Newcastle City Council has reached the settlement with trade unions.

It will benefit 2,800 workers, such as cleaners and care-at-home staff, who will receive average payments of �3,931 although some will get �13,000.

The council brought in a fairer pay structure in February 2004 to address present and future pay arrangements, but this deal is retrospective.

The agreement was reached after five months of talks between the council and unions.

'Past inequalities'

It is designed to enhance the position of part-time women who have traditionally been lower paid than men.

Staff will receive a range of one-off payments. The maximum for someone who has worked more than 35 hours a week with more than six years of service will be �13,000.

Council leader Councillor Peter Arnold said: "The city council is committed to fair pay and equality and is pleased to have reached an agreement thereby avoiding costly legal proceedings and staff having to give evidence in court."

Unison branch secretary Kenny Bell said: "Equal pay does not come cheap. We now have an equality proof pay structure and have compensated women workers for past inequalities.

"It is disgraceful the council has had to bear the full cost and has not received government funding."

GMB senior regional organiser Colin Smith said: "During negotiations we were aware of the need to strike a balance between achieving a settlement that dealt with past inequalities alongside fair pay and grading structures for the future."