The Tesco Pay Rise 2026 increased the standard hourly rate for eligible store and online fulfilment centre colleagues from £12.64 to £13.28 per hour from 29 March 2026. This represents a 5.1% increase, backed by an investment of more than £200 million in hourly pay.
Eligible colleagues working within the M25 receive £14.55 per hour, after Tesco increased its London Location Allowance from £1.21 to £1.27 per hour.
The pay deal was agreed with retail trade union USDAW. It is separate from a later £65 million additional performance award for hourly-paid colleagues identified in Tesco’s 2025/26 results.
| Tesco Pay Detail | 2026 Rate |
| Standard Hourly Rate | £13.28 |
| Previous Hourly Rate | £12.64 |
| Hourly Increase | £0.64 |
| Percentage Increase | 5.1% |
| M25 Hourly Rate | £14.55 |
| London Location Allowance | £1.27 |
| Effective Date | 29 March 2026 |
Last Updated: 17.08.2026
What Is The Tesco Hourly Pay Rate In 2026?
Tesco’s standard hourly rate for eligible store and online fulfilment centre colleagues is £13.28 per hour from 29 March 2026.
The previous standard rate was £12.64, meaning eligible workers receive an additional 64p for every basic hour worked.
Employees within the M25 receive a higher rate. Tesco increased its London Location Allowance to £1.27, taking the combined hourly rate to £14.55.
These figures refer to basic hourly pay. Actual earnings can differ depending on the employee’s role and working arrangements, including:
- Contracted Hours
- Overtime
- Location Payments
- Skill Payments
- Shift Premiums
- Unpaid Absence
- Pension Contributions
- Tax And National Insurance Deductions
Employees in specialist, distribution or delivery positions should check their individual contract or payslip because separate pay arrangements may apply.
When Did The Tesco Pay Rise Take Effect?
The Tesco Pay Rise 2026 took effect on 29 March 2026.
Eligible hours worked from that date should therefore be calculated using the new £13.28 basic hourly rate. The exact payslip on which an employee first saw the increase may have depended on Tesco’s payroll period and cut-off dates.
The change arrived shortly before the statutory National Living Wage increased to £12.71 per hour for workers aged 21 and over from 1 April 2026.
This means Tesco’s £13.28 standard rate remains above the statutory minimum.
How Much Extra Will Tesco Employees Earn From The 2026 Pay Rise?
The increase from £12.64 to £13.28 adds 64p for each basic hour worked.
Its value therefore depends heavily on an employee’s paid weekly hours.
| Weekly Hours | Extra Per Week | Approx. Extra Per Month | Extra Per Year |
| 16 Hours | £10.24 | £44.37 | £532.48 |
| 20 Hours | £12.80 | £55.47 | £665.60 |
| 30 Hours | £19.20 | £83.20 | £998.40 |
| 37.5 Hours | £24.00 | £104.00 | £1,248.00 |
| 40 Hours | £25.60 | £110.93 | £1,331.20 |
These figures are gross estimates based on 52 paid weeks.
For example, somebody working 37.5 paid hours every week receives an additional £24 in gross basic pay per week, equivalent to about £1,248 over a full year.
At the new £13.28 rate, estimated annual basic earnings would be:
| Weekly Hours | Estimated Annual Gross Pay |
| 16 Hours | £11,048.96 |
| 20 Hours | £13,811.20 |
| 30 Hours | £20,716.80 |
| 37.5 Hours | £25,896.00 |
| 40 Hours | £27,622.40 |
Actual take-home pay will be lower where Income Tax, National Insurance, workplace pension contributions or other deductions apply.
Did Tesco Employees Receive A Bonus In 2026?
Tesco also identified a £65 million additional performance award for hourly-paid colleagues in its 2025/26 preliminary results.
This should be treated separately from the Tesco Pay Rise 2026.
The £200 million-plus pay investment relates to the change in basic hourly rates, while the £65 million figure relates to an additional performance award.
Employees should not assume that £65 million was divided equally between every Tesco worker.
Individual eligibility, payment arrangements and amounts may depend on Tesco’s specific award rules and the employee’s circumstances.
The distinction matters because the basic wage increase permanently changes the applicable hourly rate, whereas a performance award is a separate form of reward.
What Did Tesco Agree With USDAW?
Tesco reached its 2026 hourly pay agreement following negotiations with USDAW, the Union of Shop, Distributive and Allied Workers.
The main elements included:
- A 5.1% Increase In Basic Hourly Pay
- A New Standard Rate Of £13.28
- A Higher London Location Allowance Of £1.27
- A Combined M25 Rate Of £14.55
- Continued Investment In Employee Benefits
- A Commitment To Paid Domestic Abuse Leave
USDAW said the deal increased the difference between Tesco’s hourly rate and the statutory National Living Wage.
Tesco has also reported that hourly pay for colleagues has increased by approximately 43% over five years.
That figure represents cumulative changes over several pay agreements rather than a single 43% increase in 2026.
What Paid Domestic Abuse Leave Has Tesco Announced?
A notable part of Tesco’s 2026 employment package is its commitment to introduce a domestic abuse policy providing up to three days of paid leave for affected colleagues.
The measure is intended to allow employees experiencing domestic abuse to take paid time away from work when support is most needed.
This provision sits alongside the basic Tesco Pay Rise 2026 rather than forming part of the £13.28 hourly rate.
Employees should check Tesco’s current internal policy for the final eligibility requirements, application process and operational details because these may be more detailed than the original announcement.
Tesco Pay Rise Timeline: Introduction, Recent Changes, Ongoing Updates And What Comes Next
Tesco’s 2026 wage increase forms part of a longer period of increases in frontline retail pay rather than being an isolated change.
| Date | Tesco Pay Development |
| 2024 | Tesco’s standard hourly rate reached £12.02 |
| 30 March 2025 | Basic hourly pay increased from £12.02 to £12.45 |
| End Of August 2025 | The second stage of the 2025 deal increased pay to £12.64 |
| 18 March 2026 | Tesco announced its new 5.1% pay agreement |
| 29 March 2026 | The £13.28 hourly rate took effect |
| April 2026 | Tesco’s results identified a £65m additional performance award for hourly-paid colleagues |
| September 2026 | The £13.28 national and £14.55 M25 rates remain the key confirmed Tesco hourly rates |
| Later In 2026 | Further implementation details around Tesco’s domestic abuse support policy may become relevant |
| October 2026 | The Low Pay Commission is due to make recommendations for the April 2027 National Living Wage |
| April 2027 | A new statutory National Living Wage is expected to take effect, potentially influencing future retailer pay reviews |
The 2025 agreement is particularly important when looking at the timeline because it was introduced in two stages. Pay first moved from £12.02 to £12.45 before rising again to £12.64 later in the year.
The 2026 Tesco pay rise then increased the basic rate by another 64p to £13.28.
No confirmed Tesco hourly rate for 2027 has yet been announced. Any future Tesco increase will depend on a new company pay decision or negotiated agreement rather than automatically following projections for the statutory minimum wage.
Is Tesco Pay Above The National Living Wage In 2026?
Yes. Tesco’s standard £13.28 hourly rate is above the statutory National Living Wage of £12.71 per hour applying to eligible workers aged 21 and over from 1 April 2026.
| Comparison | Hourly Rate |
| Tesco Standard Rate | £13.28 |
| 2026 National Living Wage | £12.71 |
| Difference | £0.57 |
Tesco therefore pays 57p per hour above the statutory rate at its standard £13.28 level.
For someone working 37.5 paid hours a week, that difference is worth approximately £1,111.50 in gross pay over 52 weeks compared with being paid exactly £12.71 per hour.
The statutory National Living Wage should not be confused with the voluntary real Living Wage.
Does Tesco Pay The Real Living Wage In 2026?
The voluntary real Living Wage is calculated separately from the statutory National Living Wage and is based on estimates of living costs.
The current rates are £13.45 across the UK and £14.80 in London.
| Pay Measure | Hourly Rate |
| Tesco Standard Rate | £13.28 |
| Statutory National Living Wage | £12.71 |
| Real Living Wage | £13.45 |
| Tesco M25 Rate | £14.55 |
| London Living Wage | £14.80 |
Tesco’s £13.28 standard rate is therefore 17p below the current voluntary real Living Wage.
Its £14.55 M25 rate is 25p below the current London Living Wage.
However, the comparisons are not completely identical because Tesco’s M25 allowance and the Living Wage Foundation’s London rate do not necessarily use exactly the same geographical eligibility rules.
How Does Tesco Pay Compare With Other UK Supermarkets?
Tesco remains competitive among the major supermarkets, although it does not have the highest entry-level hourly rate.
| Supermarket | Standard Starting Rate | London Or M25 Rate |
| Aldi | £13.50 | £14.88 |
| Lidl | £13.45 | £14.80 |
| Tesco | £13.28 | £14.55 |
| Sainsbury’s | £13.23 | £14.54 |
Aldi currently has the highest of these basic starting rates at £13.50 nationally, followed by Lidl at £13.45.
Tesco’s £13.28 rate is 5p above Sainsbury’s £13.23 basic rate, while the Tesco M25 rate is 1p above Sainsbury’s stated London base rate.
Basic hourly pay does not provide a complete comparison of employment packages. Paid breaks, length-of-service rates, pensions, family leave, discounts and other benefits can substantially affect the overall value of working for each supermarket.
What Benefits Do Tesco Employees Receive Alongside Pay?
Tesco’s employment package extends beyond basic hourly pay.
Depending on eligibility and scheme rules, benefits can include:
- Colleague Clubcard Discounts
- Workplace Pension Contributions
- Enhanced Maternity And Paternity Leave
- Virtual GP Access
- Share Saving Schemes
- Wellbeing Support
- Family Leave Policies
- Employee Assistance Services
Tesco has previously stated that eligible colleagues can receive up to 26 weeks of fully paid maternity leave and up to six weeks of fully paid paternity leave.
Its Colleague Clubcard typically provides a standard colleague discount with higher discount periods around designated payday events.
The value of benefits should not simply be added to the £13.28 hourly wage because eligibility and usage vary between employees.
Does The Tesco Pay Rise Apply To Warehouse, Fulfilment And Delivery Staff?
Tesco’s main 2026 pay announcement specifically covered eligible colleagues working in stores and online fulfilment centres.
That does not necessarily mean every distribution centre, warehouse, transport or specialist logistics employee receives exactly £13.28.
A customer fulfilment centre used for online grocery operations may operate under different arrangements from a Tesco distribution depot supplying stores.
Delivery positions can also have different rates because some jobs include:
- Skill Payments
- Location Allowances
- Shift Premiums
- Role-Specific Rates
- Different Contractual Terms
Employees should therefore use the rate shown in their employment contract, latest Tesco pay communication or payslip as the best indication of the rate applying to their role.
Is The Tesco Pay Rise Still Above Inflation In 2026?
The Tesco Pay Rise 2026 was announced as an above-inflation increase.
The latest Consumer Prices Index figure available in September 2026 shows UK CPI inflation at 3.1% in the 12 months to August 2026.
That is lower than Tesco’s 5.1% headline pay increase.
However, the figures should not be interpreted as meaning every employee is exactly 2 percentage points better off in real terms.
The pay award and latest annual inflation measurement cover different periods, while individual household costs can also rise at different rates.
The comparison nevertheless shows why the Tesco wage increase continues to be significant within the 2026 retail pay environment.
Could Tesco Pay Increase Again In 2027?
Tesco has not yet confirmed a 2027 hourly pay rate.
However, another review is likely to attract attention because the statutory National Living Wage will change again from April 2027.
The Low Pay Commission’s current indicative calculations suggest that a National Living Wage somewhere between £13.02 and £13.34 could be required to maintain the government’s two-thirds-of-median-earnings benchmark, with a central estimate of £13.18.
These are projections rather than confirmed rates.
The final recommendation is expected later in 2026, and the government will then decide the statutory rate applying from April 2027.
Tesco could choose to maintain a margin above the statutory minimum, but the size of any future Tesco Pay Rise 2027 cannot be confirmed until the company announces or agrees its next pay deal.
What Does The Tesco Pay Rise Mean For UK Retail Workers?
Tesco is one of Britain’s largest private-sector employers, so changes to its frontline hourly rate have wider significance across the retail labour market.
The Tesco Pay Rise 2026 arrived during another competitive period for supermarket wages.
Aldi, Lidl, Sainsbury’s and other major retailers have also increased pay as employers compete for experienced frontline employees while responding to higher statutory wage levels.
The competition increasingly extends beyond the headline hourly figure.
Retail employees can compare employers on factors such as pensions, paid breaks, family leave, discounts, guaranteed hours, location premiums and opportunities to progress.
Tesco’s £13.28 rate is not the highest supermarket starting rate in 2026, but it remains above the statutory National Living Wage and represents another substantial increase compared with Tesco’s pay levels only a few years earlier.
Conclusion
The Tesco Pay Rise 2026 increased the standard hourly rate for eligible store and online fulfilment centre colleagues to £13.28 from 29 March 2026, representing a 5.1% rise from £12.64.
Eligible colleagues within the M25 receive £14.55 per hour, including Tesco’s £1.27 London Location Allowance.
A 37.5-hour worker earns around £24 more in gross basic pay each week compared with the previous rate, equivalent to approximately £1,248 over 52 paid weeks.
The basic wage increase should also be distinguished from Tesco’s separate £65 million additional performance award for hourly-paid colleagues.
Tesco continues to pay above the £12.71 statutory National Living Wage, although its standard rate remains below the voluntary £13.45 real Living Wage.
No Tesco Pay Rise 2027 has yet been confirmed, making the next statutory minimum wage decision and future Tesco-USDAW negotiations the main developments to watch.
Frequently Asked Questions
How Much Does Tesco Pay Per Hour In 2026?
Tesco pays a standard £13.28 per hour to eligible store and online fulfilment centre colleagues from 29 March 2026.
How Much Does Tesco Pay Inside The M25?
Eligible Tesco colleagues working within the M25 receive £14.55 per hour, consisting of the £13.28 basic rate and £1.27 London Location Allowance.
When Did The Tesco Pay Rise Start?
The new Tesco hourly rates became effective from 29 March 2026.
How Much Extra Is The 5.1% Tesco Pay Rise Worth?
The basic rate increased by 64p per hour. For someone working 37.5 paid hours each week, that equals approximately £24 extra per week or £1,248 over 52 weeks before deductions.
Do Part-Time Tesco Employees Get The Pay Rise?
Eligible hourly-paid part-time colleagues should receive the applicable new hourly rate. The total value of their increase depends on how many paid hours they work.
Do Tesco Warehouse Workers Get The Same Pay Rise?
Not necessarily. Tesco’s main announcement covered stores and online fulfilment centres. Distribution depots, transport operations and specialist logistics roles can have separate pay structures.
Did Tesco Staff Receive A Bonus In 2026?
Tesco’s 2025/26 results identified a separate £65 million additional performance award for hourly-paid colleagues. This should not be confused with the permanent 5.1% increase in the standard hourly rate.
