Tesco is increasing the hourly pay rate for colleagues in stores from £11.02 to £12.02 – its biggest ever single investment into pay.

It represents a 9.1% rise in base pay and a record investment of more than £300m in hourly colleague pay.

The new rate, which is above the Real Living Wage, has been agreed with Usdaw and will come into effect from April 2024.

As part of the deal, Tesco will be creating one ‘London Allowance’ area at £13.15 per hour for stores within the M25 – an increase from £11.95 inner London and £11.75 outer London, and keeps the retailer in line with the London Real Living Wage.

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The annual Colleague Clubcard discount allowance will also be increasing by £500 to £2,000 and for staff who joined before 24 July 2022, the value for a Sunday premium will increase from £12.89 to £13.22 per hour.

It comes on top of previous changes, including a total increase of 26% in hourly pay – equivalent to a more than £750m investment.

As well as investing in pay, the supermarket giant is also increasing paternity leave to six weeks fully paid, alongside an increase in maximum company sick pay entitlement to 18 weeks for eligible colleagues.

Tesco UK CEO Matthew Barnes said: “This represents another significant investment in our colleagues, building on the last two years of investment.

“We recognise the amazing work our colleagues do every day in serving our customers and we’re really proud to offer such competitive rates of pay alongside a great range of exclusive colleague benefits”.