Union of Shop, Distributive and Allied Workers v Tesco Stores Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Bean,Lord Justice Newey,Lord Justice Lewis |
| Judgment Date | 15 July 2022 |
| Neutral Citation | [2022] EWCA Civ 978 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-000240 |
[2022] EWCA Civ 978
Lord Justice Bean
Lord Justice Newey
and
Lord Justice Lewis
Case No: CA-2022-000240
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT (QUEEN'S BENCH DIVISION)
MRS JUSTICE ELLENBOGEN
Royal Courts of Justice
Strand, London, WC2A 2LL
Anthony de Garr Robinson QC and Amy Rogers (instructed by Herbert Smith Freehills LLP) for the Appellant
Paul Gilroy QC and Stuart Brittenden (instructed by Thompsons LLP) for the Respondents
Hearing date: 09 June 2022
Approved Judgment
In 2007 the Appellant company (“Tesco”) planned an expansion and restructuring of its distribution centre network. This involved among other things the opening of new sites and the closure of others. The company was keen to ensure that it would not lose experienced warehouse staff through redundancy. It sought to persuade employees at its Crick distribution centre to move to Lichfield or Daventry. The incentive offered for them to do so was a significant enhancement of their pay, known as Retained Pay. The individual Claimants are among those who accepted the offer. If they had refused, the alternative was that they would have been dismissed on the grounds of redundancy, and would each have been entitled to redundancy payments of between £6,000 and £8,000.
As an example Mr Jagpreet Singh, the third Claimant, was one of those who agreed to move from Crick to Lichfield. His new contract of employment, signed on 26 September 2007, included the following paragraph.
“Under the arrangement for moving to the new Lichfield site you are eligible to receive the sum of £134.70 per week as Retained Pay. This payment is part of your contractual terms and is included in your calculation of pensions and benefits, e.g. shares in success. Retained Pay will be uplifted by any future negotiated pay increases. Retained Pay can only be altered in agreement with yourself and ceases where you agree to a promotion or where you request a fundamental shift change, for example a move from nights to days when there will be an adjustment to the premium payment only. In the event of a company-initiated change there would be no reductions in Retained Pay.”
Mr Singh's contract of employment contained other clauses of a more standard kind. One of these provided for the right of the company to give notice to terminate the contract and setting out a schedule of the periods of notice to be given: in fact these were the same as the minimum periods laid down in section 86 of the Employment Rights Act 1996. The company was not required to give any notice in cases of gross misconduct.
The Union of Shop, Distributive and Allied Workers (“USDAW”) was and remains recognized by Tesco for collective bargaining purposes. By a Recognition and Procedural Agreement dated 2009, but signed on 18 February 2010, Tesco recognised USDAW as the sole representative and negotiating trade union for staff below the grade of Team Manager employed at so-called ‘new contract sites’, including those at Lichfield, Daventry and Livingston, Scotland.
This collective agreement was not legally binding as such (see s 179 of the Trade Union and Labour Relations (Consolidation) Act 1992), but it is common ground that it was incorporated by established custom and practice into the individual Claimants' contracts of employment at or shortly after the time it was signed. The critical paragraphs read as follows:-
“ SITE SPECIFIC AGREEMENTS
RETAINED PAY
Certain staff under the arrangements for moving to Lichfield from other Tesco sites may receive retained pay. Retained pay will be uplifted by any future negotiated pay increases.
Retained pay is individually calculated and confirmed in individual statements of employment. It is an integral part of contractual terms and is included in calculations for pension and other benefits such as Shares in Success.
Retained pay will remain a permanent feature of an individual's contractual eligibility subject to the following principles:
i) retained pay can only be changed by mutual consent
ii) on promotion to a new role it will cease
iii) when an individual requests a change to working patterns such as nights to days the premium payment element will be adjusted
iv) if Tesco make shift changes it will not be subject to change or adjustment.”
More than a decade later, Tesco wished to bring Retained Pay to an end. In January 2021 the company gave notice to all staff in receipt of Retained Pay that it intended to seek their agreement to remove the Retained Pay clauses from their contracts in return for an advance payment equal to 18 months of Retained Pay. Where an individual did not agree to this change, Tesco intended to terminate the individual contract and offer re-engagement on different terms.
43 employees at Lichfield and Daventry, represented in these proceedings by the second, third and fourth Claimants, have refused to give up their Retained Pay. The company indicated that their contracts would be terminated, although they would be offered re-engagement on altered terms.
A similar process has been going on in relation to employees at Tesco's Livingston Distribution Centre in Scotland. On 12 February 2021 Lord Armstrong, in the Outer House of the Court of Session, granted an interim interdict restraining Tesco “from serving or purporting to serve notice of termination of the contracts of employment” of any of USDAW's members employed at the Livingston distribution centre who were in receipt of Retained Pay and who had not consented in writing to its being withdrawn. We were told that the Scottish case has not yet come to trial.
A claim form in this jurisdiction was issued on 17 March 2021 by USDAW and three individual Claimants: Mr Webb, who is one of 22 members affected at the Daventry Clothing centre; Mr Singh, one of 20 at the Lichfield centre, and Mr Kumar, who is employed at the Daventry Grocery centre. There was no application for an interlocutory injunction in England since Tesco undertook not to terminate the contracts of the individual Claimants or those whom they represent pending judgment in the High Court.
The claim form, as originally issued, was very short. It sought relief in the form of an order: firstly a declaration that the contract of employment between each affected member was subject to an express term that the affected member was entitled to a payment of Retained Pay; secondly, a declaration that each such contract was “subject to an implied term that the Defendant will not exercise the right it would otherwise enjoy to terminate such contract so that new terms and conditions could be offered to the Affected Member” (subsequently amended to a declaration that the Defendant will not exercise such rights “for the purpose of removing the right to Retained Pay”); and thirdly, an injunction restraining the Defendant from compulsorily withdrawing from any affected member the contractual benefit of Retained Pay, or serving or purporting to serve notice of termination of the contract, in circumstances whereby the Defendant offers to re-engage any such person on terms and conditions which do not include the provision of Retained Pay.
A further claim based on estoppel was later added by amendment in the following terms:-
“2A Further or alternatively, by reason of the clear and unambiguous representations made by the Defendant to each Affected Member (including each of the Second, Third, and Fourth Claimant) and which are particularised in a skeleton argument dated 6 April 2021, in relation to the Defendant's expressed intention to unilaterally remove such entitlement to Retained Pay through the mechanism of issuing notice of termination and re-engagement on new terms and conditions:
(i) the Defendant is estopped from seeking to unilaterally withdraw the entitlement to Retained Pay; and/or
(ii) such representations amount to a forbearance precluding it from exercising any right it otherwise possessed to unilaterally withdraw the entitlement to Retained Pay.
In respect of (i) and/or (ii) it is inequitable to permit the Defendant to act in a manner inconsistent with such representations.”
The claim form leaves open the question of which documents are relied on as forming part of the contract. However, the argument before us (and, it seems, before the judge) proceeded on the basis that the Retained Pay provisions of the collective agreement set out at paragraph 5 above are the ones on which the Claimants rely. The document we have relates to Lichfield but we were told that there was an effectively identical one for Daventry.
The bundle includes, and the judgment of Ellenbogen J refers to, a number of pre-contractual documents. It is convenient to set them out at this stage.
Pre-contractual documents
In February 2007 the company provided its employees with a ‘Compensation Package Summary’, setting out, in tabular form, entitlements were staff to move to Lichfield or ‘any other Tesco site with the new Tesco contract’ and the sums which would be paid were they to opt for redundancy. For those who chose to remain in employment, it was said, there would be ‘new terms and conditions supported by individual retained pay — protection for life at new Tesco contract site…Please refer to previous joint statements for details’. [emphasis added]
Staff were further provided with a ‘Q&A’ document, published by the company on 20 February 2007, including the following questions and answers, numbered 32 and 33:
“32. Will I receive any protection to support me moving to the new site with new terms and conditions?
Yes, we will support you in this instance by applying our ‘Retained Pay’...
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