Charles Anthony Joseph Steel v Spencer Road LLP
[2023] EWHC 2492 (Ch)
Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers and others
12 September 2024
[2024] UKSC 28
Supreme Court
Tesco promised its employees permanent extra pay to move jobs. Tesco then tried to fire and rehire them without that extra pay. The court said Tesco couldn't do that because it broke its promise. The court ordered Tesco to keep paying the extra pay.
Key Facts
- •Tesco employees sought declaratory and injunctive relief regarding their contractual entitlement to retained pay after Tesco attempted to remove it through dismissal and re-engagement.
- •The retained pay term was in a 2010 collective agreement and incorporated into individual contracts.
- •Pre-contractual materials from 2007 (including a Compensation Package Summary, Q&A document, joint statement, and Livingston documents) were relevant to interpreting the retained pay term.
- •The High Court found for the employees, implying a term that Tesco could not dismiss to remove retained pay. The Court of Appeal overturned this decision.
- •The Supreme Court considered the interpretation of the "permanent" retained pay term and whether a term should be implied to qualify Tesco's right to terminate contracts.
Legal Principles
Contractual interpretation requires an objective and contextual approach, considering business common sense but not subjective intentions.
ICS; Arnold v Britton [2015] UKSC 36, Wood v Capita Insurance Services Ltd [2017] UKSC 24
Implying terms by fact requires necessity for business efficacy or obviousness, clear expression, and no contradiction of express terms.
Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472, Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72, Ali v Petroleum Co of Trinidad and Tobago [2017] UKPC 2
Contracts of employment are generally not specifically enforceable, but exceptions exist where damages are inadequate and sufficient confidence remains.
Hill v C A Parsons & Co Ltd [1972] Ch 305, Powell v Brent London Borough Council [1988] ICR 176
Outcomes
The Supreme Court allowed the appeal and reinstated the injunction granted by the High Court.
The "permanent" retained pay term, interpreted contextually, meant the right lasted as long as employment in the same role continued, subject to specified exceptions. An implied term was necessary to prevent Tesco from defeating this promise by dismissing employees to remove retained pay. Damages were inadequate.
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