Nearly a quarter of a million Tesco store staff will receive a 3.1% increase in basic pay this year under a new deal that will also mean cuts to holiday and night-time bonuses. In a similar move, as businesses try to offset costs ahead of the introduction of the national living wage in April, retailer Wilko is considering cutting Sunday, holiday and overtime bonuses for staff.
Established staff at Tesco will get £7.62 an hour from July, in anticipation of the £7.20 minimum wage for over-25s introduced by the chancellor, George Osborne, but still less than the living wage calculated by independent campaigners.
New employees will see their pay rise from £7.02 to £7.20 in April, in line with government legislation, then to £7.24 in July.
All workers will receive time-and-a-half for Sunday and bank holiday shifts from July, meaning that thousands of staff who currently earn double pay for working on those days will lose out. Meanwhile, special payment for night work will only apply from midnight-6am, compared with 10pm-6am at present.
Tesco said 85% of staff would be better off under the pay deal and that those who had been negatively affected would be handed a lump-sum payment worth 18 months of the difference in pay.
But the wage rise puts Tesco’s terms and conditions well behind that of its rivals, including Sainsbury’s, Morrisons, Aldi and Lidl. Last summer, Sainsbury’s agreed to give 137,000 shopfloor staff a 4% rise to £7.36, its biggest increase in a decade, after pressure from low-pay campaigners.
Aldi pledged to increase staff wages to a minimum rate of £8.40 an hour from this month, while Lidl agreed to pay workers at least £8.20 in line with the living wage. Morrisons pays its workers £8.20 an hour – but it funded that change partly by cutting paid breaks and Sunday pay.
Wilko is consulting with its staff on cutting Sunday, bank holiday, overtime pay and bonuses for working in certain areas or in departmental management roles in return for a basic pay rise to £7.65 for over-25s and a rise to £7.20 for 21-to-24-year-olds.
Just over 40% of staff will lose out in some way, according to trade union GMB, which is consulting members about the Wilko pay deal. It said more than 2,000 workers would lose out by between £1,000 and £3,000, but that about 1,500 would benefit by the same amount.
“This is a real law of unintended consequences,” said Eamon O’Hearn, GMB national officer. “Osborne’s push for the national living wage has given businesses the opportunity to review their pay arrangements and in the current competitive market, to shift much of the burden on to low-paid staff. The introduction of this basic pay rise will leave a lot of people with a really sour taste in their mouth without the benefits for productivity increases or the wider economy.”
Matt Davies, the chief executive of Tesco in the UK and the Republic of Ireland, said: “We’ve spent a lot of time working with [trade union] Usdaw and colleague representatives to understand what’s important to colleagues. Together, we have 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.
“As well as an increase in pay, which puts our hourly rate well above the government’s national living wage, we remain absolutely committed to rewarding our colleagues with a pay and benefits package they really value, including a pension, colleague discount and 5% turnaround bonus.”
Pauline Foulkes, a national officer at Usdaw, said the total package for Tesco staff, including a 5% turnaround bonus that employees are on track to receive this year, was well ahead of the living wage and was one of the best in retail. “We believe the deal is the best that could be achieved in the circumstances and represents a significant investment in pay and benefits.”
Wilko was unavailable for comment.
- This article was amended on 3 February: Aldi is not accredited to the Living Wage Foundation as we said originally
