The UK’s biggest retailer is to raise store worker pay by 5.2% over the next six months but strip away a 10% premium for working on a Sunday.
Tesco said it was to stagger the increase, with the full amount taking effect from the end of August after an initial rise at the end of this month, following talks with the Usdaw union.
It marks a £180m investment for Tesco and means its staff will remain comfortably over the new national living wage rate due to take effect on 1 April.
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The first rise also coincides with the hike in employer National Insurance contributions announced in last October’s budget.
It’s set to add £250m a year to Tesco’s costs.
The company employs more than 300,000 people in the UK. It revealed 400 job losses in January as part of efforts to “simplify” the business ahead of the tax change.
The new pay deal, while above the rate of inflation, will remove a 10% bonus enjoyed by staff when they work a shift on a Sunday.
Tesco, which had already removed the perk for new starters, said those affected by the loss of pay would receive a one-off payment to cover the next 18 months as it phased out the premium.
Tesco UK boss Matthew Barnes said: “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.
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“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, said of the agreement: “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.”
