The contracts are effective from July 1, 2002, through June 30, 2004, City Administrator Bruce Zimmerman said.
The members of the two employee groups approved the contracts at meetings last week, he said.
"We came to a reasonable compromise. We are glad it is done," said Steve Ryan, a city employee who is the unit chairman for the electrical workers union.
During Tuesday's meeting, Councilmen N. Linn Hendershot and Lewis C. Metzner thanked the union members for their patience.
The city continues to negotiate with the American Federation of State, County and Municipal Employees Council, which represents police officers as well as employees from the public works, water and water pollution control departments, Zimmerman said.
The city hopes to reach contracts with the other two groups in December, Zimmerman said.
In June the council unanimously approved a 2.5 percent cost of living allowance increase for its 126 nonunion employees.
Union workers were not given that increase due to the lack of contracts.
Under the adopted contracts, the members of the two employee groups will get 3.14 percent raises, retroactive to July 1, Hagerstown Assistant Director of Finance Ray Foltz said. The average employee will get an increase of about $1,400, Foltz said.
The difference between the 2.5 percent increase and the 3.14 percent raises will be funded with savings resulting from a change in union members' health care coverage, Zimmerman said.
The employees will, separately, get money in a one-time payment during this fiscal year, Foltz said. The average employee will receive $547 in a one-time payment, Foltz said,
In June the council approved moving most nonunion employees up the pay scale. The average employee changing grades would receive a 1 percent pay raise, or $439 more a year, Human Resources Director Donna Messina has said.
Moving employees to higher grades cost about $72,000, which will come out of $101,727 in savings realized because nonunion employees agreed to participate in a lower cost health care program, Zimmerman said.
The contract with the firefighters' group will cost the city $114,469 for the current fiscal year, which ends June 30, and $86,671 in the next fiscal year, Zimmerman said.
The contract with the electrical workers will cost the city $80,465 in the current fiscal year and $64,779 in the next fiscal year, Zimmerman said.