Investing.com -- Tesco (OTC:TSCDY) has announced a £180m investment that will raise the hourly pay for its store colleagues. The agreement, reached with trade union USDAW, will see pay rates increase from £12.02 to £12.45 per hour starting from March 30, 2025, and then to £12.64 per hour by the end of August 2025.
This two-step raise signifies an above-inflation increase of 5.2% and continues Tesco’s trend of significant investments in colleague pay and benefits in recent years. The £180m investment means that hourly-paid colleagues will have experienced a pay increase of 32% since April 2022, equivalent to an investment of over £900m.
Tesco is among the few supermarkets that recognize an independent trade union and negotiate pay rates with them for all its hourly-paid colleagues in the UK.
Along with this pay deal, Tesco will make other changes. The London allowance will increase by 7.1% to £1.21, raising rates from £13.15 per hour to £14.36 per hour. Sunday premium payments will be removed to align Tesco with other retailers, but eligible colleagues will receive a one-time payment, and Bank Holiday premiums will still be retained.
Other changes include an uncapped Colleague Clubcard discount for colleagues and their second Clubcard holder, replacing the previous £2,000 allowance. The maximum company sick pay entitlement will also be increased to 20 weeks for eligible colleagues.
In addition to its pay deal, Tesco continues to offer a leading package of colleague benefits. This includes a Virtual GP service, the right to request flexible working from the first day, and enhanced family leave policies, such as 26 weeks fully paid maternity and six weeks fully paid paternity.
Tesco also offers colleagues a Colleague Clubcard discount of up to 15% on their shopping, free food in store canteens, and a pay advance scheme. Furthermore, colleagues benefit from a competitive reward package that includes share save schemes, the Tesco Retirement Savings Plan which matches contributions up to 7.5%, an Employee Assistance Programme and more.
Matthew Barnes, Tesco UK CEO, stated: “Our colleagues are our greatest asset, and this pay deal recognises the brilliant work they put in day-in, day-out to serve our customers. It also represents another significant investment in our colleague pay, which combined with our fantastic package of benefits, means Tesco continues to be a place to get on and thrive in a fulfilling and rewarding career.”
Daniel Adams, USDAW National Officer, added: “It is a real achievement that Usdaw reps have been able to secure an above-inflation pay deal that builds on the negotiations of the last few years. Not only does it ensure a meaningful gap between the Tesco rates of pay and the National Living Wage in April, but it also means that in August, the basic rate of pay in Tesco will exceed the Real Living Wage rate outside of London and meet it within the M25. This, along with the other negotiated improvements, demonstrates the value of a modern and progressive relationship between independent trade unions and employers.”
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