About 55,000 low-paid workers, mainly women, are about to get one of the biggest pay rises ever after details of a historic pay equity settlement are revealed today.

LISTEN: Pay equity settlement sets major precedent

The deal will cost the Government over $500 million a year when fully implemented in five years, assuming it is signed off by union members and the Cabinet.

The settlement will mean hefty pay increases from July in three government-funded service sectors that employ mainly women on low rates: aged residential care, home support, and disability services.

The Herald understands that for the primary litigant, rest home caregiver Kristine Bartlett, it will mean an increase from about $16 an hour to about $23 an hour - more than 43 per cent.

The deal allows for annual increases over five years to $27 an hour.

Overall, pay rises will range from $3 an hour to $7, depending on the work and experience.

The statutory minimum wage at present is $15.75 an hour. The new pay rates will not be backdated.

The case is the first legal settlement in New Zealand that recognises that some jobs pay less because they are done mainly by women.

Talking about the ongoing negotiations last year, State Services Minister Paula Bennett said the deal would put some pressure on the budget by increasing the cost of the workforce.

"But equally, we've got women who work incredibly hard in some sectors that are absolutely necessary and it does come down to us working in a fair way with them to make sure we are addressing some of the inequalities that are out there."

Bennett herself was once a rest home shift worker, washing dishes and working as a nurse aid, and said it was a tough industry.

"I've always had a genuine empathy with those who work in aged care."

The Service and Food Workers' Union lodged a claim on Bartlett's behalf with the Employment Relations Authority in 2012.

It claimed that she and other caregivers, male and female, were paid at a low rate because it was work predominantly done by women.

The union took the case on behalf of Bartlett and 14 other union members of the 110 employed by Terranova rest home. Their wages were effectively set by the government subsidy paid by the Ministry of Health for rest home services.

The case was elevated to the Employment Court, Court of Appeal and Supreme Court.

But once the Court of Appeal confirmed that pay equity cases could be heard under the Equal Pay Act of 1972, the Government stepped into the process because it was loath to leave a case with such far-reaching repercussions solely in the court's hands.

The Government has been involved in two distinct processes: one negotiating a settlement on the Bartlett case - which has been extended to other care services similarly funded by the Government.

It also set up a tripartite working group involving unions, employers and the Government to come up with a set of principles by which other pay equity claims can be lodged outside of the court system - although they have not yet been enshrined in law.

The first of those claims - by education support workers - began last week.

Bartlett's Service Workers' Union has merged with the Engineers Union to become E Tu and if its members, along with the Nurses Organisation and the PSA representing other affected workers, accept the settlement, the pay increases will take effect in July.

EY employment law specialist Christie Hall said the amount involved in the Bartlett case would be "fairly sobering" for quite a few employers.

"The private sector is by no means immune from this."

It would convey to other employers what was expected of them and could make them nervous.

Birmingham Council in Britain settled a pay equity claim for about $2 billion.

Hall said that in terms of the Bartlett case, it would be interesting to see the amount of detail and methodology used to determine the settlement. That could be of interest in future pay equity claims.

- NZ Herald