UK supermarket Asda offers pay rise for flexible working

LONDON (Reuters) - Asda, the British supermarket owned by Wal-Mart (WMT.N), is offering staff in its stores a 14 percent rise in hourly pay, if they sign a contract requiring more flexible working.

Britain's No. 3 supermarket said on Monday it will offer its 135,000 store staff a base rate of 8.50 pounds ($10.39) an hour from October, up from 7.44 pounds.

The new rate is 1 pound above the government mandated National Living Wage increase which comes into effect April 1.

The new contract will require Asda staff to work in different parts of stores and different days or hours, including public holidays. All breaks will also move to being unpaid.

Asda's move comes as the Bank of England is closely watching a pick-up in inflation for signs it might fuel higher pay settlements.

Asda said that 95 percent of current employees will be better off if they move to the new contract. If they do not, their base rate will move up to the minimum national rate of 7.50 pounds and they will retain their existing contract.

Asda, which trails market leader Tesco (TSCO.L) and Sainsbury's (SBRY.L) by annual sales, has been the sector laggard for the last two years.

However, a trading update last month showed it had stemmed the pace of sales decline, suggesting new CEO Sean Clarke's focus on pricing and product quality was starting to have an impact.

(Reporting by James Davey; Editing by Alexander Smith)