A COMPENSATION package worth more than £1m is being proposed for town hall workers who were sacked when a council department was axed four years ago.

Middlesbrough Council disbanded its Economic, Development and Transportation section following budget problems, leading to the loss of 341posts.

An Employment Tribunal found that workers had been unfairly dismissed, ruling that the local authority had failed to carry out proper procedures.

Middlesbrough Council appealed against the decision, but budgeted for £1.8m to fund the pay-out in case they lost the action.

Now an agreement has been reached following talks between Middlesbrough Mayor Ray Mallon, who played no part in the original decision to issue redundancy notices, and the unions involved.

The proposed settlement will award 90 days' pay to 107 of the 341 employees who were made redundant. There will also be 70 days' pay to 28 staff who were moved to other council jobs with less pay and 60' days pay to 206 people who kept their jobs. The compensation bill will be £1.065m.

Dave Carsley, local branch secretary of Unison, which together with the Transport and General Workers Union (TGWU) took Middlesbrough Council to the tribunal, said: "Some of the workers have stayed unemployed and it is the same old mix. You try to do what you can and keep families together but some will have failed and others faltered."

A spokesman for Mayor Mallon said: "This is something he inherited and on which he has been taking advice. What he is anxious to avoid is a situation where unions and employers are seen as warring factions.

"He acknowledges the stress and trauma this will have caused a large number of staff and their families; but he also has, in his current role, to work in the best interests of the ratepayers."

In a joint statement, Mike Brider of the TGWU and Unison's David Murray said: "The unions and the council want a motivated, respected and valued workforce. We all want a relationship that is based on partnership rather than conflict. We are committed to making that happen.

"The proposed award does reflect a reasonable and equitable settlement made genuinely to those affected."