Legitimacy of fire and re-hire practices

In April, the UK Supreme Court will hear Tesco Stores Ltd (Respondent) v Union of Shop, Distributive and Allied Workers and others (Appellants) Case ID: 2022/0133. In 2007, Tesco planned an expansion and restructuring of its distribution centre network, which involved the opening of new sites along with the closure of others. Tesco, not wanting to lose experienced warehouse employees to redundancy, offered employees a significant enhancement of their pay (known as “Retained Pay”) if they would relocate to the new distribution centre.

Over a decade later, in 2021, Tesco sought to bring Retained Pay to an end. Notices issued to all staff concerned that Tesco intended to seek agreement to remove the Retained Pay clause from their contracts in exchange for an advance payment equal to 18 months of Retained Pay. Any employee who did not consent would be terminated and offered re-engagement on different terms.

The Appellants are employees who refused to give up their retained pay. An initial declaration was sought by the Appellants in the High Court that their employment contracts entitled them to Retained Pay, that they were subject to an implied term the contracts could not be terminated for the purpose of removing Retained Pay and an injunction preventing Tesco from terminating the contracts. The Appellants were successful in the High Court, but Tesco’s appeal was allowed in the Court of Appeal. The Appellants are now appealing to the Supreme Court.

The so-called practice of “hire and re-hire” is particularly topical in the UK, with the UK Government publishing a revised draft Code of Practice on fire and re-hire practices, which is expected to come into force later this year.

Employment status

In Commissioners for His Majesty’s Revenue and Customs (Respondent) v Professional Game Match Officials Ltd (Appellant) Case ID: 2021/0220, the UK Supreme Court was asked to consider whether the relationship between a company responsible for providing football referees to the Football League constituted an employment relationship so as to trigger an obligation on the company to deduct Income Tax and National Insurance from the payments it makes to the referees.

The Appellant company is a non-profit service company providing referees and other officials for significant football matches, in particular the Premier League, the FA Cup and EFL. The referees are part-time and are treated as self-employed. They receive match fees, expenses and a training attendance allowance, and they supply some of their own equipment, but among other things were subject to coaching and fitness assessment systems, had to sign and agree to comply with a Code of Conduct and certain referees could be subject to disciplinary action. Most referees balanced their commitments with full time work.

The Court of Appeal of England and Wales ruled that the Appellant had engaged the referees on contracts of employment, which would require income tax and national insurance to be deducted from the payments made to referees. This case was heard by the Supreme Court in June 2023 but judgment is yet to be handed down.

Following the Irish Supreme Court decision in Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino’s Pizza [2023] IESC 24 on the employment status of delivery drivers for tax purposes last year, the Revenue Commissioners confirmed that it, along with the Department of Social Protection and the Workplace Relations Commission, is currently updating the Code of Practice on Determining Employment Status.

Collective bargaining: whether collective agreement could be rectified

In May, the UK Supreme Court will hear Unite the Union and another (Respondents) v Tyne and Wear Passenger Transport Executive T/A Nexus (Appellants) Case ID UKSC 2022/0180. In this case, the Appellant, trading as Nexus, operates the Tyne and Wear Metro, which recognises the Respondent union as one union for collective bargaining purposes in relation to certain relevant employees. Employees’ contracts expressly incorporate terms relating to pay and conditions negotiated under the collective bargaining procedures, whether or not they are members of either the Respondent union or the National Union of Rail, Maritime and Transport Workers (RMT).

These proceedings are a sequel to an earlier claim brought against Nexus by a group of relevant employees known as the “Anderson Proceedings”. The Anderson Proceedings concerned a collective agreement that was reached between the unions and Nexus. In the letter of agreement, Nexus agreed to consolidate a pre-existing entitlement which was inaccurately referred to as a “productivity bonus” into the basic pay of employees. The employees successfully argued in the Anderson Proceedings that as shift allowances were not calculated as a percentage of their basic pay and productivity bonus, they had therefore been underpaid. Nexus later brought a separate claim to rectify the Letter of Agreement for common or unilateral mistake. In a pre-trial hearing, the unions argued that Nexus should be estopped from advancing the claim as mistake was not brought up in the Anderson Proceedings, and argued for strike-out or summary judgment arguing that that the claim was an abuse of process, barred by delay, and in any event the Court could not rectify the agreement as it was a collective agreement which is not legally binding or enforceable.

The High Court of England and Wales rejected the unions’ arguments, but the Court of Appeal found in their favour. Nexus has now appealed to the UK Supreme Court to establish whether the Court of Appeal erred in its findings, including in holding that rectification is not available for a collective agreement which is not intended to be a legally enforceable contract and refusing to allow the claim to be amended.

Whether workers are protected from detriment and dismissal when involved in trade union activities

In December, the UK Supreme Court heard Secretary of State for Business and Trade (Respondent) v Mercer (Appellant) Case ID: 2022/0080. The Appellant had been employed as a support worker for a health and social care charity since 2009 and was also a representative for UNISON, the public sector union, and was involved in planning and the organisation of strike action. In January 2019, the Appellant was interviewed by an online publication and appeared in other press material about the strikes, saying that she intended to participate in the strikes herself.

The Appellant was suspended in March 2019, and was told this was because she had abandoned her shift on two separate occasions and had spoken to the press about strike action without prior authorisation in a way which conveyed confidential information and was likely to bring the organisation into disrepute. According to her initial claim, she was in receipt of normal pay during her suspension and the effect of the suspension was effectively to remove her from the premises while the industrial action was in progress. Therefore, the Appellant claimed she had suffered a detriment, and the decision to suspend her was for the sole or main reason to prevent or deter her from taking part in the activities of an independent trade union or penalising her for having done so.

An employment tribunal determined, as a preliminary issue, that Articles 10 and 11 of the European Convention on Human Rights and section 146 of the Trade Union & Labour Relations (Consolidation) Act 1992 (which gives workers the right to not be subjected to detriment as an individual for being a member of or taking part in trade union activities) did not extend to participation in lawful industrial action as a member of an independent trade union. The UK Employment Appeal Tribunal allowed the appeal and held it did so extend. The Court of Appeal of England and Wales allowed a further appeal by an intervener, The Secretary of State for Business and Trade. The Appellant now appeals to the Supreme Court to establish whether a worker who is subject to detriment for the purpose of preventing or deterring her participation in a union-organised industrial action can potentially bring a claim under s. 146(2)(b) of the Trade Union & Labour Relations (Consolidation) Act 1992. Judgment is awaited.

Given the Irish Supreme Court’s recent decision in HA O’Neil Limited v Unite the Union and others, which fundamentally changed the approach the High Court should take in considering applications for interlocutory injunctions to restrain picketing and industrial action sanctioned or supported by a trade union, the outcome of these collective bargaining/trade union cases before the UK Supreme Court will be watched with interest.  

The authors would like to acknowledge the contribution of Niamh McCarthy, Trainee to this briefing.

The content of this briefing is provided for information purposes only and is not legal or other advice.