ALDI employees have received a huge boost to start the new year after finding out their latest pay rise will mean they're employed by the UK's highest-paying supermarket.

The chain has announced plans to increase its pay for staff in stores by just over 3%.

The discounter said minimum hourly rates will rise from £9.10 an hour to £9.40, with workers inside the M25 getting £10.90 an hour instead of £10.55.

And for employees who have been with the business for three years or more, pay will increase to £10.41 an hour, while workers in London with two years' service will earn £11.15.

Aldi also pointed out that it is one of the few supermarkets to pay staff during breaks.

The new rates exceed the Living Wage Foundation's recommended pay rates of £9.30 an hour, although Aldi is not a member of the organisation, which also requires companies to agree to a series of staff well-being levels.

Retailers are in a fierce battle to keep and reward workers.

Greggs recently announced that its staff would share a £7 million bonus.

And Mike Ashley of Frasers Group - formerly Sports Direct - said last year that he wanted to introduce a new bonus scheme for store staff, although details remain unclear.

Giles Hurley, chief executive of Aldi UK, said: "We have the most efficient and productive workforce, and this is why they earn the highest rates of pay in the grocery sector."

Changes will come into effect from February 1.

Aldi, which currently has 874 stores, is recruiting for over 3,800 store-level positions this year and remains on track to achieve its long-term target of 1,200 UK stores by 2025.