Theresa May has called on retailers to provide competitive wages and bonus schemes for staff amid a furious row over workers' contracts at Sainsbury's.
The supermarket giant is moving staff on to new contracts in September and its plans have proved controversial because it is scrapping a number of staff benefits.
While Sainsbury's is increasing its basic pay, it is ending paid breaks and premium pay on Sunday for thousands of staff.
As part of a campaign spearheaded by Labour's Siobhain McDonagh, more than 100 MPs wrote to the Prime Minister to complain about Sainsbury's eroding staff benefits.
In a reply, seen by the Press Association, Mrs May said she would not intervene, arguing that the Government should not "dictate how managers run businesses".
However, she added: "The Government believes that it is essential for employers to ensure that their reward packages are competitive, in order to retain and develop their staff.
"This includes the payment of wages above the statutory minima and the provision of additional benefits where this is affordable."
The Prime Minister also said she was pleased that Sainsbury's had announced concessions following discussions with staff, including a higher pay rate for workers in London and higher pay for drivers and staff on unsociable hours.
Ms McDonagh is now calling on MPs to join her in delivering an online petition to Sainsbury's headquarters in London on June 26.
Several large retailers have modified staff contracts in a bid to save money following the introduction of the National Living Wage.
Waitrose, Morrisons, John Lewis, Marks & Spencer and B&Q have all faced criticism over new contracts, with many cutting paid breaks as part of the changes.
A Sainsbury's spokesman said: "We're pleased the Prime Minister references in her letter that all workers should take home a fair wage. This is the driving force behind our plans, which will result in one fair and consistent contract for all Sainsbury's store colleagues.
"At present we have colleagues working side by side in stores every day, carrying out the same role but being paid different amounts and that's not fair."