A lieutenant is the junior commissioned officer aboard a Royal Navy ship. It is above warrant officer, and midshipman and below the rank of captain. Lieutenants are numbered aboard a ship by seniority of attaining the rank, First Lieutenant, Second Lieutenant, etc. The First Lieutenant is second in command of the ship after the Captain and so forth.
Attaining the rank of Lieutenant is by examination. At such time as the midshipman is deemed ready for examination by his commanding officer, he appears before the next available Board of Examination, consisting of a number of Post Captains, which convenes from time to time when there are sufficient Captains available and sufficient examinees. Upon successful passing of the examination, he is now a passed Lieutenant if there is no billet for him to fill, or is there is, he becomes Lieutenant according to his seniority. Increase in pay occurs only when he fills a billet of a Lieutenant. If failed, he returns to his command continuing as a midshipman. Better luck next time!

Glossary: SearchWikipedia