The Government has signed a $2 billion pay equity settlement to be delivered over the next five years for low-paid health care workers.
Fifty-five thousand care and support workers will see a boost to their wages from July 1, as part of a gradual increase over the next five years.
Pay equity is the principle that men and women should be paid the same for doing different jobs that are of equal value.
It comes after the Service and Food Workers Union (now part of E tū union) filed a case in 2012 on behalf of TerraNova Homes and Care care worker Kristine Bartlett.
In June 2015 Cabinet appointed a Crown negotiator to come to resolve the case outside of the Employment Court.
"Home and community support, disability and aged residential care workers are widely seen as amongst the most deserving of recognition as a pay equity case. It is an historic moment for the Government to address this undervaluing with Ms Bartlett and the unions," says Health Minister Jonathan Coleman.
Under the settlement, care workers like Ms Bartlett on the minimum wage would see their pay rise from $15.75 per hour to $23.50 on July 1.
Within five years the rate would be $27 an hour - an increase of 71 percent.
The new wage structure needs to be ratified by union members, and legislation will be introduced to Parliament to prescribe the minimum pay rates to employers.
Earlier on Tuesday Labour leader Andrew Little said the deal was a victory for determination and unions, against "sheer Government resistance."
"Labour welcomes the impending settlement and we congratulate Kristine Bartlett, her union E tū and other unions for their perseverance and determination. Their hard-won victory will make a huge difference to the lives of 55,000 low-paid New Zealanders.
"But make no mistake, the Government has been dragged kicking and screaming to this point, having had lawyers at each appeal stage of the original case opposing lower court decisions on pay equity determinations.
"This settlement wouldn't have been reached without the unions' involvement, which will see thousands of other workers benefit from the legal case and the outcome of the negotiations."
Mr Little said that it shouldn't have been such a tough fight, and it confirms the need for modern and fairer pay setting mechanisms.
Green Party women's spokesperson Jan Logie said the announcement was well overdue, "despite Government interventions and stalling" and said there is more work to be done to ensure pay equity.
Ms Logie wants the Government to support her Member's Bill that would see gender pay transparency indexes published, so that women could see if they were being underpaid.
"Even today's announcement will still be phased in over many years, and these women have waited too long already. There is no moral justification for making women wait longer."
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