Tesco increased its standard hourly pay for eligible store and online fulfilment centre colleagues to £13.28 per hour from 29 March 2026, up from £12.64 (a 5.1% increase).
Employees working within the M25 receive £14.55 per hour, including the updated London Location Allowance. The table below compares the new rates with the previous pay and highlights the changes.
| Pay detail | Confirmed information |
| New standard hourly rate | £13.28 |
| Previous standard rate | £12.64 |
| Percentage increase | 5.1% |
| New M25 hourly rate | £14.55 |
| New London allowance | £1.27 per hour |
| Effective date | 29 March 2026 |
| Employees covered | Eligible hourly-paid store and online fulfilment centre colleagues |
| Five-year pay growth | Approximately 43% |
Eligible hours worked from 29 March 2026 should be paid at the new rate. However, the payslip on which the increase first appears may depend on Tesco’s payroll period and cut-off date.
Employees should check the hourly rate, number of paid hours and any separate skill, location or shift premiums shown on their payslip.
What Is the Tesco Pay Rise 2026?
Tesco increased its standard hourly rate for eligible store and online fulfilment centre colleagues from £12.64 to £13.28 on 29 March 2026. The 64p increase represents a 5.1% rise in basic hourly pay.
Employees working within the M25 receive a higher rate because Tesco’s London Location Allowance increased from £1.21 to £1.27 per hour. This takes the combined hourly rate for eligible M25 colleagues to £14.55.
Tesco said the agreement represents an investment of more than £200 million in colleague pay. It was negotiated with the Union of Shop, Distributive and Allied Workers, commonly known as USDAW.
The announcement forms part of a wider round of supermarket pay rises in 2026, as major grocery employers compete for staff while adjusting their wage structures to remain above the statutory minimum.
Tesco and USDAW also reported that hourly pay for Tesco colleagues has increased by approximately 43% over the past five years. This figure refers to the cumulative rise in hourly pay rather than an additional increase being paid in 2026.
When Did the Tesco Pay Rise Take Effect?
The new Tesco hourly rates took effect on 29 March 2026. Eligible hours worked from that date should be calculated using the new basic rate.
The pay rise applies to eligible hourly-paid colleagues rather than salaried managers. Individual earnings may still differ because of:
- Contracted weekly hours
- Night or unsocial-hours premiums
- Skill or responsibility payments
- London and other location allowances
- Overtime arrangements
- Unpaid breaks or absence
- Pension and payroll deductions
The basic rate increase should normally be applied automatically.
Employees who believe an incorrect rate has been used should compare the pay period shown on their payslip with the 29 March start date before raising the issue through Tesco’s internal payroll or colleague-support process.
How Much Are Tesco Store Employees Paid in 2026?
The standard hourly rate for eligible Tesco store and online fulfilment centre colleagues is £13.28. This is an increase of 64p per hour from the previous £12.64 rate.
| Tesco pay measure | Previous rate | Rate from 29 March 2026 | Increase |
| Standard hourly rate | £12.64 | £13.28 | £0.64 |
| M25 hourly rate | £13.85 | £14.55 | £0.70 |
| London Location Allowance | £1.21 | £1.27 | £0.06 |
The £13.28 figure is a gross hourly rate. It is not the amount an employee will receive after Income Tax, National Insurance, pension contributions or other deductions.
Estimated Annual Tesco Earnings at £13.28 an Hour
The following examples show gross earnings based on 52 paid weeks. They do not include overtime, premiums, bonuses, unpaid absence or payroll deductions.
| Contracted hours per week | Estimated annual gross pay | Estimated annual increase |
| 20 hours | £13,811 | £666 |
| 30 hours | £20,717 | £998 |
| 37.5 hours | £25,896 | £1,248 |
| 40 hours | £27,622 | £1,331 |
For example, an employee working 37.5 paid hours each week would earn approximately £25,896 a year at the standard rate. This is around £1,248 more than the same number of hours paid at £12.64.
These are mathematical estimates rather than guaranteed salaries. Actual annual pay depends on the number of hours an employee is paid for during the year.
How Has Tesco Pay Changed Over the Past Five Years?
Tesco and USDAW said hourly-paid colleagues have received a cumulative pay increase of approximately 43% over five years.
The 2026 increase continues that longer-term pattern, but the 43% figure should not be presented as a single pay award. It reflects the combined effect of several separate pay reviews introduced over the five-year period.
The latest rise also increases the difference between Tesco’s basic rate and the statutory National Living Wage.
However, Tesco does not have the highest starting rate among every major UK supermarket, so it is more accurate to describe the company’s pay as competitive rather than industry-leading.
What Is the Tesco London Pay Rate in 2026?
Eligible Tesco colleagues working within the M25 receive £14.55 per hour following the 2026 pay increase.
The London rate consists of:
| Pay component | Hourly amount |
| Standard Tesco rate | £13.28 |
| London Location Allowance | £1.27 |
| Combined M25 rate | £14.55 |
The London Location Allowance increased from £1.21 to £1.27 per hour. When combined with the new national basic rate, this produced a total increase of 70p from the previous M25 rate of £13.85.
At £14.55 an hour, an employee working 37.5 paid hours a week throughout the year would have estimated gross earnings of approximately £28,373 before tax, National Insurance, pension deductions and any changes in hours.
The M25 rate should not automatically be described as applying to every employee who works in Greater London. Eligibility may depend on the employee’s workplace, role and Tesco’s location-pay rules.
Why Did Tesco Increase Pay in 2026?
Tesco described the agreement as an investment in the employees who support its stores and online operations.
The company also needs to remain competitive in a retail labour market where workers can compare hourly pay, guaranteed hours, staff discounts, pensions and family-leave policies across several large employers.
The increase was announced shortly before the statutory National Living Wage rose in April 2026. Raising Tesco’s rate to £13.28 preserved a clear margin above the legal minimum for workers aged 21 and over.
Competition is not limited to grocery businesses. Pay announcements such as the M&S pay rise for 2026 show that large retailers across the UK are reviewing frontline wages as they try to recruit and retain experienced employees.
Tesco’s investment should not be described as being caused by one factor alone. Legal wage changes, recruitment pressures, living costs, employee retention and negotiations with USDAW all form part of the wider context.
How Does Tesco Pay Compare With Other Supermarkets?
Tesco’s £13.28 basic rate is competitive but is not the highest starting rate offered by a major UK supermarket in 2026.
| Supermarket | National starting rate | London or M25 starting rate | Effective date |
| Aldi | £13.50 | £14.88 | 1 April 2026 |
| Lidl | £13.45 | £14.80 | 1 March 2026 |
| Tesco | £13.28 | £14.55 | 29 March 2026 |
| Sainsbury’s | £13.23 | £14.54 | March 2026 |
Tesco pays 5p more nationally and 1p more in London than the confirmed Sainsbury’s 2026 pay rate. However, Aldi and Lidl have higher entry-level rates in both the national and London comparisons.
The table compares starting basic rates only. It does not account for length-of-service increases, paid breaks, responsibility payments, night premiums, bonuses, pensions or employee discounts.
These additional terms can materially affect the overall value of a retailer’s employment package.
Rates should be dated and reviewed regularly. Do not leave older estimated figures in this table after a retailer has confirmed a new rate.
What Did Tesco Agree With USDAW?
The 2026 pay deal was negotiated between Tesco and USDAW, the recognised trade union representing Tesco’s hourly-paid colleagues.
The agreement confirmed:
- A 5.1% increase in the standard hourly rate
- A new basic rate of £13.28 from 29 March 2026
- An increase in the London Location Allowance to £1.27
- A combined M25 rate of £14.55
- A commitment to introduce paid leave supporting colleagues experiencing domestic abuse
USDAW National Officer Daniel Adams said the agreement delivered a real-terms wage increase and extended the difference between Tesco’s pay rate and the National Living Wage. He also welcomed Tesco’s commitment to paid domestic-abuse leave.
The public announcement did not provide every operational detail of the domestic-abuse policy. The article should therefore avoid stating a specific entitlement, implementation date or number of paid days unless those terms are confirmed in Tesco’s final policy.
Tesco is one of the relatively small number of major UK supermarkets that has a full collective-bargaining arrangement with an independent trade union covering hourly-paid colleagues.
What Benefits Do Tesco Employees Receive Alongside Pay?
Hourly pay is only one part of Tesco’s total employment package. Depending on eligibility, role and length of service, colleague benefits can include:
| Benefit | Published Tesco provision |
| Colleague Clubcard | A standard discount that increases during designated payday periods |
| Workplace pension | Tesco can match eligible employee contributions up to 7.5% |
| Maternity leave | Up to 26 weeks fully paid for eligible colleagues |
| Paternity leave | Up to six weeks fully paid for eligible colleagues |
| Healthcare support | Virtual GP access |
| Share schemes | Save As You Earn and other eligible colleague schemes |
| Employee support | Wellbeing and assistance services |
The Clubcard benefit should not be described simply as “up to 15% during selected periods.” Tesco vacancies commonly describe a standard 10% colleague discount that increases to 15% around designated payday periods.
Terms, exclusions and eligibility can change, so employees should use Tesco’s current colleague-benefits information as the final authority.
Benefits may depend on service length, contract type and scheme rules. They should not be treated as an automatic cash addition to the £13.28 hourly rate.
Does the Tesco Pay Rise Apply to Warehouse and Delivery Staff?
Tesco’s announcement specifically identified eligible store colleagues and employees working in online fulfilment centres.
An online fulfilment centre is not necessarily covered by the same pay arrangements as every Tesco distribution depot, warehouse or logistics operation. Employees in distribution, transport or specialist roles may have different contracts, premiums or negotiated pay structures.
The article should therefore avoid claiming that every Tesco warehouse employee automatically receives the £13.28 rate.
Delivery roles may also include separate skill payments or vacancy-specific rates.
Employees comparing these positions can use published Tesco delivery driver earnings as general context, but the rate stated in an individual Tesco vacancy or employment contract should take priority.
Employees who are uncertain whether the agreement covers them should check:
- The basic hourly rate on their payslip
- Their job title and employing Tesco business
- Their contract or latest pay communication
- Any separate skill or location premium
- Information supplied by Tesco or their USDAW representative
Is Tesco Pay Above the National Living Wage in 2026?
Yes. The statutory UK National Living Wage for 2026 is £12.71 per hour for eligible workers aged 21 and over from 1 April 2026.
Tesco’s standard rate of £13.28 is therefore 57p per hour higher.
| Comparison | Hourly rate |
| Tesco standard rate | £13.28 |
| National Living Wage for workers aged 21 and over | £12.71 |
| Difference | £0.57 |
For someone working 37.5 paid hours each week for 52 weeks, a 57p hourly difference is approximately £1,112 in gross annual pay.
This is a mathematical comparison, not a guaranteed increase in take-home income. Tax, National Insurance, pension deductions, hours worked and unpaid absence all affect the final amount an employee receives.
The statutory National Living Wage should not be confused with the voluntary real Living Wage calculated by the Living Wage Foundation. They are separate rates with different eligibility and enforcement arrangements.
What Did Tesco UK CEO Ashwin Prasad Say?
Tesco UK CEO Ashwin Prasad said colleagues play an important role in delivering for customers and described the agreement as another meaningful investment in colleague pay.
He also linked the wage increase with Tesco’s wider benefits package and its aim of providing employees with opportunities to build longer-term careers within the business.
The article should paraphrase his position or use a short, accurately attributed extract from Tesco’s announcement. It should not surround the genuine statement with unsupported commentary from unidentified workforce analysts.
How Does Tesco Support Employees Beyond Basic Pay?
Tesco’s employment package includes workplace benefits as well as hourly pay. Published benefits include pension contributions, family-leave policies, Colleague Clubcard discounts, share schemes, virtual GP access and employee-support services.
The company also committed through the 2026 agreement to introduce paid leave for employees affected by domestic abuse.
Eligibility and detailed terms can differ between employees. Benefits should therefore be presented as part of Tesco’s wider colleague package rather than as entitlements that apply identically to every person employed by the business.
What Does Tesco’s Pay Rise Mean for UK Retail?
Tesco is one of the UK’s largest private-sector employers, so a change to its basic hourly rate affects a substantial number of workers and can influence pay comparisons across the grocery sector.
The 2026 announcements from Tesco, Aldi, Lidl and Sainsbury’s show that supermarkets are competing on more than product prices. Starting wages, London allowances, paid breaks, pensions, staff discounts and family-leave policies have all become important recruitment considerations.
Tesco’s £13.28 national rate places it above the statutory minimum and slightly above Sainsbury’s, but below the starting rates offered by Aldi and Lidl. This makes Tesco competitive without justifying a claim that it is the highest-paying supermarket.
Future comparisons should be updated whenever another retailer changes its rate. Every table should include an effective date so that confirmed current pay is not mixed with old rates or estimates.
Conclusion
Tesco increased its standard hourly rate to £13.28 on 29 March 2026 following a 5.1% pay agreement with USDAW. Eligible colleagues working within the M25 receive £14.55 an hour after the London Location Allowance increased to £1.27.
The increase is worth approximately £1,248 a year before deductions for an employee working 37.5 paid hours every week, although actual earnings depend on contracted hours, premiums, absence and payroll deductions.
Tesco’s rate remains above the £12.71 National Living Wage for workers aged 21 and over. It is also slightly higher than Sainsbury’s basic rate, although Aldi and Lidl continue to offer higher supermarket starting rates.
Employees should confirm their individual position through their payslip, employment contract, Tesco colleague communications or USDAW representative, particularly if they work in distribution, delivery or another role with a separate pay structure.
Pay calculations in this article are gross estimates. Actual pay and take-home income depend on hours worked, tax, National Insurance, pension contributions, premiums and individual employment terms.
Frequently Asked Questions
How much does Tesco pay per hour in 2026?
Tesco’s standard hourly rate for eligible store and online fulfilment centre colleagues is £13.28 from 29 March 2026.
How much does Tesco pay inside the M25?
Eligible employees within the M25 receive £14.55 per hour. This consists of the £13.28 basic rate and a £1.27 London Location Allowance.
When did the Tesco pay rise begin?
The new rates took effect on 29 March 2026. The payslip on which the increase first appears may depend on the payroll period and cut-off date.
Does the pay rise apply to part-time employees?
Eligible hourly-paid part-time colleagues should receive the applicable new hourly rate. Their total weekly or annual increase will depend on the number of paid hours they work.
Does the £13.28 rate apply to Tesco warehouse employees?
Tesco’s announcement specifically covered eligible store and online fulfilment centre colleagues. Employees working in distribution depots, warehouses or specialist logistics roles should check their contract or Tesco pay communication rather than assuming the same rate applies.
Are Tesco delivery drivers paid £13.28 an hour?
Some delivery roles may receive the basic rate plus a separate skill, location or shift payment. The applicable rate should be confirmed from the employee’s vacancy, contract or payslip.
Is £13.28 the amount employees take home?
No. £13.28 is a gross hourly rate before Income Tax, National Insurance, pension contributions and other deductions.
Is Tesco paying above the National Living Wage?
Yes. Tesco’s £13.28 standard rate is 57p above the statutory £12.71 National Living Wage that applies to eligible workers aged 21 and over from 1 April 2026.
Editorial note: This article was reviewed and fact-checked on 23 July 2026 using official information published by Tesco, USDAW, the UK Government and the supermarkets included in the pay comparison.
Pay rates, benefits and employment terms can change, so employees should confirm their individual rate through their payslip, employment contract or official Tesco colleague communications.
Source Links
Tesco – 2026 Pay Increase Announcement
https://www.tescoplc.com/tesco-announces-over-200m-investment-in-pay-with-51-increase-for-hourly-paid-colleagues/
USDAW – Tesco Pay Deal 2026
https://www.usdaw.org.uk/latest-news/tesco-pay-deal-2026/
GOV.UK – National Minimum Wage Rates
https://www.gov.uk/national-minimum-wage-rates
GOV.UK – National Minimum Wage in 2026
https://www.gov.uk/government/publications/the-national-minimum-wage-in-2026/the-national-minimum-wage-in-2026
Tesco Careers – Colleague Benefits
https://www.tesco-careers.com/explore-our-world/benefits/
