Morrisons is proposing to increase pay for store staff from £6.83 to £8.20 an hour.
The pay rise will apply to store-based staff of all ages, benefiting over 90,000 employees.
The supermarket chain will invest more than £40 million in the hourly wage increase. It will also simplify pay supplements, such as a premium for working on a Sunday.
The pay rise is subject to a positive ballot among members of Usdaw, the shop workers’ union, to be held on 12 November. If members vote in favour of the move, which Usdaw supports, then the higher pay rate will come into effect in March 2016.
The proposed hourly wage of £8.20 an hour is higher than the Living Wage Foundation’s living wage rate. This currently stands at £7.85 an hour and £9.15 in London. New living wage rates for the UK and London will be announced in November.
The hourly pay rate proposed by Morrisons is also higher than the government’s national living wage, which will be introduced in April 2016. The national living wage, initially set at £7.20, is a statutory requirement for staff aged 25 and above.
David Potts, chief executive of Morrisons, said: “We have been listening to our colleagues who told us they want their pay to be more competitive and simpler.
“By paying a significantly higher hourly rate, we are recognising the contribution of our excellent staff, who are so important to the revival of Morrisons.”
Joanne McGuinness, national officer at Usdaw, added: “For some time, we have been talking to the [organisation] about taking retail staff up to, and beyond, the Living Wage Foundation rate, currently set at £7.85 an hour. So I am delighted that we have agreed a rise that takes staff way past that to £8.20.
“It is a big step forward, shows that the [organisation is] prepared to invest in staff to help grow the business and I hope that the deal is supported by our members in the ballot.”