A controversial month-long delay to a promised pay rise at Tesco has drawn widespread criticism, as some employees find themselves earning less than the minimum wage.

The delay, set to save the supermarket over £17 million, has left staff frustrated, especially as the increase was sanctioned by their union.

Tesco, a major UK employer with over 330,000 workers, had committed to raising the minimum pay for shop workers from £11.02 to £12.02 next month. However, the implementation of this pay hike is scheduled for 28 April, nearly a month after the legal minimum wage for those aged 21 and over increases to £11.44 on 1 April.

One Tesco employee expressed their frustration to The Guardian, stating, “We are all extremely angry at this, especially as this was approved by our union.”

The delay is permitted under HMRC rules, which allow minimum pay rates to be applied from the start of the “pay reference period” beginning on or after 1 April, in Tesco’s case, 28 April.

Missing out on £1 an hour

Based on the 220,000 workers affected by the delayed pay rise missing out on £1 an hour compared to the promised new rate, Tesco stands to save more than £17 million by introducing the pay rise at the end of April. It also saves 42p an hour compared to paying the new legal minimum wage for those aged 21 and over, amounting to over £7 million during the relevant period.

Daniel Adams, the national officer for the Usdaw union, which approved the new pay deal, explained, “While we would have preferred that the company implemented this increase earlier, as Usdaw had originally requested, the regulations do allow them to make that decision.”

Usdaw negotiated a substantial 9 percent pay increase next month, benefiting 220,000 people, making Tesco workers among the highest paid in the sector. Asda recently raised its minimum hourly pay to £12.04, and Sainsbury’s, Aldi, and Lidl increased pay to £12 an hour.

A Tesco spokesperson defended the delay, stating, “We are investing over £300 million in colleague pay, bringing our hourly rate to £12.02, which is significantly ahead of the national living wage, in a deal that has the full support of Usdaw.”

A track record of pay investments

The company emphasised its compliance with HMRC guidelines and highlighted a track record of substantial pay investments. Since 2022, hourly pay has increased by 26 percent, amounting to over £750 million invested in colleagues. Tesco also pointed to other enhanced benefits, including an increase in paternity leave to six weeks and an extension of the colleague discount allowance to £2,000 per year.

This controversy unfolds after Tesco upgraded its profit expectations for the year by £50 million to £2.75 billion in January, attributing its success to a “stronger trading performance than anticipated” during the festive period, partially credited to having “more colleagues on the shop floor, helping to deliver market-leading availability.”

 

 

 

 

Amelia Brand
Amelia Brand

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.