The union representing KiwiRail workers has withdrawn two strike notices after the state-owned rail operator presented a new pay deal.

Rail and Maritime Transport Union (RMTU) members had been due to strike on Dec 16 in the South Island and the day after in the North Island in a move that would have hamstrung freight and passenger rail movements in the week before Christmas. Interislander sailings also would have been affected.

In a statement issued on Tuesday, the RMTU confirmed it had withdrawn the strike notices and was taking back a new offer from KiwiRail to its members for ratification.

The union had been seeking an 8% increase to the total payroll which, divided equally among union members, would have been of most benefit to the lowest paid workers.

It has been a tumultuous time for KiwiRail. Its chief executive, Greg Miller, resigned last month midway through a board-ordered probe speaking to senior staff who had resigned on his watch. 

Relations between the union and KiwiRail had soured under Miller, who oversaw improved operating results at the company. The RMTU welcomed his resignation as a chance to reset the relationship.

In a statement, KiwiRail said it had agreed on terms of settlement with the RTMU which has brought the "collective agreement negotiations to a conclusion".

“It has been a difficult negotiation,” said KiwiRail's acting CEO Todd Moyle, “but we have arrived at a settlement which provides our employees with a good pay outcome, and KiwiRail and our customers with a stable industrial environment into mid-2023.”

Meanwhile, RTMU general secretary Wayne Butson said "we are satisfied that an appropriate settlement has been arrived at".

“It has been tense at times, and we did not issue a strike notice lightly, but the outcome will be recognised by members as a fair one.”

The required process for the ratification of the agreement is expected to commence next week.