Tesco is set to give its shop workers a 9.1% pay rise, which will cost around £300 million.
This makes Tesco the latest supermarket to increase pay for its staff before the national minimum wage goes up on April 1. The national minimum wage will go from £10.42 per hour to £11.44. Tesco, which has over 330,000 employees in the UK, will increase the basic hourly rate for store workers from £11.02 to £12.02.
Workers within the M25 will see their pay go up to £13.15 per hour, from £11.95 for those in inner London and £11.75 for those in outer London. After agreeing with the Usdaw trade union, Tesco also announced it will increase paternity leave to six weeks fully paid and raise maximum sick pay entitlement to 18 weeks.
Matthew Barnes, Tesco UK chief executive, said: "This represents another significant investment in our colleagues, building on the last two years of investment. We recognise the amazing work our colleagues do every day in serving our customers and we're really proud to offer such competitive rates of pay alongside a great range of exclusive colleague benefits."
Tesco will also boost its annual Colleague Clubcard discount allowance to £2,000, up from £1,500. Usdaw national officer Daniel Adams said: "This deal not only delivers an inflation-busting increase for Tesco employees, but it also demonstrates the value of progressive employers engaging constructively with trade unions at a time when the cost-of-living pressures continue to be keenly felt by our members."
"We welcome the company's positive response through our negotiations, which have resulted in the largest investment in pay in a single year, with the highest entry rate for store employees of any major supermarket."
This news comes just days after rival Asda also announced an increase in its basic hourly rate to £12.04, set to take effect later this year.