The management and labour union at Hyundai Motor have agreed a 5.41% increase in base pay, ending their annual negotiations without a strike for the third consecutive year.

The carmaker said the tentative deal was reached after overnight marathon talks held at its main Ulsan plant. The labor union plans to put the wage agreement to a vote on Friday.

"The settlement highlights the commitment by the company to improve working conditions and to work together with the union to forge a better future for the company," Hyundai's management told the Korea Times. It expressed hope that union members will agree to the deal.

Labor representatives also said that the agreement marked record benefits for workers and should be accepted.

Under the agreement, the carmaker agreed to raise base pay by a record KRW93,000 (US$86.30) compared to the KRW79,000 won hike reached in 2010, and give a 300% bonus and an extra KRW7m in special encouragement money to workers. Hyundai will also give its employees 35 shares of the company's stock for not engaging in a walkout.

In addition, both sides agreed to raise allowances for paid leave by 50%, raise stipends to people who have worked for the company for a long period of time and allow workers to be employed one year more after they formally retire from the company at 59. The retirement age has also been raised by one year from the current 58.

On the issue of the so-called time-off system that restricts wage payments to full-time unionists, the two sides settled on acknowledging 111 workers as representing the union, although only 26 would be paid salaries.

The time-off scheme had been one of the main contentious issues that held up talks. At present, Hyundai's trade union recognised 237 dedicated unionists engaged in labour activities.

The agreement comes after management and the union reached a settlement on six issues in Monday's talks out of 25 that were on the table after beginning this year's negotiations on 8 June.

If no understanding had been reached, the union had planned to hold a vote asking members if they would engage in a partial walkout this week, and report their intent to strike to the National Labor Relations Commission.

The latest settlement marks the fourth time that Hyundai's union has settled its wage demands without engaging in a walkout. No strikes occurred in 1994 and from 2009 onwards.