Employment tribunal and court judgments | March 2022

High Court blocks Tesco's "fire and rehire" plans

"Fire and rehire" is a tactic used by employers to change an employee's contract of employment, where such changes are not permitted under their contract and the employee will not consent to the changes. The practice itself it is not unlawful but does come with risks, particularly around brand/reputational damage lately. There are also legal risks, including potential exposure to industrial action where a trade union is recognised and/or unfair dismissal claims from employees who have service (although a fair reason for dismissals of this kind can be established if an employer can show it had a "sound business reason" for dismissing any employee who would not accept the changes proposed). Employers should consider those risks carefully before implementing this practice.

Fire and rehire has been in the spotlight, firstly as a result of businesses using it in the pandemic and now due to the High Court granting an injunction against Tesco, preventing them from dismissing and rehiring employees in order to remove an element of contractual pay from their contracts.

Due to a restructure in the late-2000s when Tesco really needed to incentivise a group of existing employees to relocate, Tesco agreed arrangements in respect of "retained pay", protecting the difference in value between the employee's former employment contracts and their new ones (post-relocation). At the time, Tesco agreed with the trade union, USDAW, that the retained pay was guaranteed for life. A collective agreement was subsequently entered into which stated that the retained pay was a "permanent" feature.

However, in January 2021, Tesco formally announced its intention to remove retained pay and offered a lump sum payment in return for giving up the entitlement. Employees who did not agree would be dismissed and offered new terms (i.e. "fired and re-hired"). USDAW, alongside some employees, applied to the High Court for:

  • A declaration that the contracts had an implied term preventing Tesco from terminating the contract in order to remove the entitlement to retained pay.
  • An injunction to stop Tesco from terminating the contracts in order to stop the entitlement to retained pay.

The High Court granted the injunction and found that it was reasonable for the employees to view the term "permanent" to mean that they would be entitled to retained pay, for as long as they were employed by Tesco in the same role.

The facts of this case are unusual. It is unlikely that many employers have made such explicit "guarantees" in respect of contractual benefits being honoured permanently, however, the case does highlight that employers should be careful when making any promises about the permanence of negotiated benefits provided to employees if they want flexibility not to be bound by them.

Serial Litigant – is it possible to make a living bringing Employment Tribunal claims?

Whilst all claims should be taken seriously and responded to properly, where a party believes that a claim is particularly weak, or a party is behaving poorly, for example they keep missing court deadlines or are contacting the other side in an inappropriate way, this can be highlighted to the Tribunal. If the Tribunal considers further steps need to be taken, it can order that the claim be either partially or completely struck out (i.e. not allowed to continue) or be subject to a deposit order, so that the offending party has to pay some money in order to be allowed to continue. If they don’t then pay, the claim (or particular part of it) will be struck out. The Tribunal can also issue an "unless order", which means that unless the party does or does not do a certain thing, they may not be allowed to continue with the proceedings.

Understandably, the Tribunal is reluctant to get involved in these sorts of issues; the behaviour usually needs to be particularly poor and sustained, or the claim very obviously lacking in merit, in order for the Tribunal to take action. However, sometimes even the Tribunal getting involved doesn’t deter the individual, and very occasionally a person will become a serial litigant, meaning they bring multiple claims against multiple employers. This may be done because the individual wants to make a nuisance of themselves, or for financial gain.

If there are concerns regarding the behaviour of an individual, the Attorney General can apply to the Employment Appeals Tribunal ("EAT") for a Restrictions of Proceedings Order ("RPO"). Such steps are rare, but this is what happened in the recent case of Her Majesty's Attorney General v David Taheri [2022] EAT 35.

Mr Taheri brought 44 claims within a 10-year period. Most of his claims followed unsuccessful applications for jobs and were very similar in the way they were structured. He also would initially claim significant sums of money but then contact the Respondent to say that he would drop his claim for a small amount; usually a few hundred pounds. Unsurprisingly a lot of the Respondents to his claims just settled instead of having the hassle of defending the claims, but some resisted them. When this happened, Mr Taheri would correspond aggressively (his behaviour was so poor in a particular case that a restraining order was issued against him) to pressurise the Respondent into settling. When occasionally this didn’t work and the Respondent applied to the Tribunal for it to intervene, it usually did so by making an unless order or deposit order, neither of which Mr Taheri would comply with and his claims would be struck out. A couple of the claims made it all the way to the final hearing, and in those Mr Taheri always lost and was also ordered to pay the Respondent's wasted legal costs. Convincing a Tribunal to order a Claimant, who was representing himself, to pay wasted legal costs is quite difficult to achieve, so this is testament to how poor the claims and/or Mr Taheri's behaviour must have been.

When making the decision to make the RPO, Mrs Justice Eady DBE (president of the EAT) was satisfied that Mr Taheri had habitually and persistently, and without any reasonable ground, instituted vexatious proceedings or made vexatious applications in any proceedings, whether in an ET or the EAT, and whether against the same person or different persons. Mr Taheri argued that the RPO was a breach of his Article 6 rights (the right to a fair trial), but Mrs Justice Eady DBE held that access to a court was not an absolute right, and that a balance needed to be struck between the right of the citizen to be able to bring claims against the rights of others and the courts not to be troubled with wholly unmeritorious claims. Should Mr Taheri want to bring any claims in the future, he will need to ask the EAT for permission to do so.

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