1/ USDAW v Tesco: CA reverses High Ct declaration & injunction to prevent fire & rehire of Tesco workers with a 'permanent' contractual right to retained pay.
bailii.org/ew/cases/EWCA/…
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2/ The facts start in 2007, when Tesco were looking to move distribution centres & to encourage experienced staff to stick around in spite of the considerable inconvenience of the move.
3/ To incentivise them, they offered them "retained pay" a significant additional monthly sum to agree to move to the new centres. There were contractual restrictions on its alteration, & in collective bargaining it was described as 'permanent' save in certain circumstances.
4/ Their contracts also contained standard clauses allowing termination on notice, with the contractual notice periods consistent with those under s.86 ERA.
5/ In the years before the collective agreement, there were various statements about the intended permanency of retained pay once brought in, including that it would remain for as long as employed by T in the current role, & it was "guaranteed for life".
6/ When Tesco sought a decade later to bring retained pay to an end, either by mutual agreement or by fire & rehire by exercise of the notice clause, those not agreeing to end it brought a claim for a declaration & injunction.
7/ The High Court granted the declaration & injunction sought (with penal notice), holding a reasonable person would find that the intention of the contracting parties would've found the intention for retained pay to remain whilst employed by T in the same substantive role.
8/ Given a contradiction between the retained pay term & notice entitlement (i.e. that Tesco could've otherwise given notice to terminate & sought to re-engage without retained pay the day after agreement), the Judge considered whether a term should be implied.
9/ She found that one should on the basis of both relevant tests - business efficacy & obviousness - a term should be implied that T's right to terminate can't be exercised for the purpose of removing or diminishing the employee's right to retained pay.
10/ Key to that finding was the Judge's concern that absent the implied term Tesco could have fired & rehired at its whim & removed the right to retained pay by doing so, & the employees would've been limited to an unfair dismissal claim with all its limitations.
11/ Tesco appealed on grounds that the Judge erred in construing the express terms, was wrong to find it necessary to imply a term, that the declaration was cast in inappropriate terms & the injunction shouldn't have been granted.
12/ Tesco sought to argue that the reference to "permanent" in the collective agreement sought merely to remove the entitlement to retained pay from collective bargaining machinery so that it could not be bargained away by those not benefitting from it.
13/ The Claimants described Tesco's construction as a kaleidoscopic one resting on a partial reading of communications issued & the context. They asserted the intention for a benefit of enduring nature was clear & unambiguous in issued communications.
14/ The CA allowed Tesco's appeal. It wasn't satisfied it had been shown that the pre-contractual documents evidenced the mutual intention of the parties, in terms of how long the retained pay right would last, or how notice could be used to end the contract.
15/ Bean LJ noted the pre-contractual statements relied upon were issued a whole 3 years before the collective agreement rather than alongside it, & they weren't referred to in it. The contract should be interpreted in its normal way, allowing notice to be exercised as normal.
16/ The CA also disagreed that the business efficacy or obviousness test were satisfied such that a term should be implied. It wasn't at all clear what term should be implied - how far did the restriction on giving notice need to go? It wasn't at all clear.
17/ Whilst the officious bystander might've said 'of course not' to Tesco being able to fire & rehire the following week, he'd also probably say 'of course not' to remaining in post for life.
18/ Whilst the High Ct had placed analogical reliance on the PHI cases where there was an implied term the employer wouldn't dismiss whilst entitled to PHI payments, the analogy didn't stretch to this case. Greater limits re time & anticipated events might've been otherwise.
19/ Finally, the injunction shouldn't have been granted. There was no authority for an injunction to prevent a private sector employer from dismissing an employee for an indefinite period. Moreover, it wasn't clear what T mustn't do under the injunction - which is problematic.
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