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Maintenance workers at Australian Paper's Maryvale mill in the Latrobe Valley have agreed to a wage freeze and a four-day week as part of a new workplace agreement.
About 160 workers have voted to accept the deal, after more than a year of negotiations.
Mark Nelson from Australian Paper said the wage cuts would save the company about $3 million.
He said efficiencies were needed amid competition from Asian paper imports and four years of consecutive losses for the company.
"It's a great signal that employees from Maryvale want the mill to continue to operate and on the basis of that its future looks better than what it had been in the past," he said.
Steve Dodd from the Australian Manufacturing Workers Union said the deal provided welcomed job security for workers and put the company on a solid footing.
"Australian Paper has had a bit of a question mark over its finances over recent times and we believe this is the appropriate agreement for our members to keep working and keep having a decent job with decent wages," he said.