More than 620 wharfies will be offered voluntary redundancy under a peace deal, between the Patrick stevedoring company and the Maritime Union of Australia, that preserves union monopoly on the waterfront.

Under the agreement, which the ACTU last night hailed as a crushing defeat for the Federal Government, Patrick will resume operations at all its terminals with a core MUA workforce of 687 employees. A further 200 jobs in security, cleaning, maintenance, and line marking will be contracted out to companies employing union labor. MUA members made redundant will be able to apply for the positions.

The 12-page agreement, a copy of which has been obtained by The Age, unravels the controversial corporate restructuring by Patrick last September, and re-establishes a direct working relationship between the company and the union workforce. All legal action will be dropped, with Patrick to pay the union's legal costs, believed to be millions of dollars.

Employees will be paid all outstanding wages, including pay lost since the mass lockout of workers on 7 April. The three-year agreement provides for a 12 per cent wage rise. Patrick also will not seek to change key award conditions and will withdraw an application to the Industrial Relations Commission to reduce overtime and penalty rates.

Employees will receive a salary based on a 35-hour week with a five-hour overtime
component. They will be paid a productivity bonus upon achieving an hourly rate of 16 crane lifts. In an element likely to be seized on by the Government, the agreement also commits workers to a productivity target of 25 net crane moves an hour.

The chairman of Patrick, Mr Chris Corrigan, said yesterday that the Government would provide $80 million to fund the redundancies. He defended the outcome, and insisted that breaking the union monopoly had never been a key issue for the company. He rejected suggestions the changes could have been brought about through peaceful negotiations.

An ACTU assistant secretary, Mr Greg Combet, said the agreement, to be put to workers at meetings this week, was a "total and decisive defeat for the Government and Patrick's agenda to bust the MUA". Under the redundancy deal, an estimated 513 union members will be employed in the terminals area, with 174 employees to work in the general stevedoring operations.

The deals provides for 628 MUA members to apply for voluntary redundancy starting in three weeks. Patrick is pushing for an extra 100 supervisory employees also to be made redundant. While the dispute at Patrick has been resolved, trouble looms at the rival stevedore, P&O, which yesterday indicated to a Senate hearing that it wanted to cut labor costs by 30 per cent.