Tesco is set to increase store worker pay by 5.2% over the next six months while removing a 10% premium for Sunday shifts.
The UK’s largest retailer disclosed that the pay raise will be phased in, with the full amount coming into effect by the end of August after an initial bump at the end of this month, following discussions with the Usdaw union.
This move represents a £180 million investment for Tesco and ensures that its employees will continue to earn above the new national living wage rate set to begin on April 1.
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The initial raise coincides with the increase in employer National Insurance contributions announced in last October’s budget.
This adjustment is expected to increase Tesco’s costs by £250 million annually.
The company has over 300,000 employees in the UK and announced 400 job losses in January as part of efforts to streamline the business before the tax change.
The revised pay agreement, while above the inflation rate, will eliminate a 10% bonus previously received by staff for working on Sundays.
Tesco, which had already discontinued the bonus for new employees, stated that those impacted by the pay reduction will receive a one-time payment covering the next 18 months as the premium is phased out.
Tesco UK chief Matthew Barnes stated: «Our employees are our most valuable asset, and this pay increase acknowledges the outstanding work they do every day to serve our customers.
«It also represents a substantial investment in our employee compensation, coupled with our excellent benefits package, making Tesco a place where individuals can progress and succeed in a fulfilling and rewarding career.»
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Daniel Adams, Usdaw national officer, commented on the agreement: «It is a significant accomplishment that Usdaw representatives have secured an above-inflation pay deal that builds upon the negotiations of recent years.
«This not only ensures a substantial gap between Tesco pay rates and the national living wage in April, but also means that by August, the base pay rate at Tesco will surpass the real living wage rate outside of London and meet it within the M25.»
Starting in April, the National Living Wage for individuals aged 21 and over will increase from £11.44 per hour to £12.21 per hour. The National Minimum Wage for those aged 18 to 20 will rise from £8.60 to £10.00 per hour.