Tesco restrained from ‘firing and rehiring’ employees in order to remove a contractual entitlement to enhanced pay

In Tesco Stores Ltd v USDAW and ors [2024] UKSC 28, the Supreme Court disagreed with the Court of Appeal and restored the High Court’s decision to grant an injunction that restrains Tesco from ‘firing and rehiring’ employees in order to remove their contractual entitlement to enhanced pay.

The contractual entitlement was stated to be ‘permanent’ and the Supreme Court interpreted that to mean that the right would continue for as long as employment continued. It implied a term to the effect that Tesco could not unilaterally terminate the employment to defeat the contractual term.

However, the implied term would not prevent Tesco from terminating the contracts for a purpose unconnected with the pay term in question, albeit that the practical effect will be to bring the entitlement to enhanced pay to an end.

While it is a general rule that specific performance of an employment contract will not be granted, there is an exception allowing for specific performance to be ordered against an employer (but not an employee) where there has been no breakdown of mutual trust and confidence. Clearly there was no such breakdown here as Tesco was prepared to re-engage the relevant employees immediately once the enhanced pay term had been removed from their contracts. The Court was therefore satisfied that the exception to the general rule was engaged and the injunction preventing dismissal was restored.

---

Authors

Daniel Hobbs

Call 1998

Related areas

Employment

---