The threat of industrial action at Bus Éireann from Sunday has been averted after both sides agreed to take the dispute to the Labour Court.

The breakthrough came after almost 12 hours of negotiations at the Labour Relations Commission today.

It is understood that the case may go before the Labour Court next week.

The company has agreed to defer introducing cuts in employees' terms and conditions for a short period while the Labour Court hearing is taking place.

Unions welcomed the breakthrough, but warned that difficult issues remained to be addressed.

Bus Éireann also welcomed the development, and said that all services will operate as normal.

Earlier, the National Bus and Rail Union had warned that its 900 drivers will refuse to operate Bus Éireann services from Sunday were cuts in staff terms and conditions without union agreement.

Arriving for talks earlier, NBRU General Secretary Michael Faherty said that the only way industrial action could be averted would be for the company to withdraw Sunday's changes and allow negotiations to take place.

Bus Éireann informed staff in December that it would be introducing changes from 13 January.

These include cuts in overtime, premium and shift payments, lower leave entitlements and longer working hours for some grades.

The company has said that it is seeking €20m in savings this year, with an €11m cut in operations and the other €9m cut in payroll.

It said that without those cuts, it faces projected losses of €16m in 2013.

The talks are being chaired by LRC Director of Conciliation Kevin Foley.