The minimum holiday entitlement will rise from 20 days a year to 24 this October, and to 28 from April 2009. Part-time employees will be given the extra holiday pro-rata.
Currently, not all retailers permit staff to take the eight annual bank holidays in addition to their 20 days annual leave, but the change means that from October they will have to pay staff for an extra eight days of work per year.
Department of Trade & Industry relations minister Jim Fitzpatrick said the move would make a difference to "hard working people". He added: "Businesses will benefit too - from reduced absenteeism and a workforce who are more motivated and productive."
But the Association of Convenience Stores thinks the move will put a burden on small businesses, and independent retailers have said they would find it hard to give staff paid extra time off.