Marvin OnumonuTesco has agreed a 5.1% pay rise for hourly-paid staff in stores and online fulfilment centres, following talks with union Usdaw.
The increase means hourly rates will go up to £13.28 from 29th March 2026.
The company said this was an investment of over £200m and is above the current national inflation rate.
Over the last five years, hourly pay has gone up by 43%.
The London location allowance will also rise from £1.21 to £1.27, bringing the hourly rate for colleagues within the M25 to £14.55.
Ashwin Prasad, CEO at Tesco UK, said: “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.”
Daniel Adams, national officer at Usdaw, said: “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.”
Adams added: “Taken together, it continues to demonstrate the value of a modern and progressive relationship between independent trade unions and employers.”
