Federal Teal MP Monique Ryan's chief of staff will retain her job for the next fortnight and will be paid leave while her unfair dismissal claim is negotiated.
Political staffer Sally Rugg asked the Federal Court to stop her employment from being terminated by both Dr Ryan and the Commonwealth of Australia after she launched an unfair dismissal claim.
The MP attended an interlocutory hearing at the court in Melbourne on Friday, while Ms Rugg watched by video link from her lawyers' offices.
After several adjournments, Ms Rugg's barrister Angel Aleksov returned to the court just before midday and said an agreement had been reached between all parties.
Dr Ryan and the Commonwealth have agreed to allow Ms Rugg to retain her job until 5pm on February 17, when the matter will return to court for another hearing.
Before then, the parties will enter mediation with a judicial registrar to discuss Ms Rugg's unfair dismissal claim.
Commonwealth barrister Nick Harrington, who has been ordered to write an undertaking for the court, said Ms Rugg will also be paid "miscellaneous leave".
Dr Ryan hired Ms Rugg, the former head of Change.org, last year following the doctor's successful challenge to then-treasurer Josh Frydenberg's seat of Kooyong in the May 2022 federal election.
Ms Rugg has alleged Dr Ryan and the Commonwealth breached national employment standards and workplace agreements for political staffers by sacking her for refusing to work unreasonable hours.
She claims the Commonwealth injured her in her employment by engaging "in hostile conduct in the workplace" and has named Dr Ryan as a "principal actor" in the suit.
She is seeking compensation and pecuniary penalties.
The hearing before Justice Debra Mortimer continues.
