Sophia HamiltonTesco / USDAW Pay Agreement 2026: A Complete Guide for Workers
The Tesco and USDAW (Union of Shop, Distributive and Allied Workers) Pay Agreement 2026 is one of the most significant collective pay deals in British retail history. Announced on 18 March 2026 and effective from 29 March 2026, it delivers a 5.1% pay increase for approximately 300,000 store and online fulfilment colleagues, backed by an investment of over £200 million. This guide explains what the agreement means for you — covering pay, leave, redundancy, notice periods, pension rights, and the landmark domestic abuse leave provision that makes this deal a first for UK retail.
What Is the Tesco / USDAW Pay Agreement?
The Tesco / USDAW Pay Agreement is a voluntary collective agreement negotiated between Tesco plc, the UK's largest private-sector employer, and USDAW, the trade union that represents shop workers across British retail. The two organisations have maintained a formal voluntary recognition arrangement for more than 30 years under the framework set out in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA 1992), which enshrines the right of recognised trade unions to bargain collectively on pay, hours, and working conditions on behalf of their members.
The 2026 agreement covers approximately 300,000 colleagues working in Tesco stores and online fulfilment centres across England, Scotland, Wales, and Northern Ireland. Its scope includes hourly-paid retail assistants, customer assistants, warehouse operatives, and online picking staff. The deal runs from 29 March 2026 to 28 March 2027, at which point negotiations for the following year's agreement will begin.
USDAW's recognition at Tesco means that terms agreed in collective bargaining are incorporated into individual contracts of employment. Employees covered by the agreement benefit automatically from its provisions — you do not need to be a union member to receive the pay rate, though membership entitles you to representation, legal advice, and other member services.
Pay and Pay Award 2026
The headline of the 2026 agreement is a 5.1% increase in the basic hourly rate, raising pay to £13.28 per hour with effect from 29 March 2026. This represents an investment of over £200 million by Tesco in its workforce and sits £1.07 above the 2026 National Living Wage (NLW) of £12.21 per hour — the statutory floor set by the government under the National Minimum Wage Act 1998 for workers aged 21 and over.
The 2026 rate is part of a sustained pay trajectory. Over the preceding five years, Tesco colleagues have seen their hourly rate rise by a cumulative 43%, with the company investing more than £900 million in colleague pay since April 2022. The previous year's two-stage award moved the rate from £12.02 to £12.64, meaning the 2026 increase of £0.64 per hour represents a meaningful continuation of that upward path.
Key pay figures at a glance (as of 2026):
| Rate | Amount (per hour) |
|---|---|
| Tesco / USDAW agreed rate (from 29 March 2026) | £13.28 |
| National Living Wage (statutory minimum, 21+) | £12.21 |
| London rate (Tesco London allowance applies) | £13.28 + £1.21 = ~£14.49 |
The London allowance of £1.21 per hour applies to colleagues working in Tesco stores and facilities within the Greater London area, reflecting the higher cost of living in the capital.
For part-time colleagues, the hourly rate applies proportionally. If you work 20 hours per week, your gross weekly pay under the agreement would be approximately £265.60 before tax and National Insurance.
Working Hours and Leave Entitlement
The Working Time Regulations 1998 (WTR 1998) set the statutory minimum annual leave entitlement for all workers in Great Britain at 28 days per year (including bank holidays), which equates to 5.6 weeks for a standard full-time employee. This is the legal floor, and Tesco colleagues are entitled to at least this level of paid leave from their first day of employment.
Public holidays: The UK observes eight public holidays in England, Scotland, Wales, and Northern Ireland (with some variation in Scotland and Northern Ireland). These eight days are typically included within the 28-day statutory entitlement at Tesco.
Rest breaks: Under WTR 1998, workers are entitled to:
- A 20-minute rest break during shifts of more than six hours
- A minimum of 11 consecutive hours' rest between shifts
- At least one day off per week
Tesco's working patterns across stores and fulfilment centres include full-time, part-time, and variable-hours contracts. The WTR 1998 protections apply regardless of contract type. Since December 2025, provisions of the Employment Rights Act 2025 have also come into force, strengthening protections for workers on irregular hours contracts and creating new rights around guaranteed minimum hours where a worker works regular patterns.
Domestic Abuse Leave: A UK Retail First
One of the most significant welfare provisions in the 2026 agreement is the introduction of up to three days' paid domestic abuse leave. This is a landmark provision — no other major UK supermarket had previously included a dedicated paid domestic abuse leave entitlement as a contractual right within a collective agreement. It gives colleagues who are experiencing or escaping domestic abuse paid time away from work to attend court hearings, access support services, make safe housing arrangements, or attend medical appointments without losing earnings.
This provision goes beyond current statutory requirements. While the Employment Rights Act 2025 strengthens several employment protections, there is no general statutory entitlement to paid domestic abuse leave in the UK as of 2026. Tesco and USDAW have therefore agreed a higher standard than the law requires, reflecting a growing recognition that employers have a role to play in tackling domestic abuse and supporting affected colleagues.
Redundancy Pay
If you are made redundant, your statutory redundancy pay is calculated under the Employment Rights Act 1996 (ERA 1996), Part XI. The formula is:
- 0.5 weeks' pay per year of service, for years worked aged under 22
- 1 week's pay per year of service, for years worked aged 22–40
- 1.5 weeks' pay per year of service, for years worked aged 41 and over
The weekly pay used in this calculation is capped at £700 per week (the 2026 statutory cap) and the total qualifying period is capped at 20 years. The maximum statutory redundancy payment in 2026 is therefore £21,000 (1.5 × £700 × 20 years).
To qualify for statutory redundancy pay under ERA 1996, you must have at least two years' continuous service with Tesco.
Tesco and USDAW have historically negotiated enhanced redundancy terms above the statutory minimum in periods of store restructuring, particularly in relation to longer-serving employees. If a redundancy situation arises, your USDAW representative can advise on whether any enhanced terms apply under the current agreement or any applicable store-level arrangement. You also have the right under ERA 1996 to receive written notice of redundancy, a consultation period, and where applicable, the right to be considered for suitable alternative employment.
Notice Periods
Under ERA 1996, section 86, the statutory minimum notice you are entitled to receive from your employer is:
- 1 week after one month's continuous employment
- 1 week per year of service for employees with between two and twelve years' service
- 12 weeks (the maximum) after twelve or more years' service
For example, if you have been with Tesco for five years, your statutory minimum notice is five weeks. Your contract of employment may specify a longer notice period — this is the contractual notice and, if longer than the statutory minimum, it is the figure that applies.
If you are giving notice to Tesco, ERA 1996 requires you to give at least one week's notice once you have completed one month's employment, unless your contract sets a longer period. You should check your written statement of employment particulars (which Tesco must provide under ERA 1996, section 1) for the exact contractual notice terms applicable to your role and length of service.
Pension Rights
Tesco operates a workplace pension scheme for eligible colleagues. Under the Pensions Act 2008, all employers must automatically enrol eligible workers into a qualifying pension scheme. Minimum contribution levels in 2026 are:
- Employee minimum: 5% of qualifying earnings
- Employer minimum: 3% of qualifying earnings
Tesco's pension arrangement for hourly-paid colleagues is a defined contribution (DC) scheme — the Tesco Colleague Pension Plan, administered via Legal & General. Both employee and employer contributions are invested in a pension fund, and the eventual retirement income depends on the size of the accumulated pot and the annuity or drawdown terms at retirement.
You are automatically enrolled once you meet the eligibility criteria (aged 22 or over, earning above the earnings threshold, and working in Great Britain). You have the right to opt out, but doing so means forfeiting your employer's contributions — in most cases, remaining enrolled is financially advantageous.
For colleagues who joined Tesco before the closure of its earlier defined benefit sections, different terms may apply. You should check your pension scheme documentation or speak to the Tesco Pensions team directly for information specific to your membership.
Your Rights Under the Agreement
The 2026 Tesco / USDAW Pay Agreement provides colleagues with rights that in several areas exceed the statutory minimum. Key points include:
- Pay above the NLW: The agreed rate of £13.28 per hour is £1.07 above the National Living Wage (£12.21), providing a meaningful premium above the legal floor for workers aged 21 and over.
- Collective bargaining protection: USDAW's recognition under TULRCA 1992 means your pay and conditions are determined through collective bargaining, and Tesco cannot unilaterally reduce agreed rates without re-negotiating with the union.
- Domestic abuse leave: Up to three days' paid leave — a contractual right with no statutory equivalent in 2026 — gives colleagues a safety net during a domestic crisis.
- Employment rights floor: All rights under ERA 1996 (unfair dismissal from two years' service, written reasons for dismissal, redundancy pay, written employment particulars), WTR 1998 (rest breaks, maximum working week, annual leave), and the Pensions Act 2008 (auto-enrolment) apply in full alongside the collective agreement.
Interactive Calculator Use our Tesco / USDAW Pay & Rights Calculator to estimate your take-home pay, redundancy entitlement, annual leave days, and pension contributions under this agreement.
Frequently Asked Questions
Q: When does the 5.1% pay increase take effect? A: The new rate of £13.28 per hour takes effect from 29 March 2026. If you were paid under the previous rate for any days between your last pay date and 29 March 2026, you should receive any arrears in your next payslip or a separate payment. Contact your line manager or HR if you have not received the correct rate after this date.
Q: Am I covered by the agreement if I am not a USDAW member? A: Yes. The agreement applies to all hourly-paid Tesco colleagues within its scope, regardless of union membership. However, USDAW members benefit from individual representation, legal support, and a voice in future negotiations. You can join USDAW at any time.
Q: Does the £13.28 rate apply to part-time workers? A: Yes. The agreed hourly rate applies to all eligible colleagues on both full-time and part-time contracts. Part-time workers are entitled to the same hourly rate pro-rated for their contracted hours, in accordance with the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000.
Q: How does Tesco's rate compare to the National Living Wage? A: The National Living Wage in 2026 is £12.21 per hour (for workers aged 21 and over). Tesco's agreed rate of £13.28 is 8.8% above the NLW, meaning Tesco colleagues earn more than the legal minimum required of any UK employer.
Q: What happens if there is a dispute about my pay or conditions? A: Tesco operates internal grievance procedures under which you can raise a concern formally. USDAW representatives are available in most Tesco stores and can accompany you to grievance or disciplinary meetings as your statutory companion under ERA 1999. If an internal resolution cannot be reached, claims relating to unlawful deduction of wages or other employment rights can be brought to an Employment Tribunal. Time limits are strict — generally three months less one day from the act complained of — so seek advice promptly.
Q: Can Tesco reduce the agreed pay rate during the agreement period? A: No. The agreed rate of £13.28 per hour is contractually binding for the duration of the agreement (29 March 2026 to 28 March 2027). Any variation to collectively agreed terms requires renegotiation with USDAW under TULRCA 1992. Individual variations to your contract of employment also require your consent under ERA 1996.
A Landmark Deal in UK Retail
The Tesco / USDAW Pay Agreement 2026 is notable not just for its scale — affecting approximately 300,000 workers and representing more than £200 million in investment — but for the quality of the provisions it delivers. The 43% cumulative pay rise over five years reflects sustained, structured negotiation between one of the UK's most prominent employers and one of its largest trade unions.
The introduction of paid domestic abuse leave as a contractual right sets a new standard for the sector and demonstrates that collective bargaining can produce outcomes that go beyond what legislation alone currently requires.
For Tesco colleagues, understanding the agreement — and the statutory protections that sit alongside it — is the first step towards ensuring you receive everything you are entitled to.
This guide is for general information only and does not constitute legal advice. For advice specific to your situation, consult your union representative or a qualified employment solicitor.
