A financial package to pay the wages of employees at the Norco ice cream factory in Lismore will be extended for another 10 weeks.
Norco received an initial amount of $5.7 million in March to cover wages since it sustained significant damage in the February floods.
Two weeks ago Norco said it would be forced to sack or stand down around 240 casual and permanent employees from Friday if more government funding was not made available.
On Thursday the federal government confirmed it would extend funding to allow 170 employees to be retained for a further 10 weeks.
Norco said the remaining 70 employees had resigned ahead of the impending July 15 deadline.
The announcement was made within hours of the workers being handed their stand-down notices.
Chief executive Michael Hampson said the negotiations had taken time.
"It did go down to the wire but I think, while that is the case, I think we're very fortunate and thankful for the outcome that we have," he said.
Factory future far from final
Mr Hampson said the 10-week extension would allow enough time for the company's Anchor Business Support Program grant application to be assessed, providing longer-term certainty regarding the factory's future.
The funding program is designed to provide large businesses in the Northern Rivers with assistance to recover from the region's floods.
It was first announced as a $50 million funding pool.
The state government has since contributed an extra $15 million but Norco and other businesses have lobbied for the program to be increased to $100 million.
While the factory's future is yet to be decided, Mr Hampson said he was hopeful the co-operative would receive enough funding to rebuild the factory and continue paying its employees until normal operations resumed.
"We would still be paying our people their wage but they would be able to go to other businesses and work to help them with their flood recovery," he said
Union calls for govt, business to 'get in the room'
Australian Manufacturing Workers' Union state secretary Cory Wright said the 10-week reprieve offered "a bit of room to breathe right now."
Mr Wright said the union was calling for a meeting with local big business representatives and members of the state and federal governments to discuss further financial support.
"We think the level of support that's there now may be able to extend that support bubble beyond Norco to other good, large employers in the region," he said.
"If we can get everyone in the room, that's certainly what we're advocating for."
