Tesco has announced that its staff will receive a 10.5 per cent boost to their hourly pay over the next two years.
Currently, Tesco workers earn £7.62 an hour, which will rise to £8.42 an hour by November 2018.
The UK's largest supermarket said it was keeping its premium pay rates for those working on Sundays and bank holidays, a benefit that has been ended for workers at some other retailers, such as Marks and Spencer.
However, from July 2018 onwards the premium pay rate will fall from time and a half to time and a quarter.
Matt Davies, chief executive of Tesco UK, said: "This reward package sees our biggest investment in store pay for a decade, and gives colleagues a sustainable pay deal that rewards them for everything they do, while allowing us to also attract new talent."
The news comes as retailers try to assimilate the rise cost of the national living wage, which, by 2018, is expected to reach £7.90 per hour.
New national minimum wage regulations have also been putting strain on retailers; John Lewis was forced to pay out £36m to employees after it failed to comply with the new regulations.