Defence Force staff are receiving a pay rise averaging 5.7%.
The move, costing $45 million, is the first pay rise for Defence personnel since 2008.
The increase applies to 8500 regular force members, about 2200 reserves and more than 2500 civilians.
The deal also includes a further $40 million for a one-off buy-back of specific entitlements and conditions of service that are being phased out.
Defence Minister Jonathan Coleman says so far this year about $143 million has been saved from the force's budget, with the money helping to cover the pay increases.
But the Labour Party says the Government is giving with one hand and taking away with the other, as the pay rise is offset by military housing rents rising to meet market rates.
Dr Coleman says nearly 90% of staff will be getting an increase.