Morrisons will become the first UK supermarket to pay at least £10 an hour from April.
It will increase its minimum pay for up to 96,000 workers from £9.20.
Retail trade union Usdaw negotiated the £10 per hour basic rate which is 50p an hour above the voluntary Living Wage Foundation rate.
“The new consolidated hourly rate is now the leading rate of the major supermarkets,” said Joanne McGuinness, Usdaw national officer.
Morrisons said for the majority of its workers the pay increase will be approximately 9%.
Part of the increase will result from changing the company’s annual bonus scheme from a discretionary yearly payment into a guaranteed amount in workers’ hourly rates.
It will boost the weekly pay of someone working 36.75 hours a week from £330.10 to £367.50.
Union members still need to approve the deal. The result will be announced on 12 February and, if accepted, the new rates will be paid from 5 April 2021.
“It’s been a tough time for food retail staff who have worked throughout the pandemic in difficult circumstances,” said Ms McGuinness.
“They provide the essential service of keeping the nation fed and deserve our support, respect and appreciation. Most of all they deserve decent pay and this offer is a welcome boost.”
In addition to the hourly pay increase, Morrisons will pay a higher London weighting.
Rates for inner London will be 85p and for outer London 60p per hour, up from 75p in inner London and 50p in outer London.
David Potts, Morrisons chief executive said: “It’s a symbolic and important milestone that represents another step in rewarding the incredibly important work that our colleagues do up and down the country.”