Tesco has announced a two-year deal to increase hourly pay rates by 10.5%, in what it has dubbed its biggest-ever investment in staff.
The commitment will see basic pay for store staff increase from the current rate of £7.62 to £8.42 an hour by November 2018.
Tesco said the changes, together with its benefits package, which includes colleague bonus plan and pension, would take the average store colleague to an equivalent hourly rate of £9.52 by 2020.
However, there was a sting in the tail for staff, as Tesco revealed it is to take the axe again to overtime and Sunday working premiums. These will stay at time-and-a-half until 2020 but subsequently be cut to time-and-a-quarter.
It follows the controversial move by Tesco to cut premiums announced last February, before which some staff were earning double time for unsociable hours and Sundays.
However, Tesco said the move to retain premiums “bucked” the trend across the retail sector. It said any colleagues negatively affected by the changes would be supported with a lump sum transition payment worth 18 months of the difference in pay, to be paid in July next year.
As part of today’s deal, Tesco also announced what it called a “significantly improved” maternity package from October 2017, which will see an additional 14 weeks’ half pay for all staff on maternity leave. The eligibility period will also reduce from two years’ service to one year from July 2018.
Tesco claimed the pay package had left 97% of colleagues better off.
Tesco UK CEO Matt Davies said: “This reward package sees our biggest investment in store pay for a decade, and gives colleagues a sustainable pay deal that rewards them for everything they do, while allowing us to also attract new talent.
“We also want to do all we can to help working parents and that’s why we are proud to offer a much improved maternity package to our colleagues.”
Usdaw also described the deal as a significant step forward for Tesco staff.
Usdaw national officer Pauline Foulkes said: “Tesco’s recent difficulties are a matter of public record and the staff have played a big part in helping turn the company around. Last year they received a one-off 5% bonus in recognition of that. So we are delighted to have negotiated a permanent substantial pay rise that averages over 5% a year for the next two years. We have managed to retain premium pay for Sunday and bank holiday working, despite a partial consolidation, even though most major retailers have now moved to a flat rate.
“This pay deal is a big step forward and shows that the company is prepared to invest in the staff to help grow the business.”
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