Tesco loses Supreme Court ‘fire and rehire’ fight

Published

4 weeks ago

September 12, 2024

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Tesco says it will accept a Supreme Court ruling in a so-called ‘fire and rehire’ case amid government efforts to bolster workers’ rights.

The Union of Shop Distributive and Allied Workers (Usdaw), along with three of its members at Tesco who also represent the union, took legal action over proposals in 2021 to fire staff at some distribution centres and rehire them on lower pay.

The case, which originally involved more than 360 workers – the majority at Livingston in West Lothian – arose after the supermarket chain offered staff higher “retained pay” to relocate in 2007.

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In 2021, the UK’s largest retailer announced plans to bring retained pay to an end and said that those affected would receive a lump sum instead.

If the offer was not accepted, the company said their contracts would be terminated and then reoffered on the same terms, but without the increased salary.

Usdaw argued that “retained” pay was described as “permanent” in the staff’s contracts, meaning it could not be removed, while Tesco said bosses were using a legitimate “contractual mechanism” open to employers.

The Supreme Court judgment followed earlier court wins for both parties – latterly Tesco at the Court of Appeal.

The five Supreme Court justices ruled unanimously that Tesco should be blocked from dismissing the staff.

They said: “Objectively, it is inconceivable that the mutual intention of the parties was that Tesco would retain a unilateral right to terminate the contracts of employees in order to bring retained pay to an end whenever it suited Tesco’s business purposes to do so.

“This would have been viewed, objectively, as unrealistic and as flouting industrial common sense by both sides.

“It would have been open to Tesco to negotiate a longstop date for the entitlement to retained pay or to make clear that the retained pay could be withdrawn if an employee were dismissed with notice and then re-employed in the same role. Neither was done.”

Following the ruling, Paddy Lillis, Usdaw’s general secretary, said: “These sorts of tactics have no place in industrial relations, so we felt we had to act to protect those concerned.

“We were very disappointed with the outcome in the Court of Appeal but always felt we had to see this case through.

“We are therefore delighted to get this outcome, which is a win for the trade union movement as a whole.”

The government has previously outlined plans to ban “fire and rehire” policies and exploitative zero-hours contracts, as well as enforce more rights from a worker’s first day in a job, including sick pay.

A Tesco spokesperson said: “We accept the Supreme Court’s judgment. Our colleagues in our distribution centres play a really critical role in helping us to serve our customers and we value all their hard work.

“Our objective in this has always been to ensure fairness across all our DC colleagues. Today’s judgment relates to a contractual dispute brought on behalf of a very small number of colleagues in our UK distribution network who receive a supplement to their pay.

“This supplement was offered many years ago as an incentive to retain certain colleagues and the vast majority of our distribution colleagues today do not receive this top-up.

“In 2021, we took the decision to phase it out. We made a competitive offer to affected colleagues at that time and many of them chose to accept this.

“Our aim has always been to engage constructively with Usdaw and the small number of colleagues affected.”

A Department for Business and Trade spokesperson added: “We are committed to updating Britain’s employment protections so they are fit for our modern economy and the future of work.

“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.”

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US national debt is heading for historic highs – whoever wins election

Published

9 hours ago

October 11, 2024

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US national debt is heading for historic highs - whoever wins election

Here in the UK, politicians are fixated with the level of the national debt.

They fret about the fact that it is now knocking on for 100% of UK gross domestic product (GDP). They incorporate it into their fiscal rules, compelling them to get it falling (even if they rarely succeed in practice).

So you might be surprised to learn that while Britain’s national debt is projected to fall in the coming years, the equivalent figure in the US is projected to balloon to completely unprecedented levels.

In fact, while Britain and America’s state debt levels have moved in near lockstep with each other in recent decades (as a percentage of GDP, both were in the mid-30s pre-financial crisis, in the 1970s and 1980s afterwards, then approaching 100% after COVID), they are about to diverge dramatically.

So, at least, suggest the latest projections from the Congressional Budget Office and Britain’s Office for Budget Responsibility (OBR). They show that while both UK and US net debt are just shy of 100% this year, America’s will rise to 125% by the middle of the next decade, while Britain’s will fall to 91%.

Now of course, these are just projections, based on the assumption that each country follows the current plans laid down by their respective administrations. Those plans could well change. But even so – the gap would amount to the biggest divergence in post-war history.

The reasons for it are many: in part, the US is raising less in taxes, thanks in part to a series of tax cuts and exemptions which began under Donald Trump but continued, for some recipients, under Joe Biden.

In part it’s because it’s spending more, both on discretionary measures like the Inflation Reduction Act (a series of subsidies for green tech firms) and non-discretionary schemes like Medicare.

Either way, the US is slated to borrow more in the coming years than it has done in any comparable period in recent memory. And the upshot of that is a seemingly perpetual increase in the federal debt, up to that 125% of GDP record level.

Which raises the question: what are the candidates in this election planning to do about it? The short answer is: not much.

Indeed, according to the latest analysis from the non-partisan Committee for a Responsible Federal Budget, based on the promises made by Kamala Harris and Donald Trump, the gap will only widen – whichever party wins the election.

It found that the Ms Harris campaign’s plans, which involve considerably more spending, imply the federal debt rising to a record 133% of GDP.

Perhaps that’s unsurprising, but the real shock of the analysis is that it found Mr Trump’s plans imply an even steeper upward trajectory, as he slashes taxes for a range of households and businesses, and continues some of the existing spending plans. While the Republicans are traditionally seen as the party of fiscal prudence, a second Trump administration would send the federal debt heading towards 142% of GDP.

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All of these figures would be record numbers. And for some economists that raises an important question: at what point do investors in UK government debt – and the dollar more widely – balk at these spending and borrowing plans?

Since the US dollar remains the world’s reserve currency, Washington is often said to enjoy an “exorbitant privilege”, allowing the government to avoid the constraints of many other nations. But with the federal debt heading towards these unprecedented levels – regardless of which candidate wins – the country’s economic story is heading into unfamiliar territory.

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Government is using Post Office as ‘shield’ over Horizon compensation schemes, outgoing CEO Nick Read tells inquiry

Published

18 hours ago

October 10, 2024

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Government is using Post Office as 'shield' over Horizon compensation schemes, outgoing CEO Nick Read tells inquiry

The Post Office’s outgoing CEO today agreed the government is using the company as a “shield” over compensation schemes, while giving evidence at the inquiry.

Nick Read, who resigned last month, was giving evidence at the Post Office Horizon IT Inquiry for the second day, with a focus on delays to victims’ financial redress.

Edward Henry KC, representing wronged sub-postmasters caught up in the Horizon scandal, asked Mr Read if the government “is using the Post Office as a shield or a fire curtain”.

He replied: “That could be a description, yes.”

Mr Henry continued: “The fact you’re [the Post Office] administering two out of the three schemes gives the government a degree of protection… one step removed gives it room for plausible deniability?”

Mr Read responded: “That’s true.”

Hundreds of sub postmasters were wrongfully convicted due to faulty Horizon computer software used by the Post Office between 1999 and 2015.

The outgoing Post Office boss denied the company has been instructed “to minimise or supress compensation claims whilst avoiding public scrutiny”.

Mr Read admitted, however, that the compensation process has been “overly bureaucratic” and expressed “deep regret” that the Post Office had not lived up to delivering “speedy and fair redress”.

However, he insisted the “approach” and way of “engaging” with victims has changed in the last few months, with “lessons learned” since the start of the year.

“I think we are genuinely open and moving towards a better system,” Mr Read told the inquiry. “There are proper appeals processes, proper independent panels now working.”

He added there is a “commitment… to get this right,” and said he believes “things will start to flow” despite “mistakes hav[ing] certainly been made”.

Mr Read also addressed the “terrible” fact that hundreds of sub-postmasters have died before receiving compensation.

A total of 251 people have died without getting full financial redress, according to data cited at the inquiry.

Nick Read insisted “a lot of time” has been spent “trying to work out how do we improve and speed up the process”, adding it was a “constant point of conversation” with the government.

Mr Read said it was “astonishing” the Post Office was involved in the administration of compensation schemes and said the “corporate view” was that the Post Office should not have anything to do with them.

When asked why that view was not communicated to the inquiry in meetings, Mr Read responded: “It’s a good question. I’m unsure why we didn’t make that very explicit…clearly we should have done.”

He said the lack of communication on this was a “failure”.

Mr Read also today told the inquiry how Post Office employees “implicated” in the Horizon scandal may “still be operating at the heart” of the business.

The inquiry continues.

Business

Scores of companies take AIM at Reeves over tax threat

Published

21 hours ago

October 10, 2024

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Scores of companies take AIM at Reeves over tax threat

More than 140 London-listed companies including Fevertree Drinks, Jet2, Mothercare and YouGov have warned the chancellor that uncertainty over the continuation of a vital tax incentive is damaging investor confidence ahead of this month’s Budget.

Sky News can exclusively reveal that AIM-quoted businesses generating combined profits of £1.5bn and employing more than 120,000 people have written to Rachel Reeves to urge the government to provide “clear support” for business relief (BR) in order to restore investors’ faith in the City’s junior exchange.

The letter represents a comprehensive warning to Ms Reeves from dozens of prominent companies about the impact of recent speculation about the abolition of BR for inheritance tax.

It is understood to have been organised at the behest of Octopus Investments, which is invested in a large portfolio of AIM stocks through its AIM Inheritance Tax Service.

Cavendish, the investment bank which acts for roughly a quarter of all AIM-listed companies, is said to have corralled many of the signatories to the letter.

Among the other backers of the plea to the chancellor, which was sent last month but has not been reported, were Arbuthnot Banking Group, Cake Box Holdings, FRP Advisory, Gateley, H&T Group, Marlowe, M&C Saatchi, Mortgage Advice Bureau, Nichols, Revolution Bars, Revolution Beauty, Science in Sport, Staffline, Tasty, Virgin Wines and Warpaint.

In it, they say that AIM “has given innovative businesses like ours the ability to access patient capital as we grow” since it was established 30 years ago.

“Underpinned by important tax reliefs like Business Relief on Inheritance Tax, AIM has become one of the most successful growth markets in the world.

“While there are a small number of specialist funds investing in companies listed on AIM, a significant percentage of our shareholder base is made up of individual investors.

“BR compensates those investors for some of the additional risks associated with investing in growing companies.

“This investment forms the foundation of AIM as a critical growth platform for smaller companies.”

The letter is the latest warning to Ms Reeves to emerge in recent weeks, with the bosses of leading brokers such as Peel Hunt and Dame Julia Hoggett, chief executive of the London Stock Exchange, signalling that the viability of the junior London market would be threatened by the abolition of BR.

The Treasury has refused to comment on the intensifying speculation ahead of the Budge.

City sources said the companies’ collective letter had also been sent to other Treasury ministers as well as to Jonathan Reynolds, the business secretary.

It was sent amid estimates that the chancellor could need to raise as much as an additional £25bn from tax rises in order to avoid a return to austerity.

“The nature of BR legislation means that qualifying investors, who are advised to make these investment decisions as part of estate planning, take a long-term approach because they have little incentive to sell in fear of a market downturn,” the letter added.

“Recent uncertainty around the future of BR, created by media speculation, has significantly impacted the ability of AIM businesses to raise capital.

“A lack of clarity on the future of this relief has damaged investor confidence, showing clearly the close link between the relief and the future success of the market.

It added that the chancellor should use her inaugural Budget to restate Treasury support for BR for qualifying AIM-listed shares.

“High-growth businesses are critical to our economy, in terms of job creation, innovation and, increasingly, the ability to reinvigorate parts of the UK that have suffered from a lack of investment.

“Clear government support for BR will restore confidence in the AIM market and help it to play a key role in driving economic growth, ensuring the UK remains competitive for high-potential businesses.”

Other signatories included Brave Bison Group, Brickability, Brooks Macdonald, Comptoir Group, Crimson Tide, Hargreaves Services, Intelligent Ultrasound, Music Magpie, Ramsdens, Safestay and Union Jack Oil.

Octopus Investments and Cavendish both declined to comment.