There were also changes to work rules such as rosters, consultation, sick leave and back pay.
FIRST Union bus organiser Rudd Hughes said he was pleased with the new agreement.
"Some important progress has been made on non-wage areas and delegates will now be recommending to our members that this offer is ratified."
"It's a reasonable compromise," he said.
Gary Froggatt, President of Auckland Tramways, said: "Tramways delegates will be recommending to our members that the offer made by the company is accepted."
NZ bus manager Shane McMahon said: "We have reached a good agreement which sees a real wage increase for our people. Once ratified this will be a great result for our drivers and customers."
Working conditions and pay issues have been a long-running source of tension between NZ Bus and unions.
Rotating rosters were introduced in July last year, significantly changing the nature of many drivers' working hours.
Some shifts were nearly 11 hours. In one example given to the Authority, unions showed how a driver would be required to come in at 6.20am, finishing at 6.02pm then returning the next day at 7.40am. After finishing their second shift at 7.01pm, the driver would be expected to come in for a third shift at 5.50am the next day, finishing at 3.02pm.
The short breaks between long shifts as well as inadequate toilet breaks while drivers were on shift were some of the union's main concerns in relation to working conditions.
The new rosters also had stretches where drivers would work five or six weekends in a row, something unions said would greatly impact on drivers' ability to spend time with their families.
On February 19 bus drivers went on strike, demanding a pay rise and better breaks on and between shifts.
NZ Bus said its drivers were paid $20.40 an hour plus overtime, and was offering another 35 cents an hour but unions rejected that offer. First Union asked for $21 an hour for drivers.
The strike was followed by a round of stopwork meetings in February.
