverage:



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