In another victory for gender equity, midwives have now been given the chance to dictate their own salaries and shrink the gender pay gap.

The College of Midwives has stepped back from taking court action after mediation that gives community-based midwives the right to design their own funding model.

The college had filed a claim against the ministry in 2015, alleging pay discrimination on the basis of gender. It was due to take the case to court in mid-August last year.

However, on the eve of a High Court hearing in Wellington, the Government made a last-minute offer to enter into mediation.

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College chief executive Karen Guilliland said this had resulted in a number of historic firsts.

"The biggest is, for the first time in New Zealand history, midwives will be designing pay structures and working conditions for community midwives."

She said the exact shape of the structures were a work in progress, and would be created with ministry officials and college members.

In the past Guilliland said midwives' pay had been locked within a system that seldom included midwives or took into consideration what their work involved.

"For the first time too, funding negotiations for midwives will be legally bound by a set of comprehensive pay equity principles recently agreed to by the government, and that makes us an important part of the global pay equity drive."

Other wins from the mediation included a pay increase of 6 per cent.

"The pay increase, together with a 2.5 per cent rise from last year and 2 per cent in 2015, equates to about $220 per pregnant woman." said Guilliland.

An additional $1m was to be targeted towards urgent areas of need, such as urban locum relief and other urgent travel away from a midwife's area.

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She said if the ministry did not follow through on what had been agreed upon, they'd be heading back to court.

The college is confident this will ensure that midwives never again find themselves so unrecognised and undervalued and would see midwives paid what they were worth.

"We now have the opportunity to make sure midwives are respected and properly reimbursed for the 24-hours-a-day service they provide.

"It will future-proof both the profession and the service for mothers and babies; services that make a positive difference to families, throughout New Zealand."