Tesco has reached an agreement with trade union Usdaw that will increase the hourly pay rate for colleagues in stores and online fulfilment centres to £13.28 an hour from 29 March 2026.
This 5.1% pay award – an investment of over £200m – is above the current national inflation rate and builds on the significant investment Tesco has made in colleague pay and benefits in recent years.
As part of the deal, the London Location Allowance will also increase from £1.21 to £1.27, equating to an hourly rate of £14.55 for colleagues within the M25.
Over the last five years, Tesco’s hourly-paid colleagues have seen a pay increase of 43%, as the supermarket has focused on supporting its workforce with a market-leading package of pay and benefits. In this period, Tesco has enhanced other benefits available to colleagues to include a virtual GP service, and enhanced family leave policies such as 26 weeks fully paid maternity and six weeks fully paid paternity leave.
Colleagues also benefit from a competitive reward package that includes a Colleague Clubcard discount of up to 15% on their shopping, a retirement savings plan which matches contributions up to 7.5%, share saving scheme, and an Employee Assistance Programme.
“Our colleagues play a vital role in delivering for our customers every single day. I’m pleased we’re able to announce this pay deal which reflects our deep appreciation for everything they do and represents another meaningful investment in colleague pay.
“Together with our comprehensive benefits package, it reinforces Tesco as a place where people can build a rewarding, long‑term career and continue to grow and thrive.”
Ashwin Prasad, Tesco UK CEO
Tesco is one of the few supermarkets in the UK to have full recognition and collective bargaining agreements with an independent trade union for all its hourly-paid colleagues.
“Our Union Reps across the business deserve a significant amount of credit for securing this pay deal – whether they are a Rep in-store or part of the negotiating team. This deal builds on the negotiations of the last few years and not only delivers a real terms increase to wages but extends the gap between the Tesco rates of pay and the National Living Wage.
“The Union is also particularly 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 – something that could make a huge difference for those affected. Taken together, it continues to demonstrate the value of a modern and progressive relationship between independent trade unions and employers.”
Daniel Adams, Usdaw National Officer
