Tallink and the Estonian Seamen's Independent Union on Monday finalized the details of a four-year collective agreement that will raise wages by at least 13 percent.
The state-owned company and union started negotiations on Thursday following a warning strike last month.
A model for calculating pay rises in the coming years has also been agreed which takes into account the median wage and the Bank of Estonia's forecasts, Tallink said.
The union initially fought for a 17.5 percent increase for service personnel and 22.5 percent rise for technical personnel.
It settled for a 13.5 percent increase for service personnel and a 16.1 percent rise for technical personnel.
Chairman of Tallink's board Paavo Nõgene said the agreement ensures "greater stability" for the company and employees.
It will also help the company plan the number of ships needed in the future, he said.
Editor: Marko Tooming, Helen Wright