Tram drivers will get a 3.5 per cent-a-year pay rise and Yarra Trams will employ fewer part-timers than it had wanted to, in an offer that has finally been accepted by the public transport union.

The major breakthrough will mark the end of a bitter 12-month dispute between the Rail, Tram and Bus Union and the tram operator, meaning commuters can breathe a sigh of relief as rolling strikes are brought to a stop.

Striking drivers outside the Malvern tram depot last year. Credit:Justin McManus

The Andrews government brokered a deal between the two parties on Thursday night in a bid to halt a series of strikes that would have cruelled the Grand Prix.

The union lowered its demand for a 6 per cent annual pay rise to 5 per cent a few months ago, and has now settled on 3.5 per cent over four years, which is the same increase as set down in the previous enterprise bargaining agreement.