"This day is historic because for the first time, farsighted union leaders have agreed to sit down with the city administration in a spirit of cooperation and a belief that we can turn what has been for the last decade a slow-motion, quiet crisis into a victory that is fair to all parties," said Mayor Michael Nutter.
The mayor said the contract "gives us the crucial time we need to address the structural crisis that healthcare costs pose to the city budget."
The deal also allows the union to bid on any contract of $1 million or more under the same terms as third party bidders.
The tentative contract proposes new flexibility for city employees. In lieu of cash overtime, they can choose time off and bank it for later use.
D.C. 33 represents 9,400 city workers and is the largest of the municipal workers unions.
Earlier this month, the city reached a one-year deal with the Fraternal Order of Police that gives them a 3.5% raise, but cut the city's healthcare contribution.
The city's white-collar union, District Council 47, has been calling for a similar wage deal.
