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Tesco has announced a £200m investment to increase hourly pay for store and fulfillment centre colleagues by 5.1%, reaching £13.28 per hour from March 2026.
The new hourly rate, agreed with the trade union Usdaw, will increase to £13.28 on 29 March 2026, representing a 43% rise over the past five years.
For staff working within the M25, the London location allowance will increase to £1.27, bringing the total hourly rate to £14.55.
This investment of over £200m places the pay award above the current national inflation rate and further extends the margin between Tesco’s pay scales and the National Living Wage.
The agreement also includes a commitment to provide paid leave for staff experiencing domestic abuse, making Tesco the first major UK retailer to implement such a policy.
Other non-salary benefits maintained in the deal include 26 weeks of fully paid maternity leave, six weeks of fully paid paternity leave, and access to a virtual GP service.
The supermarket remains one of the few in the UK to maintain full collective bargaining agreements for all hourly-paid employees.
Staff will continue to receive a Colleague Clubcard discount of up to 15% and access to a retirement savings plan with employer contributions matched up to 7.5%.
The pay deal follows a series of investments in workforce benefits intended to support retention across the company’s retail and online operations.
Ashwin Prasad, Tesco UK CEO, said: “Our colleagues play a role in delivering for our customers every day. I’m pleased we’re able to announce this pay deal which reflects our appreciation for everything they do and represents an investment in colleague pay. Together with our benefits package, it reinforces Tesco as a place where people can build a career.”
Daniel Adams, Usdaw national officer, added: “Our Union Reps deserve credit for securing this pay deal. This deal delivers a real term increase to wages and extends the gap between the Tesco rates of pay and the National Living Wage. The Union is pleased that the business has agreed to be the first retailer to commit to providing paid leave to help support staff who experience domestic abuse. It demonstrates the value of a relationship between trade unions and employers.”
