Premier Foods has averted a third week of strike action at its Wigan Hovis factory by agreeing a deal with workers campaigning over the use of agency staff on zero-hours contracts.

In an agreement signed on Monday, the company promised to pay any agency employee who works at least 39 hours a week for 12 consecutive weeks at the same level as full-time employees. The deal also ensures that temporary labour shortages will be covered by existing employees using overtime, rather than agency staff. The company said it would review staffing levels after three months to see if it had sufficient full-time staff in place.

The Bakers Food and Allied Workers Union, which represents 230 of the Wigan bakery's 357 employees, has been campaigning against the use of the agency staff whose zero-hours contracts do not specify set working hours and give limited guarantees on conditions.

The regional organiser for the union, Geoff Atkinson, said: "We believe we got everything we wanted. It's a massive victory for us. We are a small union and we took on a company. It should encourage other people. We've proved that if you stick together, you can do away with these unscrupulous contracts. We won't stand for our members being replaced by agency labour."

Premier Foods said it wanted to rebuild trust at the Wigan plant now the dispute had been resolved. It said: "We are delighted to have reached an agreement with the union that gets our people back to work, as it's been a difficult time for all concerned."