Discount supermarket Lidl will next month increase pay for thousands of its staff in Britain by at least 12 per cent.

German-owned Lidl, which has been winning market share from bigger rivals Tesco, Asda, Sainsbury’s and Morrisons, said that from October 1 its employees will receive a minimum of £8.20 an hour across England, Scotland and Wales and £9.35 an hour in London.

“Lidl employees will be among the best paid in the supermarket sector,” said chief executive Ronny Gottschlich.

It said this will be an average wage increase of £1,200 per year, with 53 per cent of Lidl UK’s 17,000 workforce and all age brackets benefiting. Lidl has been paying workers outside of London a minimum of £7.30 an hour, while those in the capital get at least £8.03.

The new levels are above a compulsory “national living wage” which the British government is introducing next April for workers aged over 25.

Lidl said the pay rise will cost it an additional £9 million a year.

Clothing retailer Next, Costa Coffee owner Whitbread and pub chain Wetherspoon’s have all warned about the higher costs stemming from the government’s wage policy.

Last month Sainsbury’s awarded store staff a four per cent pay rise, taking its standard rate of pay to £7.36 per hour.

Market leader Tesco pays an hourly rate of £7.39, Asda will pay £7 from October 1, while Aldi pays £8.15.

Morrisons’ standard hourly rate for store staff varies from a minimum of £6.83 to a minimum of £7.79 depending on location, though it is yet to conclude this year’s pay round.

Tesco and Lidl, unlike Asda, Sainsbury’s, Morrisons and Aldi, do not pay staff for breaks.