A union has begun a High Court fight with Tesco after complaining that workers at distribution centres are at risk of losing money as a result of a “fire and rehire” process.

Usdaw says Tesco is acting “unconscionably” by trying to “unilaterally remove” workers’ entitlement to retained pay.

Lawyers representing the union told a judge on Wednesday that Tesco was proposing to issue notices of termination and offer re-engagement on new terms which did not include retained pay.

Union bosses want Mrs Justice Ellenbogen to “restrain” Tesco.

Lawyers representing Tesco are disputing Usdaw’s claim.

They say Tesco is using a “contractual mechanism” open to employers.

Mrs Justice Ellenbogen, who is based in London, is overseeing an online High Court hearing due to end on Thursday.

Usdaw had announced in March that it was taking High Court action.

A spokesman said then that more than 70 workers at three Tesco distribution centres in England – two in Daventry, Northamptonshire, and one in Lichfield, Staffordshire, were at risk of having their “terms slashed through a fire and rehire process”, which would cost some of them “a third of their wages”.

He said “fire and rehire” was a “controversial process” where employers fired employees before rehiring them immediately afterwards, on less favourable terms and conditions.

A barrister leading Usdaw’s legal team on Wednesday told Mrs Justice Ellenbogen said Tesco was acting “unconscionably”.

In a written case outline, Paul Gilroy QC said: “The claimants’ position is that given the assurances to affected staff (analogous to contractual undertakings) the defendant now acts unconscionably in seeking to unilaterally remove entitlement to retained pay.

“Unless restrained, the defendant proposes to achieve this by issuing notices of termination and offering re-engagement on new terms which do not include any retained pay.”

He said Usdaw wanted “declaratory and injunctive relief” to restrain Tesco “from doing this”.

Three representative workers have also taken action alongside Usdaw.

Bruce Carr QC, who is leading Tesco’s legal team, told the judge that Usdaw’s claim should be dismissed.

“The defendant is entitled to terminate the relevant contracts in accordance with the notice provisions contained within them,” he told the judge, in a written case outline.

“Their reason for doing so is irrelevant save to the extent that it can be challenged in the Employment Tribunal.”

Usdaw is represented by Thompsons Solicitors.

Neil Todd, a lawyer at Thompsons, had said before the hearing started: “Tesco has used the uncertainty of job security in the pandemic to manipulate its workers into taking worse terms because they are so scared of losing their jobs.”

The hearing continues.