Fonterra has claimed that it has averted threatened industrial action and reached an agreement with the Dairy Workers Union (DWU) in New Zealand.

Earlier this month, the DWU gave notice of "work to rule" industrial action after failing to reach a new collective employment agreement with the New Zealand dairy giant when pay talks collapsed.

The DWU was pushing for a pay hike of 8% this year and a Consumers Price Index (CPI)-linked pay rise, plus 1%, for next year. Fonterra, meanwhile, was offering a 5% rise plus a 2.5% lump sum this year, CPI plus a 1% lump sum for the second year, and CPI plus 1% for the third year.

However, the Fonterra proposal would have seen the dairy workers lose a bonus scheme that has been in operation for the last five years and is worth an average of 2% extra, the DWU said.

Details of the new agreement are yet to be released and the DWU has not commented publicly on the deal.

However, Fonterra's director of milk supply Barry Harris said a settlement had been agreed, subject to ratification by union members. The union will now discuss the detail of the agreement with its members, he added.

"We are pleased to have reached a fair and appropriate agreement. While it's still to be ratified by the union, we believe this agreement will give security for both sides in what are turbulent times at the moment, economically and financially," Harris said.

Harris added that the company expected to receive notice that the strike action was suspended yesterday (13 November). However, this is yet to be confirmed.