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The issue came to light when it was brought to the attention of the unions that the calculation used by the Royal Borough of Greenwich to calculate the rates of pay for term time workers incorrectly underestimated the number of hours they would work over the course of the year.

Andy Prendergast, senior organiser at GMB who was one of the unions involved, said: “This result represents a great victory for the predominately women workers employed on term time contracts. Teaching assistants, administrators, cleaners and nursery nurses have been effectively unpaid for years and this deal ensures that will no longer the case.

"We are pleased that the staff will see both a pay increase and compensation for what shouldn't have happened in the first place. This offer of a settlement represent a pragmatic step forward by the council and we are pleased that we will be able to deliver our members the backpack they deserve in time for Christmas."

The agreement, ratified by the Council at a meeting last week (30 October), means that the employees affected will see pay rises of between 0.5%-1.6% and a compensation payment backdated to 1st January 2013.

Additional payments will be made to those members in the pension scheme prior to 2014 in respect of the contributions which were missed.

Cllr Chris Kirby, formerly cabinet member for human resources at The Royal Borough of Greenwich, said: “There were around 18 different formulas being used by all councils across the country. Only one of those formulas can be correct. We started negotiations with national unions on this two years ago and have been able to work with our partners and our staff to come up with a proposal that works for them. It’s a proposal that they are happy with and that is sustainable and doesn’t threaten frontline jobs.”

The payments will be offered to all affected staff by the end of the year.