Too good to be true? Sainsbury’s and ASDA merger – *Update 21/02/19*

Update by: Kayleigh Bishop

Updated – 21 February 2019

It appears that the pledge was too good to be true…

On 20 February 2019, the CMA published preliminary findings of the Sainsburys and ASDA merger. Our prediction of the CMA’s requirement for store closures was correct, however the potential extent was unforeseen. The CMA has indicated that if the merger is to progress, then the retailers need to consider the following options to maintain competition within the sector:

1. Potentially extensive Sainsburys and ASDA store closures (possibly beyond the 300 previously anticipated);
2. Close or sell to competitors stores that are in close proximity; or
3. The Sainsburys or ASDA brand may have to be sold to a competitor. It is rumoured that ASDA is likely to be the brand that is sold if this occurs.

The above three options (which we have summarised) may all have a more significant impact to Head Office staff than had previously been anticipated. The last two options may also mean Head Office staff could be TUPE transferred to other retailers. Settlement Agreements may be offered to staff, as an alternative to TUPE transfer or Redundancy. For further information regarding TUPE and Settlement Agreements, please see our main article below.

The retailers will now have until 6 March 2019 to provide a response in relation to the three options above.

We will keep you updated.

Original Article – 12 February 2019:

Too good to be true? Sainsburys and ASDA’s pledge not to close stores following merger.

In April 2018, Sainsburys and ASDA (the ‘Retailers’) announced their intention to merge, with Sainsburys buying ASDA from Walmart for an estimated £7.3bn. During the announcement regarding the intended merger on 28 April 2018, the Retailers stated that there were no planned store closures. However, was this pledge premature and too good to be true?

The Competition and Markets Authority (CMA) are currently investigating the impact of this merger on other supermarkets and on consumers. There is growing concern that post-merger the Retailers will hold too much of the market and thus there will not be enough competition for customers to choose from.

It is also feared that other retailers will have to increase their prices or make cost-efficiencies as a result. It has been reported that Tesco has announced 9,000 redundancies to achieve cost-savings and remain competitive on pricing.

Due to the concerns regarding market dominance, the CMA may insist that the merger can only proceed if up to 300 stores close (as reported by the BBC.) This in turn may trigger the Retailers converting stores from one brand to the other, although (as far as we are aware) this is not currently planned by the Retailers. The CMA’s decision is expected on 5 March 2019.

Whilst the CMA’s focus is the Retailers’ potential market dominance, its decision may also have significant and immediate implications for staff. Whilst employees in-store are likely to benefit from Union representation, many Head Office staff will need to obtain their own legal advice.

TUPE

If the merger proceeds, employees from the Retailers may be afforded additional protection (over and above their right not to be unfairly dismissed if they have two or more years’ service) under the Transfer of Under Takings (Protection of Employment) Regulations 2006 and their employment is to transfer from one retailer to another. TUPE protection against dismissal applies both pre and post-transfer, if the sole of principle reason for an employee’s dismissal is due to the transfer.

Whilst TUPE offers employees some protection against redundancy, if the employer has properly consulted and can show post transfer that there is an economic, technical, organisation reason to justify dismissals, then any resulting redundancies may be lawful. To circumvent the requirement for individual consultation or due to other commercial considerations, it is not unusual for employers to offer Head Office staff settlement agreements.

Whilst we have been unable to locate a policy to this effect, we know from representing ex-employees of major UK supermarkets that it has been common place for them to offer enhanced redundancy payments aligned with employee’s length of service if the employee signs a settlement agreement.

Settlement Agreements

A settlement agreement is a legally binding contract between employer and employee whereby an employee agrees, but for a few exceptions, to waive all claims that they may have against their employer (such as TUPE or Unfair Dismissal), in exchange for a sum of money (some of which is usually tax-free). It is common for settlement agreements to contain a confidentiality clause meaning that employees cannot disclose that they have signed a settlement agreement or what they have been paid under the terms of the same.

We anticipate that settlement agreements may be offered to some Head Office staff, if store closures are indeed required by the CMA for the merger to progress.

How we can help

If you have been offered a settlement agreement from ASDA, Sainsbury’s or Tesco, we will be able to assist in renegotiating the terms of the settlement agreement, or simply advise you on its terms and effect. It is usual for your employer to contribute towards our professional fees.

Here is what one of our recent clients has said about us:

“I have no hesitation recommending Oakwood Solicitors Ltd, who acted on my behalf in relation to a very complex situation with my previous employer – a major UK Supermarket.  The service that was provided was outstanding and I am very thankful to them for achieving such a positive result for me.”

Anonymous, Ex-Manager.

For more client reviews, please click here.

WHAT TO DO NEXT

For a free initial consultation, call our expert team on 0113 200 9720, or contact us online here to discuss how we can help you.