How much is a fair wage in the UK retail sector in 2025? With inflation, rising living costs, and a competitive labour market placing pressure on employers, it’s no surprise that the spotlight has turned once again to retail wages, especially at Tesco, the UK’s largest private-sector employer.
In response to economic conditions and ongoing union negotiations, Tesco has announced a significant wage increase for its store colleagues. The company will raise hourly pay in two phases throughout 2025.
Starting on 30 March, store employees will see their base pay rise from £12.02 to £12.45 per hour, with a second uplift to £12.64 taking effect by the end of August.
The pay deal, negotiated with the Union of Shop, Distributive and Allied Workers (Usdaw), is part of a £180 million investment in employee compensation this year.
For workers based in London, the location weighting also increases, meaning pay in the capital will go from £13.15 to £13.66, and then to £13.85 by late summer.
This move represents a 5.2% overall wage increase for store staff in 2025 and is designed not only to maintain Tesco’s competitiveness but also to address concerns raised by both employees and the union over the impact of the rising cost of living.
How Does Tesco’s 2025 Pay Rise Compare to Previous Years?
Tesco has maintained a steady record of increasing employee pay in recent years. Since April 2022, the company has raised wages for hourly-paid workers by a total of 32%, amounting to a cumulative investment of over £900 million.
When placed in context, the current year’s 5.2% pay increase stands out as one of the more substantial year-on-year jumps in recent times.
The following table illustrates how hourly wages have evolved for Tesco store staff over recent years:
| Year | Hourly Pay (National) | Increase (%) |
| 2022 | £10.10 | – |
| 2023 | £10.70 | 5.9% |
| 2024 | £11.02 | 2.9% |
| 2025 | £12.64 (Aug) | 14.7% over two years |
While other retailers are also raising wages, Tesco’s approach continues to be defined by its ongoing relationship with Usdaw, ensuring a structured and negotiated agreement that prioritises long-term worker wellbeing.
What Changes Are Being Made to Sunday Pay and Other Benefits?
Although the pay increase will benefit all store staff, the new agreement also introduces changes that are important for employees to understand. Most notably, Tesco will remove the 10% Sunday pay premium, an additional payment historically provided to compensate staff for weekend working hours.
This change aligns Tesco with broader retail trends, as several other major supermarket chains have phased out enhanced Sunday pay for new employees. At Tesco, the benefit had already ceased for new starters, but from 2025, it will no longer apply to existing staff either.
In recognition of the impact this may have, Tesco has confirmed that eligible employees will receive a one-off payment to offset the loss. While Tesco has not disclosed the specific amount or formula for this compensatory payment, it is expected to be issued alongside the March pay increase.
Tesco, however, has retained Bank Holiday premium payments, ensuring employees who work on public holidays will continue to receive additional compensation. This retention offers some balance in the overall benefits package.
How Is Pay Structured Across Regions and Roles at Tesco in 2025?
Tesco’s wage structure is differentiated by both geography and job function. Employees working in Greater London receive an additional London weighting, now rising to £1.21 per hour, bringing total hourly pay to £13.85 by August 2025.
The table below outlines Tesco’s 2025 pay rates across standard and London-based roles:
| Role | March 2025 Rate | August 2025 Rate | London Rate (Aug 2025) |
| Store Colleague | £12.45 | £12.64 | £13.85 |
| Delivery Driver | ~£12.75 | ~£12.94 | ~£14.15 |
| Warehouse Operative | ~£13.00 | ~£13.25 | ~£14.50 |
These estimates for non-store roles are based on past trends and proportional increases and may vary depending on department and location.
What Additional Benefits Are Included in Tesco’s 2025 Pay Deal?
In addition to base pay increases, Tesco has announced a refreshed benefits package aimed at enhancing employee welfare and engagement. Some of the key benefits include:
- Uncapped Colleague Clubcard Discounts: Previously capped at £2,000 annually, this discount has been revised to offer unlimited in-store savings for staff and one nominated household member.
- Enhanced Company Sick Pay: Eligible colleagues can now receive up to 20 weeks of company sick pay, a significant increase over previous limits.
- Virtual GP Access: Tesco continues to offer a free digital healthcare service that allows staff to consult with a GP online.
- Flexible Working from Day One: Employees can now request flexible work arrangements immediately upon joining.
- Family Leave Enhancements: The retailer offers 26 weeks of fully paid maternity leave and six weeks of fully paid paternity leave.
- Share Save Scheme and Retirement Plan: Tesco matches pension contributions up to 7.5%, and its award-winning share schemes remain available to eligible employees.
- Employee Assistance Programme: Free, confidential counselling and mental health support services are included in the benefits package.
Tesco’s leadership has repeatedly emphasised that these benefits form a crucial part of the company’s employee value proposition.
Matthew Barnes, CEO of Tesco UK, stated that the deal “recognises the brilliant work” of store colleagues and positions Tesco as a retail employer that supports long-term career development and wellbeing.
How Does Tesco’s Pay Rise Align With the National Living Wage in 2025?
The UK government has announced that from April 2025, the National Living Wage will rise to £12.21 per hour. Tesco’s updated base rate of £12.45 in March and £12.64 in August keeps the supermarket well above this threshold.
According to Usdaw, this pay structure ensures a meaningful gap between Tesco’s base rate and the statutory minimum, which is important in a time of increased scrutiny over wage fairness.
Moreover, by August, Tesco’s pay will exceed the Real Living Wage benchmark outside of London and match it within London, offering staff genuine financial breathing room.
Usdaw has called the pay agreement an example of a “modern and progressive relationship between trade unions and employers,” underscoring how negotiation and collaboration can lead to equitable outcomes for workers.
How Does Tesco’s Pay Compare With Other Major UK Supermarkets in 2025?
Tesco operates in a fiercely competitive labour market, where most large supermarket chains are under pressure to raise pay to attract and retain employees.
Here’s a comparison of hourly wages across leading UK grocery retailers as of mid-2025:
| Supermarket | Base Hourly Pay (Standard) | London Rate | Notes |
| Tesco | £12.64 (from August) | £13.85 | Retains Bank Holiday premiums |
| Aldi | £12.75 | £13.65 | Highest base rate in sector |
| Lidl | £12.75 | £13.80 | Competitive on both rates |
| Sainsbury’s | £12.00 | £13.20 | Raised in two phases |
| Asda | £11.80 | £12.90 | Below industry average |
Tesco’s rates are among the best, particularly when paired with its comprehensive benefits and unionised negotiation framework. While Aldi leads slightly on pay, Tesco offers a broader package that includes long-term career incentives and more consistent benefit structures.
What Does Tesco’s 2025 Pay Strategy Reveal About Its Long-Term Vision?
Tesco’s 2025 wage and benefits strategy appears to be more than a response to short-term inflation. It reflects a deliberate investment in workforce retention, brand reputation, and employee engagement.
With broader macroeconomic challenges including increases to employer National Insurance contributions and ongoing inflation, Tesco’s decision to maintain wage growth positions it as a leader in the evolving world of retail employment.
By not only raising wages but also enhancing non-wage benefits, Tesco is sending a clear signal: attracting and retaining skilled, motivated employees is a central part of its growth model moving forward.
Frequently Asked Questions About Tesco Pay in 2025
What is the current hourly rate for Tesco store staff?
As of 30 March 2025, it is £12.45. It will rise again to £12.64 by the end of August.
Do Tesco staff in London receive higher wages?
Yes, employees in London will earn £13.66 from March and £13.85 from August, inclusive of the £1.21 London weighting.
Has Tesco removed Sunday pay bonuses?
Yes, the 10% Sunday premium has been removed. A one-off payment will be made to affected employees.
Will Tesco retain Bank Holiday pay premiums?
Yes, Bank Holiday premiums will continue as part of the standard pay structure.
What are the other benefits offered by Tesco?
These include unlimited colleague discounts, enhanced sick pay, Virtual GP access, family leave, pension matching, and flexible working rights from day one.
How does Tesco’s pay compare to the UK National Living Wage?
Tesco’s pay exceeds the National Living Wage, which is set at £12.21 from April 2025.
Does Tesco negotiate wages with a trade union?
Yes, Tesco works closely with Usdaw to negotiate pay and conditions for all hourly-paid UK employees.
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