Tynwald's voted to approve a 9.9% increase in the minimum wage from £12.25 to £13.46 per hour.
The change will come into force in April next year, alongside an increase in the Youth Rate from £9.55 to £10.76.
A total of 17 MHKs were in favour of the move and seven against, whilst it was unanimously passed by the Legislative Council.
It comes after the Isle of Man Chamber of Commerce warned against the move, saying it will hit local businesses.
Heritage charity asks members to update details after manx.net changes
Government publishes praise for new school meals
Pre-paid debit cards being considered as MiCard alternative
Local authority plans for new works depot
Tynwald members won't get their half-term break yet
TT star launches new YouTube channel
New gelato shop for Laxey!
Firefighters tackle blaze at flour mill