Tesco was not entitled to terminate some employees' contracts and offer to rehire them on less favourable terms, the Supreme Court ruled on Thursday.
Shopworkers' union Usdaw took legal action against Britain's biggest retailer after Tesco sought to remove some warehouse workers' entitlement to increased pay by ending their contracts and offering to re-engage them – a practice often referred to as 'fire and rehire'.
The governing Labour Party has said it will outlaw "fire and rehire" tactics, but has yet to set out how it will replace current codes of practice.
A spokesperson for the Department for Business and Trade said: “We will be bringing forward legislation soon to put an end to unscrupulous fire and rehire practices, which have no place in a modern labour market.”
The Supreme Court ruled that Tesco was not permitted to use 'fire and rehire' in these circumstances and restored an injunction preventing the retailer from doing so.
Usdaw had won an injunction in February 2022 which prevented Tesco from dismissing the warehouse workers and offering them new contracts, but Tesco subsequently overturned that ruling on appeal.
The Supreme Court reversed that decision, however, ruling that Tesco's right to terminate employees' contracts could not be used to deprive them of their right to enhanced pay.
Tesco, which has a British grocery market share of nearly 28 per cent, said it accepted the ruling. A spokesperson said it related to “a very small number of colleagues in our UK distribution network who receive a supplement to their pay”.
“Our objective in this has always been to ensure fairness across all our distribution centre colleagues,” the spokesperson added.
Paddy Lillis, Usdaw general secretary, said in a statement that the ruling was “a win for the trade union movement as a whole”.
Lillis said of "fire and rehire" itself: “These sorts of tactics have no place in industrial relations, so we felt we had to act to protect those concerned.”
Usdaw brought the case on behalf of 42 workers employed at Tesco’s Daventry and Lichfield distribution centres after the supermarket giant tried to cut their wages as part of a change to their terms and conditions of employment.
The dispute centred on the workers' entitlement to enhanced pay for agreeing to move to a new distribution centre back in 2007.
When Tesco sought to remove the entitlement in 2021, it asked workers to agree to its removal for a lump sum payment or else their contract would be terminated and a new contract offered without the increased pay included.
In its ruling in favour of the workers, the High Court had noted that the workers had been guaranteed an entitlement to a specific payment labelled ‘retained pay’ to keep them within the business, which Tesco intended to remove by firing and then rehiring them.
The judge held that there was an implied term in the workers’ contracts that the right to terminate employment could not be exercised if the aim was to remove a right to ‘retained pay’.
The union's lawyer, Oliver Segal, said in court documents for the appeal in April that led to Thursday's ruling that Tesco was effectively arguing it has an "unrestricted freedom to terminate the relationship 'at will'."
Tesco, however, argued the affected workers had received increased pay worth thousands of pounds each for more than a decade.
The UK government’s generative AI chatbot has moved to the next stage of testing this week, making it easier and quicker for thousands of small businesses across the country to find information on GOV.UK.
Up to 15,000 business users will be able to ask the tool for advice on business rules and support, with the chatbot linked from 30 of GOV.UK’s business pages, such as “set up a business” and “search for a trade mark”. People with access to the trial can ask questions about tax and the support available to them.
A team of in-house data scientists, developers and designers are building the experimental tool using OpenAI’s GPT-4o technology which aims to help people more quickly navigate complex advice to understand what matters to them. In response, they will receive straightforward, personalised answers that collate information that may otherwise be spread across dozens of pages.
The results from the trial will determine the next steps which could include potential larger-scale testing. This could ultimately lead to the chatbot being rolled out across the full government website, made up of 700,000 pages.
The GOV.UK website attracts over 11 million users per week and is the best-known digital service in the UK according to YouGov.
The new trial comes as the science secretary’s department is shaping the new ‘digital centre’ of government to boost technology adoption across the public sector, taking a more experimental approach with emerging technology where appropriate as it does so.
“Outdated and bulky government processes waste people’s time too often, with the average adult in the UK spending the equivalent of a working week and a half dealing with public sector bureaucracy every year,” science secretary Peter Kyle said.
“We are going to change this by experimenting with emerging technology to find new ways to save people time and make their lives easier, as we are doing with GOV.UK Chat. With all new technology, it takes time to get it right so we’re taking it through extensive trials with thousands of real users before it is used more widely.”
After the first trial, which was conducted late last year, nearly 70 per cent of users agreed that the responses provided by the chatbot were helpful - where under 15 per cent disagreed. However, the first trial also showed that more testing and development was required to meet the high accuracy standards for advice and information on GOV.UK.
The government added that stringent safety measures and guardrails have been put in place, given the nature of this technology. Since the last test, the government experts have added ‘guardrails’ that help GOV.UK Chat detect which questions it should, and should not, answer. These include measures to prevent the chatbot responding to queries that may prompt an illegal answer, share sensitive financial information or force the chatbot to take a political position.
Government is "missing the mark" when it comes to understanding the struggles faced by small business owners, a convenience store owner has said, adding that Chancellor Rachel Reeves' budget has left many small, family-run businesses feeling overlooked.
Retailer Benedict Selvaratnam, who runs his family business Freshfields Market in Croydon, is "disappointed" by the recent budget announcement. He feels that the bigger-than-expected increase in wage cost, rise in Employer National Insurance Contributions and reduction in business rates relief will significantly raise the business operating costs
Among the key measures announced by Reeves that directly impact local stores are an increase in National Living Wage to £12.21 per hour and increase in National Minimum Wage (18-20 rate) to £10 per hour. The two are collectively expected to cost £513 million extra to the convenience sector next year, according to convenience store body Association of Convenience Stores (ACS).
Additionally, Employers’ National Insurance Contributions will rise by 15 per cent, the threshold for Employers’ National Insurance contributions to fall to £5,000 per year and Employment Allowance to rise to £10,500 a year. The collective cost to the convenience sector next year is estimated by ACS at £397m (increase of £85m).
Expressing his concerns, Selvaratnam told Asian Trader, "As a small, independent family business, Freshfields Market already operates on tight margins to keep our prices competitive for the local community. The increase in Employer National Insurance Contributions and reduction in business rates relief will significantly raise our operating costs.
"These changes come at a time when small businesses are still trying to recover from economic challenges, and it could hinder our ability to invest in growth, hire more staff, or even maintain our current workforce. It feels like a step backward for small businesses that are vital to our high streets."
Selvaratnam finds some relief in the shoplifting measures announced in the budget though he stresses on the need of proper enforcement as well.
He said, "The measures proposed to tackle shoplifting are a positive move and much needed. Shoplifting has become a major issue for retailers, especially in communities where economic pressures are high. Abolishing the £200 threshold and enforcing stricter penalties sends a strong message that theft won’t be tolerated.
"However, for these measures to be effective, enforcement needs to be consistent and supported by local law enforcement. It’s a step in the right direction, but we need ongoing support to ensure our staff and customers feel safe and protected."
"While the shoplifting measures are encouraging, the increased financial burden placed on small businesses outweighs the positives. It feels like the government is missing the mark when it comes to understanding the struggles faced by SMEs. We need policies that support growth and sustainability, not measures that add pressure to already strained resources.
"This budget has left many small, family-run businesses feeling overlooked."
Earlier, retailers' body British Independent Retailers Association (BIRA) too strongly criticised Reeves’ budget, calling it the “most damaging for independent retailers in recent memory”, with a triple blow of doubled business rates, increased National Insurance, and higher minimum wage costs threatening widespread high street closures.
Andrew Goodacre, CEO of Bira, said, "Small retailers, who have already endured years of challenging trading conditions, now face a perfect storm of crippling cost increases. Their business rates will more than double as relief drops from 75 per cent to 40 per cent, while they're hit simultaneously with employer National Insurance rising to 15 per cent and a lower threshold of £5,000, down from £9,100. Add to this the minimum wage increase to £12.21, and many of our members are telling us they simply cannot survive this onslaught."
Goodacre added, "For all the government's rhetoric about supporting small businesses and revitalising high streets, their actions do precisely the opposite. These punishing measures will force many shop owners to make heart-breaking decisions about their businesses' future.
"What makes this particularly bitter is that these are family businesses, often built up over generations, run by people who work incredibly long hours to serve their communities. They're now being asked to shoulder an impossible burden while trying to compete with online giants who face none of these cost pressures."
Russell George MS has been elected as the new Chair of the Cross-Party Group on Small Shops, succeeding Vikki Howells MS.
The decision was taken during the CPG's annual general meeting held on Wednesday (6). The meeting also saw discussion over the important role of access to cash in local communities.
Convenience store body Association of Convenience Stores (ACS) highlighted in the session the current access to cash trends across the convenience sector and the important role that cash plays in local communities and businesses.
Sarah McKenzie, Financial Conduct Authority (FCA), also joined the meeting to discuss the FCA's latest interventions to protect access to cash for communities in Wales and what this means for businesses across Wales. The CPG committee also heard from Tenby's Vince Malone, who shared his experience of running a Post Office in his local community and why cash is still important for his customers.
The core purpose of the group is to ensure that the voice of small shops is heard within the Welsh Parliament.
George said, “As a former small shop owner, I am delighted to be elected as Chair of the Cross-party Group on Small Shops. This role is vital in advocating for our local businesses and ensuring that their voices are heard. Access to cash is crucial for communities across Wales, especially in rural areas where many residents rely on cash transactions.
“We must work together to safeguard cash access, ensuring that the people of Wales can engage fully with their local economies and maintain the health of our high streets. I look forward to leading this group in promoting policies that support small shops and enhance financial inclusivity.”
British supermarket group Sainsbury's on Thursday (7) stuck to its full-year forecast of up to 10 per cent profit growth after a 3.7 per cent rise in the first half, with robust grocery sales offset by weakness in general merchandise.
Sainsbury's strategy of matching discounter Aldi's prices on hundreds of essential items and providing better offers for members of its Nectar loyalty scheme, financed by cutting costs, is paying off for CEO Simon Roberts.
The group is also benefiting from the continuing trend of Britons dining at home more, with sales of its premium Taste the Difference range up 18 per cent in the first half.
"Our food business is going from strength to strength and we're making the biggest market share gains in the industry, with continued strong volume growth," said Roberts, adding that he was expecting another "strong performance" at Christmas.
Sainsbury's has a UK grocery market share of 15.2 per cent, the latest data from researcher Kantar shows, up 40 basis points year-on-year. Britain's No. 2 grocer after Tesco said it still expected 2024-25 retail underlying operating profit, its preferred profit measure, of between 1.01 and 1.06 billion pounds, growth of 5 per cent to 10 per cent versus 2023-24.
The group said it also still expected to generate retail free cash flow of at least 500 million pounds.
For the six months to Sept 14, Sainsbury's made retail underlying operating profit of 503 million pounds, up from 485 million pounds in the same period last year.
Second-quarter like-for-like sales, excluding fuel, rose 4.2 per cent, having been up 2.7 per cent in the first quarter.
Grocery sales rose 5.3 per cent and general merchandise and clothing sales in Sainsbury's stores were up 2.2 per cent. However, sales at the Argos business fell 1.4 per cent.
"We remain confident of delivering strong profit growth in the full year, with continued leverage from Sainsbury's grocery volume growth and a stronger Argos H2 performance," said the group.
Small Business Saturday UK has launched its national roadshow that travels the length and breadth of the country ahead of Small Business Saturday on 7 December.
Kicked off in Lossiemouth on Monday (4 November), The Tour will travel over 3,000 miles across the UK for over the course of five weeks in an electric van to limit emissions and reflect the sustainable switches many small business owners are making as part of their vital role in the race to net zero.
The Tour will visit 23 different towns and cities, visiting small businesses, going behind the scenes and meeting the people running them, to shine a light on their invaluable contribution to local communities and the wider UK economy.
It will also offer a jampacked free daily programme of online training and insight - including webinars, mentoring and inspiring entrepreneurial stories - open to all small businesses.
Running from 4 November to 4 December, Monday to Friday at 11am, small businesses can sign up to as many free daily webinars as they want. Covering essential topics like marketing on a budget, time management, finance, sustainability and more, the webinars will offer practical tips and insights from industry experts.
As part of The Tour, the campaign is also offering 1-hour mentoring sessions with trusted small business experts. Sessions run from 4 November to 16 December. Businesses are being urged to book before the 16 November deadline to secure their spot.
Small Business Saturday UK is a grassroots, non-commercial campaign, which highlights small business success and encourages consumers to 'shop local' and support small businesses in their communities.
Details of the Tour locations, webinar programme and mentoring sessions are available here.