About 8500 police officers are to get a pay rise of 2% spread out over three years.
Under the just-announced agreement there will be no increase in the first year and 1% increases in each of years two and three.
Police Commissioner Peter Marshall says the agreement is fair and reasonable in the current economic climate.
Discussions will continue between the police executive and the Police Association over the current collective agreement.
The Public Services Association says the latest round of police wage negotiations reflects a tough bargaining environment in the public sector.
PSA's national secretary Richard Wagstaff says it is concerned about budget cuts in the public service and says he does not expect the police contract to be what he calls a trend-setter for public sector negotiations.
Acting Prime Minister Bill English, however, says police are very well-looked after in comparison to other public servants.
Mr English says the Police Association and police management have worked constructively to come to an agreement.
But the Labour Party says police have been done hard by and have effectively taken a pay cut.