Management and unions at the BMW plant at Cowley have resolved a pay dispute after two days of talks.

The row centred on a new seven-grade pay structure for workers that BMW wants to introduce to replace Rover's three grades.

Under the plan, about 20 per cent of the plant's 2,200 workers are due to move up a grade but BMW said workers would not receive any pay increase until they had been individually assessed. Workers argued that this broke an agreement.

After the talks, BMW spokesman Ms Angela Wigley said: "Every employee will have a one-to-one meeting with his or her manager during the next eight working days to advise them what their new grade will be. The new grading will apply from July 1.

"Anyone who goes up a grade will receive increased money backdated to April 1.

"We have also agreed a right of appeal for all employees. The company and unions are keen to stress that the appeals procedure contained within the agreement will be strictly followed."

She added: "There had been an awful lot of rumours and speculation circulating over the change from the old three-grade system to the new seven-grade one and we could have handled communications better. Both sides have worked hard to clear up mis- understandings."

A spokesman for the Transport and General Workers Union said: "Things look better now than they did a week ago, but there are still likely to be some unhappy people around.

"We intend to meet the company again to clarify points such as how long the appeal process will take."

The dispute came just days before the launch of the new Mini on Saturday.