A dairy company that accused international workers of owing rent has agreed to an out-of-court settlement over allegations of underpayment.

Australasian Global Dairies (AGD) was taken to the Federal Court by the National Union of Workers on behalf of 17 non-English-speaking workers who claimed they were underpaid almost $170,000 for their work on six south-west Victorian dairy farms.

In July, AGD hit back with claims the workers owed the company rent — allegations the union described as "simply ludicrous".

In a statement released today, the NUW said the matter has been settled out of court, noting that AGD and its parent company Australasian Global Exports "do not admit the allegations".

The union said the companies had "settled the Federal Court proceeding on acceptable monetary terms".

The figure has not been released.

It was alleged the 17 foreign workers had been paid $4 an hour below the minimum wage during 2016 and 2017, with the NUW saying the underpayment was confirmed by payslips.

Ahead of a preliminary hearing in late July, AGD launched a counterclaim saying the workers owed rent for their on-farm accommodation.

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NUW claimed the accommodation was listed as free in the original advertisement for the job, but the 17 workers were being asked to pay back $210 each per week for staying in a house where as many as eight people stayed at a time, with some sleeping on couches for weeks.

The union also alleged AGD was asking for rent during periods when the employees did not stay at the on-farm accommodation and at a rate about four times the market rate for an equivalent property in south-west Victoria.

An AGD spokesperson said they were unable to comment on the matter.