Up to 500 job losses are expected at British Steel after a deal over pay and conditions for workers was struck with the Chinese buyer.
Unions, which point out “significant numbers” had recently left the business, said an agreement was reached following 10 days of “extremely challenging” negotiations with the industrial giant Jingye.
It aims to complete the takeover in the next few months.
Most of the steelmaker’s 4,000 UK employees are based at its main Scunthorpe plant.
The Community, Unite and GMB unions said they were in a difficult situation, since any new owner of a company in liquidation could offer new contracts with minimum terms and conditions.
However, they said they were encouraged by Jingye’s promise to invest £1.2bn in the business over the next decade.
The unions said in a joint statement: “These discussions have been extremely challenging but with British Steel in liquidation it is clear that if the business is to survive, change is required.
“These talks also took place in the context of the special managers having made it clear that there will not be another sales process for the whole business if the Jingye deal does not complete. British Steel would be broken up and sold in parts.
“Importantly, the employment package is also in the context of Jingye’s £1.2bn investment plan. We have seen the detail, and this investment would transform the business and secure the future of British Steel.”
Jingye chief executive Li Huiming said: “We believe that this agreement lays the groundwork to provide well-paid, skilled jobs at British Steel for many years to come.
“It will pave the way for significant investment in the company that will transform the business and allow it to succeed.”
Alasdair McDiarmid, operations director for Community, said: “Faced with challenging circumstances, we believe that the dialogue between Jingye and the unions has produced a better deal for employees than what was otherwise on the table.
“We look forward to working with everyone to securing the future of British Steel under Jingye’s ownership.”
Business Secretary Andrea Leadsom said: “The government is committed to getting a good outcome for British Steel and its valued employees.
“All parties are working extremely hard to finalise a sale in the coming weeks and secure a bright future for the company.”