Tesco has announced a 5.2% pay increase for its store staff but will scrap extra pay for Sunday shifts.
The UK’s largest supermarket chain confirmed that the hourly rate will rise by 43p to £12.45 from 30 March following an agreement with trade unions. A further increase will take pay up to £12.64 per hour from the end of August—just above the new National Minimum Wage of £12.21, which comes into effect in April.
However, Tesco will end the current 10% Sunday pay bonus for all staff, a benefit that had already been removed for new starters.
Pay Increases & Union Response
Tesco’s UK chief executive described the £180 million pay investment as a “significant commitment” to staff.
Meanwhile, the USDAW union confirmed that workers in London will see their pay rise to £13.66 per hour, followed by an increase to £13.85 per hour later in the year.
USDAW’s Daniel Adams welcomed the above-inflation pay rise, stating:
“This raise ensures a meaningful gap between Tesco’s rates of pay and the National Living Wage in April.”
Tesco also announced that staff affected by the loss of the Sunday pay bonus will receive a one-off payment, although the amount and calculation method remain unclear.
Retailers Compete for Staff Amid Labour Market Pressures
The move comes as major UK supermarkets increase wages to attract and retain workers amid a tight labour market.
- Sainsbury’s announced a 5% pay rise in January, implemented in two phases. However, it warned of slower recruitment in 2025 due to rising costs.
- Lidl, the German-owned discount chain, revealed in February that it will raise pay from £12.40 per hour to £12.75.
Economic Factors & Business Concerns
In the October Budget, Chancellor Rachel Reeves confirmed that from April, both the National Minimum Wage and employer National Insurance contributions will increase.
While businesses warn that these rising costs could lead to higher prices, job cuts, and store closures, unions have criticised companies for making such claims.
