Our approach to Reward
At Tesco, we have 345,000 colleagues worldwide, including 300,000 in the UK. All our colleagues serve customers in a variety of roles and all using different skills and expertise. We want to be an employer of choice - ensuring everyone feels welcome, working with colleagues on their development and long-term careers at Tesco, and offering competitive pay rates and benefits that are sustainable for our colleagues and for our business.
For every role in the business, we apply the same principles of Reward. These are applied across our whole reward package, which includes a number of benefits as well as the basic rate of pay.
Always investing in our colleagues
We have a very strong track record of making substantial investments in pay. Over the last 10 years, Tesco’s hourly rate of pay for store and customer fulfilment colleagues (CFC) in the UK has increased from £7.14 to £10.30. In April 2022, we announced a £200m investment in our colleagues – including an increase in pay of 5.8%, the biggest single-year investment in hourly store/CFC pay in at least a decade. In October 2022, we announced a further increase to the hourly rate for the same colleagues to £10.30, effective from November and equating to a near 8% pay increase for these colleagues in 2022 alone.
We feel a duty of care to provide our colleagues with a balanced benefits package that supports their different needs. Across all of our markets we offer a competitive package of rewards and benefits, in addition to base pay.
We believe that we are positioned very competitively for both basic pay and total reward; and our colleagues have a very positive view of their reward package. Through our Every Voice Matters survey – the largest colleague engagement programme in the UK – colleague scores on both working at Tesco and their reward package are significantly ahead of our external partner’s global benchmark. In the three years since we launched our current survey, the proportion of our colleagues that would recommend Tesco as a great place to work, our headline KPI, has been 79%, 82% and 80% respectively.
As we continue to look for ways to support colleagues with the cost of living, we have recently strengthened the range of free products that we offer in our back of store areas for everyone working in stores, which they can help themselves to while at work. Products available free in our Colleague Rooms in stores include fresh fruit; hot and cold drinks; breakfast items; soup, bread, pasta and noodle snacks; and toiletries including deodorant and sanitary products.
Working collaboratively with our Unions
We spend time listening to how our colleagues are feeling, and understanding what matters to them.
When it comes to reward, our package is extensively discussed and negotiated with our independent unions. Colleagues are supported with paid time off from their day jobs to participate in these negotiations.
We have built strong relationships with our unions over the years, and as a result we have long-established full recognition and collective bargaining agreements in place with USDAW, Unite and URTU for all our hourly-paid colleagues across the UK. Our robust engagement process ensures that colleagues and union representatives are involved throughout the process, and are consulted before any decisions on reward are finalised. Any decisions we make benefit all eligible colleagues, regardless of whether they are a member of a union or not.
We believe that unions should be as representative as possible, and we actively support colleague membership in many other ways, including offering slots for union representatives in inductions for new starters and offering colleagues the ability to pay union membership fees directly via payroll.
As part of the listening process and in tandem with our extensive pay review process, we continue to make changes to the overall colleague experience based upon feedback about what matters most to our colleagues. For example, as part of our 2022 negotiations for hourly-paid colleagues in UK stores, we agreed to always offer any vacant hours to colleagues working fewer than 16 hours a week before recruiting externally – based upon feedback from colleagues. When we do recruit externally, all new contracts will be based on a minimum of 16 hours per week, (save for our smallest Convenience stores) in line with USDAW’s New Deal for Workers campaign.
We will continue to work flexibly when it comes to investing in reward for colleagues. For example, we made three additional ‘thank you’ payments over a two-year period to colleagues during the COVID-19 pandemic, and we consider what’s beneficial to colleagues at different moments in time –agreeing a one-year rather than two-year pay deal for hourly-paid colleagues in 2022, allowing us to review again in 2023 given the current increases to the cost of living. We have recently agreed with the unions that these negotiations will begin in January 2023, ahead of our usual timescales, and that they will include a review of location pay.
Our balanced benefits package
We know colleagues really appreciate the value they get from their Colleague Clubcard, and after three months of service, colleagues receive a discount card for themselves and a second card for a family member. We are committed to supporting colleagues with the cost of living, including keeping down the cost of their weekly shop. In 2022, we extended our Colleague Clubcard discount allowance by £500, taking the annual total allowance for all colleagues to £1,500. Our Colleague Clubcard is our most widely used benefit, with over 95% of colleagues holding one.
Colleagues can take advantage of a 10% discount, increasing to 15% every pay day weekend and 20% during the peak Christmas week in 2022. This discount – in combination with our powerful value combination for all customers of Aldi Price Match, Low Everyday Prices and Clubcard Prices – allows our colleagues to access some of the cheapest food in the market, every time they shop with us. Colleagues receive 20% off F&F clothing throughout the year, including across our great range of school uniform and children’s basics. We also offer extremely competitive deals at Tesco Mobile for colleagues, with 10% off both pay-monthly and sim-only deals. In addition, over half of our colleagues are registered for our Colleague Deals and Discounts, which give access to savings and cashback on everyday products and services outside of Tesco.
A competitive pension
We offer a retirement savings plan for all our colleagues. As well as savings for retirement, the plan also provides valuable life cover for every member. Colleagues are contractually enrolled into our pension scheme and the vast majority of our colleagues then remain in the scheme, with a very low opt-out rate of approximately 5-6% per annum. At retirement, members are able to choose how to take their savings, in a way that suits them.
Buy As You Earn
The Buy As You Earn scheme is an opportunity for colleagues to buy Tesco shares on a regular basis, from their gross salary. There is total flexibility to start, stop and change the amount of salary used to buy shares at any time.
Save As You Earn
Save As You Earn (SAYE) is our Tesco share savings scheme that gives colleagues the opportunity to save direct from their pay for three or five years. Once they have finished saving, they can choose to buy Tesco shares at a discounted Option Price or get their savings back. It’s our longest running share scheme with thousands of colleagues participating for nearly 40 years. Over 15% of our colleagues are actively saving in one or more SAYE scheme.
In November 2022, we launched a new benefit to colleagues in the UK to help with unexpected or large expenses by offering them access to a low-cost advance on their pay. Colleagues can access up to 25% of their contractual pay early for a single set fee of £1.49. The advance is aimed at helping colleagues avoid having to take on expensive debt with high interest payments, such as pay day loans, if they are faced with unexpected bills.
Cycle to Work scheme
The Cycle to Work scheme is a salary sacrifice scheme, designed to encourage healthier and greener journeys to work by providing access to bikes and safety accessories as a tax-free benefit. It is a government supported initiative. To improve accessibility of the scheme, we have changed the loan repayment terms to give colleagues the option to repay over a longer period and enable colleagues to borrow a higher value and access a greater range of bikes.
Employee Assistance Programme
Every colleague in the UK has access to our free, confidential Employee Assistance Programme. Services include:
- Mental health experts
- Structured clinical counselling (available in a language of your choice)
- Financial information
- Legal information
- Career and life coaching
- Bereavement counselling
Our Financial Wellbeing Hub contains tips and tools to help colleagues manage their finances, as we look to support them with the cost of living. It shares information on how to make the most of your money, borrow responsibly and find the best options for you and get help identifying your savings goals and discover ways to help you achieve them. We encourage colleagues who may feel they are struggling to speak to their line manager or People team for additional support.