The trade union has warned that the supermarket giant plans to tell workers at 39 stores across the South of England that they will lose 60p per hour in "location supplement" and have their night supplement reduced.

Staff in the south have received higher pay than staff in stores throughout the rest of the country because of the higher cost of living near London.

Asda, the UK’s third biggest supermarket, said it was now "out of line with the wider retail market" and meant some staff were paid differently despite working in stores nearby.

Fire and rehire, or “termination and re-engagement”, is the practice of dismissing employees with notice before offering to re-employ them immediately after termination, often on less generous terms. 

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The GMB Union claims Asda employees who do not agree will have the new contract imposed on them and could be dismissed If they refuse to sign. 

Nadine Houghton, GMB Organiser, said: “Cutting the pay of 7,000 low-paid, retail workers during a cost-of-living crisis is inexcusable. 

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“These slash and burn tactics, along with food and fuel price increases, will only ramp up if the merger goes ahead. TDR and the Issa Brothers will be using ASDA’s revenues to pay off their debt mountain – this is money that should be invested in stores, colleagues and ensuring proper competition in pricing. 

“ASDA’s workers and consumers should not bear the brunt of financial engineering from private equity.” 

An Asda spokesperson said: “We are holding a collective consultation in a small number of stores outside the M25 where colleagues are currently paid a legacy location supplement of 60p per hour on top of their existing rate of £11.00 per hour. 

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"This supplement is out of line with the wider retail market and has created an anomaly where some Asda colleagues in stores that are close together are paid different rates. 

"As part of this consultation, we are discussing a compensatory payment for colleagues in return for the removal of this location supplement, if the proposal goes ahead. These discussions are ongoing and no final decision has been taken.”