Supermarket giant Asda has been accused of threatening to “fire and rehire” thousands of workers in a dispute over pay.

The GMB union said there were plans to tell staff at 39 stores in southern England that they will lose a 60p-per-hour “location supplement” and have their night supplement reduced.

Those who do not agree will have the new contract imposed on them and could be dismissed if they refuse to sign, claimed the union, describing it as a “fire and rehire” threat.

Asda said it was consulting in a small number of stores where staff were paid a “legacy location supplement” which was out of line with the retail market.

The union said there were plans to implement the change in November.

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

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.

“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.”