Retail organisation Tesco will increase pay for hourly-paid store employees by 10.5% as part of a new pay deal, with the hourly rate set to reach £8.42 an hour by November 2018.
The pay rise will be implemented in three stages over the next two years. Pay will increase from £7.62 an hour to £8.02 an hour in November 2017, to £8.18 an hour in July 2018, and to £8.42 an hour in November 2018.
Premium payments for Sunday and bank holiday shifts will continue to be paid at time and a half until July 2018. After this, the rate for these shifts will decrease to time and a quarter. Any employees who will be negatively impacted as a result of this change will receive a lump sum transition payment in July 2018, worth 18 months of the difference in pay.
Under the new agreement, the established rate of pay will apply to employees after three months instead of the current nine-month policy. This will take effect from July 2017.
The pay deal also includes changes to the organisation’s maternity offering. From October 2017, eligible employees will be able to take an additional 14 weeks of maternity leave at half pay. This will enhance the maternity package from 14 weeks at full pay followed by 25 weeks at the statutory rate to 14 weeks at full pay, followed by 14 weeks at half pay, and then 11 weeks at the statutory rate.
In addition, the eligibility period for the maternity pay policy will reduce from two years’ service to one year of service from July 2018.
Tesco worked with trade union Usdaw and elected staff representatives to agree the pay deal.
Matt Davies, chief executive officer at Tesco UK, said: “This reward package sees our biggest investment in store pay for a decade, and gives [employees] 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 [staff].”
Pauline Foulkes, national officer at Usdaw, added: “Tesco’s recent difficulties are a matter of public record and the staff have played a big part in helping turn the [organisation] 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 [organisation] is prepared to invest in the staff to help grow the business.”