Tesco has agreed a pay increase of up to 3.1 per cent for its UK store staff.
The deal will affect 230,000 of the supermarket giant’s 320,000 UK employees, taking the hourly rate of its shop workers to £7.62.
The move comes ahead of the April introduction of the UK government’s national living wage, which will lift minimum hourly pay to £7.20 for over-25s, from its current level of £6.50, and to at least £9 an hour by 2020. Chancellor George Osborne announced the surprise measure in his Budget last July.
Tesco said its pay increase, which comes into effect on 3 July, will apply to all workers regardless of age who have worked at the business for more than nine months.
The deal also comes as the grocer, along with “big four” rivals Asda, Sainsbury’s and Morrisons, fights a fierce supermarket price war in a bid to maintain profit levels against discounters Aldi and Lidl.
Tesco said it has agreed the pay deal with union Usdaw.
The supermarket chain said the move will see its shop staff “benefit from one of the highest pay and benefits packages in retail”, which includes store discount, a pension and a 5 per cent turnaround bonus as the business bids to restore its fortunes.
The group said as part of the new pay package all staff will move to time-and-a-half payments for Sunday and bank holiday shifts from July.
It said a small number of staff had received double time for these shifts, but added that 85 per cent of staff affected will be better off under the new arrangements.
The firm said any workers negatively impacted by the changes will be supported with a lump sum transition payment worth 18 months of the difference in pay.
Tesco UK and Ireland chief executive Matt Davies said: “We’ve spent a lot of time working with Usdaw and colleague representatives to understand what’s important to colleagues.
“Together we’ve agreed one of the highest pay and benefits packages in retail for store colleagues, and introduced a simpler and fairer pay structure, including one approach to premium payments.”
Usdaw national officer Pauline Foulkes said: “We believe that the deal is the best that could be achieved in the circumstances and represents a significant investment in pay and benefits.”
On Monday, Motorway service operator Welcome Break said it will pay the new national living wage to all its workers, irrespective of age, giving some staff a 33 per cent pay rise.