More than 2,000 care assistants, domestics, cleaners and lollipop men and women have been promised a share in �7.2m by South Tyneside Council.

The proposed agreement, which has been accepted by the GMB and Unison unions, will mean disputes going back six years can be settled.

Pay-outs will be based on years of service and hours worked.

GMB spokesman Martin Gannon said the union welcomed the offer but would be discussing each case individually with its members.

He said: "Members can claim a maximum of six years in compensatory payment, and if they have been working 37 hours a week for that time, the total would be �8,000.

"We generally regard it as a good offer and will recommend it to our members, but we will still sit down and discuss each case."

'Value for money'

South Tyneside Council's deputy leader Iain Malcolm said: "It is a credit to the council and the trades unions that we have agreed to settle this issue at local level.

"It will mean fairer pay for many of our employees, especially women in essential but low paid jobs, and I am proud that we have been able to play a part in getting rid of potential pay inequality."

Council chiefs are also planning to introduce a new pay and grading structure in accordance with national agreements.

Cllr Malcolm added: "This issue has evoked strong feelings among many of our key workers. I'm delighted that after much consultation we have been able to agree the proposed settlement.

"This will mean not only fairer pay but will also give a significant boost to the council's ongoing commitment to modernise services and give residents and businesses better value for money."