Tesco has announced that it will invest £180 million in employee pay.

The move comes after the supermarket chain reached an agreement with trade union USDAW to hike the hourly pay for its in-store workforce from £12.02 to £12.45 from 30 March 2025, and again to £12.64 from the end of August.

Tesco said that the two-stage rate increase represents an above-inflation increase of 5.2 per cent.

The latest investment will mean that hourly-paid employees will have seen a pay increase of 32 per cent since April 2022, equivalent to a more than £900 million investment.

“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,” said Matthew Barnes, Tesco UK chief executive. “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.”

As part of the pay deal, Tesco is also promising to increase the London allowance to £1.21, up seven per cent.

The company said that to bring Tesco in line with other retailers it will remove Sunday premium payments, with eligible colleagues receiving a one-off payment.

In February, Lidl and Aldi announced they were increasing pay for employees.

In January, Sainsbury’s announced a five per cent pay increase for its 118,000 hourly-paid workers following what it described as its "biggest ever Christmas", with the raise to be implemented in two stages to manage inflation pressures.

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