The shopworkers union Usdaw has been given the green light by the supreme court to challenge Tesco’s controversial tactic of firing staff then rehiring them on less favourable contracts. The union was granted permission to proceed with a case after the appeal court overturned a high court ruling that banned Tesco from dismissing staff at its warehouses in Daventry and Litchfield and then seeking to re-employ them on lower pay. The Tesco case hinges on a promise of “retained pay” which the workers say was part of a permanent agreement dating to a deal in 2007 but which the supermarket argued was only in place for the life of the contracts that workers signed. Tesco said: “A very small number of colleagues in our UK distribution network receive a supplement to their pay, which was offered a number of years ago as an incentive to retain colleagues. “The vast majority of our distribution colleagues today do not receive this top-up, and so we took the decision to phase it out. We will continue to work constructively with the small number of colleagues affected to agree a way forward.” Union leaders say that employers are increasingly threatening to terminate workers’ contracts – leaving those workers with the choice of leaving their job or signing up to a worse deal – rather than attempt to reach an agreement with the employees or their union. Neil Todd, a trade union specialist at Thompsons solicitors, which is representing the workers, said: “We are delighted to have been given permission by the supreme court to proceed with this important case. The fight against fire and rehire is a pivotal one for the whole trade union movement.” A ruling by the supreme court would be the final say on the matter with no further option for appeal. The legal battle comes after UK government ministers last year scuppered a Commons bill that would have stopped fire and rehire saying that, while they opposed such actions, legislation was the wrong way to respond. The decision prompted anger from opposition parties and unions, with the TUC saying the government had “chosen to side with bad bosses”. The tactic has come under scrutiny in recent years as big companies have used it to alter pay and conditions. British Gas dismissed hundreds of engineers last year after they refused to accept a pay cut and longer, more antisocial, hours. Others accepted jobs on the new terms. Hundreds of bus drivers at Go North West, pilots at British Airways, and caterers and cleaners working on Ministry of Defence sites for ESS, part of the multinational Compass Group, had also fought against the tactic. The government has argued that companies in serious financial difficulty must have the option of offering staff new jobs if the alternative is closure. However, an analysis by the Observer found that nearly 70% of firms engaging in the practice were making a profit.