Tesco workers benefit from tax-exempt discount scheme

Workers in one of Ireland's largest retail chains are to benefit from a novel 10% staff-discount scheme, introduced in October 1997 following its takeover by the UK-based giant, Tesco. A new collective agreement is also being negotiated for the company.

Employees in the Quinnsworth/Crazy Prices supermarket chain, purchased by the UK food retailing giant Tesco plc in March 1997 for IEP 600 million, are set to benefit from a new tax-exempt staff discount scheme.

The scheme, introduced by Tesco on 13 October, provides for a 10% discount on all purchases by Tesco employees. For example, an employee who spends an average of IEP 500 per month in one of the stores would save IEP 50. However, the real benefit to the employee is the fact that the Revenue Commissioners (which operate Ireland's tax regulations) have decided that the discount is not be regarded as a "benefit-in-kind".

Benefit-in-kind "perks", such as the provision of a company car, are taxable in Ireland but the 10% Tesco discount is being regarded by the Revenue in the same way as a price reduction for regular customers. The scheme has also helped to ease worker discontent after their claim for a so-called "goodwill" payment in the context of the Tesco takeover was turned down by the Labour Court. It may also help to ensure that workers endorse a proposed new collective agreement.

Following the takeover, unions representing a majority of the 8,300 employees involved sought a "goodwill" payment on the grounds that they should receive some monetary reward for the role which they played in developing their former company and in making it attractive to a purchaser. Their demand was rejected in a non-binding recommendation by the Labour Court on 29 July. The Court stated that there was no precedent for conceding such claims in the context of major mergers or acquisitions.

Union members, however, rejected the Court's recommendation and shop steward s of the largest of the four unions involved, Mandate, urged their executive to conduct a ballot for industrial action. While the Mandate executive agreed to hold a ballot, this was postponed indefinitely because Tesco and all four unions were in the process of concluding a proposed new collective agreement covering pay and conditions, which would replace the Quinnsworth/Crazy Prices agreement.

The terms of the proposed new agreement were due to be formally unveiled on 23 October and employees were expected to follow the advice of their unions and formally accept it.