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Tesco prevented from terminating employment contracts to avoid increased pay for its employees

A recent High Court case granted the exceptional remedy of declaratory relief and prohibited Tesco from terminating and re-employing several of its warehouse workers.

The workers, through their union, brought a claim to the High Court to stop Tesco from terminating their current contracts and re-engaging them under new contracts which did not include an entitlement to increased pay. This entitlement formed part of their current contracts and had been introduced through a collective agreement as an incentive to retain employees when Tesco was substantially restructuring its warehouse operations.

Tesco had sought to avoid the workers’ entitlement to increased pay through terminating their current contracts and re-engaging the workers on new contracts which did not include this entitlement, however the collective agreement provided that the entitlement was permanent and could only be amended mutually or through promotion.

The workers’ claim was successful, with the High Court specifying the term of the contract regarding the entitlement and prohibiting Tesco from terminating the contract to avoid paying the employees the increased pay, as it would materially reduce the remuneration currently paid to the workers.  

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