More than a million workers are to receive a pay rise as increases to the minimum wage come into force.
The UK minimum wage was introduced in 1999
The adult rate for the statutory minimum wage will go up from £5.35 to £5.52 and from £4.44 to £4.60 for 18 to 21-year-olds.
The rate for 16 and 17-year-olds will increase from £3.30 to £3.40 an hour.
The annual leave entitlement will rise from 20 to 24 days a year, for people who work five days a week, and will rise again to 28 days from April 2009.
Employment Relations Minister Pat McFadden, said: "These changes will improve the lives of millions of British workers, giving them more time with their families and ensuring our lowest paid workers continue to be able to earn a living wage."
Mr McFadden said just over a million workers will receive a higher wage as a result of the changes and up to six million workers will benefit from the extra holidays.
He added businesses would benefit from a more motivated and productive workforce.
TUC general secretary Brendan Barber said: "Today's minimum wage increase will provide a much-needed boost to the pay packets of millions of low paid workers.
"Unions would have liked a bigger increase but at this level there is nothing for businesses to complain about."
The changes come as the British Retail Consortium publishes new research showing the cost to retailers of last year's minimum wage rise was £1.7bn.
The cost was inflated because retailers had to pay more to maintain wage differentials among their staff.
"Future increases should be guided much more closely by increases in median earnings in sectors, including retail, which are most affected by the minimum wage," said BRC director general Kevin Hawkins.