"A solution has been achieved to the wage problem in local government," the Finance Ministry and Histadrut Labor Union said in a joint statement released Sunday night following more than three hours of talks.
The Histadrut had threatened to begin a general strike Tuesday if the overdue wages of local authority and religious council employees and firefighters were not paid by the end of last week.
Budget Supervisor Kobi Haber, Interior Ministry Director-General Ram Belnikov and Histadrut Chairman Ofer Eini agreed on a "work outline for the immediate resolution" of the crisis, whereby the workers would be paid by the eve of Rosh Hashana.
In the "few authorities" with particularly severe delays, up to three months' wages would be paid by the deadline. The government and local authorities "will act in the variety of ways at their disposal" to ensure that the remaining paychecks are received by the employees by the end of the year, according to the agreement.
Local authorities currently subject to debt collection procedures by creditors or without the necessary bank accounts would pay the wages according to a separate scheme - on which details were not yet available - but would also have to meet the December 31 deadline.
Eini and Finance Minister Avraham Hirchson would follow progress on the execution of the agreement and handle any problems as they arise, the joint statement said, adding that a separate agreement would be reached on the debts owed by the authorities to workers' provident and pension funds by the end of the month.
Eini praised the deal as a "landmark," ensuring employees that "there will not be a situation in which employees who come to work do not receive their wages."