As we approach the final quarter of 2025, a major shift in Tesco’s pay structure is underway. In a two-phase rollout that began in March and concludes at the end of August, Tesco has implemented one of its most significant pay rises to date.
If you’re a Tesco employee, or considering a role within the company, understanding exactly what this means for your earnings, benefits, and working conditions is more important than ever.
This blog breaks down the 2025 Tesco pay rise, what you can expect in real terms, and how it compares across the UK retail sector. With the cost of living continuing to rise and wage reforms rippling across the economy, these changes offer key insights into the evolving role of compensation in the retail industry.
What Are the New Tesco Hourly Pay Rates for 2025?
Tesco’s 2025 pay structure involves two confirmed stages. The first stage took effect on 30 March 2025, raising the base hourly wage for store employees from £12.02 to £12.45. The second stage has been announced and is scheduled for implementation by the end of August, which will further increase the hourly rate to £12.64.
In London, employees benefit from a location-based allowance. The London rate moved from £13.15 to £13.66 with the March update. The second increase, taking the rate to £13.85, is also planned for the end of August but is not yet in effect.
These increases form part of Tesco’s £180 million investment in colleague pay for 2025, aimed at maintaining its competitiveness and helping staff cope with the rising cost of living.
Tesco Hourly Pay Rates – 2025
| Location | March 2025 Rate | Announced End-August 2025 Rate |
| Outside London | £12.45 | £12.64 |
| London (M25) | £13.66 | £13.85 |
By structuring these changes in phases, Tesco offers stability for employees and flexibility to respond to economic developments as the year progresses.
When Will Tesco’s Second Pay Rise Take Effect in 2025?
The second stage of Tesco’s 2025 pay rise has been confirmed but not yet implemented. It is scheduled to take effect by the end of August, increasing hourly pay to £12.64 for standard roles and £13.85 for employees in London.
For now, employees are receiving the first-stage rates implemented in March. The upcoming adjustment offers staff additional financial support heading into the later part of the year.
Tesco has committed to reflecting the change in employee payslips shortly after it goes into effect, ensuring transparency and predictability in earnings.
How Much Will Tesco Employees Earn Monthly Based on Hours Worked?
Understanding your income potential under the new 2025 rates is crucial for planning. The table below offers a clear breakdown of estimated weekly and monthly earnings for Tesco colleagues working common shift patterns.
Estimated Earnings Based on Weekly Hours
| Weekly Hours | March Rate (£12.45) | August Rate (£12.64) | Estimated Monthly (Post-August) |
| 20 hours | £249.00 | £252.80 | ~£1,094.62 |
| 30 hours | £373.50 | £379.20 | ~£1,641.94 |
| 37.5 hours | £466.88 | £474.00 | ~£2,052.42 |
| 40 hours | £498.00 | £505.60 | ~£2,190.25 |
To estimate your pay:
Weekly Pay = Hours × Hourly Rate
Monthly Estimate = Weekly Pay × 4.33
This calculation helps employees visualise their expected take-home pay and prepare for seasonal costs such as holidays or increased energy bills.
What’s Happening to Tesco’s Sunday Premium Pay and Buyout?
One of the most notable changes in Tesco’s 2025 pay structure is the removal of the 10% Sunday premium, previously given to employees who joined before July 24, 2022.
This decision aligns Tesco with other major retailers that have phased out enhanced Sunday pay as part of efforts to streamline payroll systems.
However, recognising the potential impact on affected staff, Tesco has introduced a one-off buyout payment. This lump sum compensates eligible employees for the removal of the premium by offering a financial cushion.
How Does the Sunday Premium Buyout Work?
- The buyout will reflect 18 months’ worth of the Sunday premium
- Calculated based on actual Sunday hours worked in 2024
- Offered only to eligible staff employed before the policy cutoff
This transitional support ensures fairness for long-serving employees, even as Tesco adopts a more standardised approach to weekend compensation.
How Are London-Based Tesco Employees Affected?
For those working in the capital, Tesco has increased its London allowance, recognising the elevated costs associated with working within the M25.
| Location | March 2025 Rate | End-August 2025 Rate |
| Outside London | £12.45 | £12.64 |
| London (M25) | £13.66 | £13.85 |
This increase represents a 7.1% uplift in the London premium, helping to match the London Living Wage and ensure that staff in the capital are compensated fairly in relation to regional expenses.
The update is a welcome move for employees in central and outer London, particularly those balancing long commutes, higher rents, and childcare costs.
How Does Tesco’s Pay Rise Compare with Other UK Supermarkets?
Tesco’s 2025 pay package positions it as a leading employer in the UK grocery retail sector. Below is a comparison of hourly wages across major competitors as of 2025:
| Supermarket | Hourly Pay (2025) |
| Tesco | £12.64 (up to £13.85 in London) |
| Sainsbury’s | £12.60 |
| Aldi | ~£12.40–£13.00+ |
| Lidl | £12.75 |
| Co-op | £12.00–£12.50 |
While several chains have lifted wages this year, Tesco’s pay rise, combined with its enhanced benefit offerings, places it at the forefront of employer value.
The two-stage implementation strategy and regional allowances make Tesco’s package both comprehensive and strategically forward-thinking.
What Additional Benefits Do Tesco Employees Get in 2025?
Tesco’s 2025 pay deal is not just about hourly rates. Employees are also benefiting from a broader set of improvements aimed at long-term support and wellbeing.
Expanded Sick Pay Entitlement
The eligible colleagues can now access up to 20 weeks of paid sick leave, a major improvement designed to support staff through extended health issues without the added burden of financial stress.
Shift Premiums for Added Responsibilities
Employees in shift leadership roles or night shifts will see enhanced premiums:
- Shift Leader Premium: £2.31 per hour
- Night Shift Premium: Increased by 5p per hour
These additions acknowledge the demands of complex and unsociable shifts, reinforcing Tesco’s commitment to fairness across all working patterns.
Unlimited Colleague Clubcard Discount
In 2024, Tesco scrapped the £2,000 annual cap on the Colleague Clubcard Discount, and that policy continues in 2025. Employees and a nominated second user can now enjoy:
- 20% discount on in-store and online shopping
- No annual limit
- Full access after three months of employment
This benefit provides substantial real-world savings on groceries and essentials, an important advantage amid rising household bills.
Will Tesco Continue This Pay Strategy Beyond 2025?
While the 2025 pay structure stands as one of Tesco’s strongest in recent years, many are curious about whether this strategy will continue beyond 2025. Several factors indicate a positive outlook.
Tesco’s ongoing collaboration with trade unions, consistent benchmarking against national wage standards, and continued investment in staff welfare all point towards a sustainable approach to fair pay.
However, with economic pressures expected in 2026, including higher employer national insurance contributions and inflation-driven costs, Tesco will likely need to adapt further.
Even so, the company’s actions in 2025 demonstrate a clear, long-term commitment to maintaining competitive and equitable compensation for its employees across the UK retail sector.
Who Negotiated the 2025 Pay Deal and Why Does It Matter?
The 2025 pay deal was negotiated between Tesco and USDAW, the Union of Shop, Distributive and Allied Workers. This longstanding relationship is significant because Tesco is one of the few retailers that engages directly with a recognised union for collective wage discussions.
This approach has allowed both parties to:
- Secure pay increases that beat inflation
- Create buyouts that respect employee tenure
- Protect working conditions and benefits
For staff, it means their interests are represented, and their voices have a place at the table.
Is the Tesco Pay Rise 2025 a Win for Employees?
The Tesco pay rise in 2025 is more than just a headline-grabbing wage increase. It reflects a broader shift in how retail giants approach their workforce, with better benefits, stronger support systems, and more equitable structures.
By increasing wages above inflation, removing outdated pay structures like the Sunday premium (with appropriate compensation), and enhancing sick pay and discounts, Tesco is working to ensure that its people feel valued and financially secure.
As the second pay rise approaches at the end of August, employees can look forward to tangible gains, particularly those in high-cost areas like London or in demanding roles like night shifts.
In a time when retail workers are more essential than ever, this pay deal sends a strong message that Tesco is investing in you.
Conclusion
The Tesco pay rise in 2025 marks a significant step forward in supporting retail staff amid rising living costs. With a structured two-stage increase, enhanced benefits, and fairer regional allowances, Tesco is reaffirming its commitment to employee wellbeing.
As the final phase of the pay deal rolls out, workers across the UK can look forward to improved financial stability and recognition for their vital roles within the business.
Frequently Asked Questions
Will Tesco’s new pay rates affect all departments equally?
Yes, the new pay rates apply broadly across store and fulfilment colleagues, but certain premiums, such as for night shifts or leadership roles, vary based on specific responsibilities.
Are Tesco fulfilment centre workers included in the pay rise?
Yes, fulfilment centre staff are included in the two-stage pay increase announced for 2025.
How does Tesco calculate the Sunday premium buyout?
The one-time payment is based on the actual Sunday hours worked in 2024 and compensates eligible employees for 18 months of lost premium pay.
Can Tesco staff calculate their new pay using an online tool?
While Tesco does not currently offer a dedicated calculator, employees can easily estimate earnings using the hourly rates and the method outlined above.
Will the London allowance increase again after August 2025?
There is no confirmed update beyond the August 2025 rate of £13.85, but future changes will likely be aligned with regional living cost reviews.
Do part-time workers receive the same hourly increase?
Yes, part-time employees benefit from the same hourly rate increases, proportional to their contracted hours.
What should Tesco employees do if they haven’t seen the pay rise reflected yet?
If your wage slip hasn’t updated according to the new pay schedule, you should contact your store manager or HR representative for clarification.
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