The city announced the new deal between outgoing Fire Chief Mike McDonnell and Mayor Jean Stothert's office on Monday.
An earlier agreement between the two fell apart last month when they disagreed over the details.
As part of the new deal, McDonnell will retire November 8 with a $124,000 pension after completing 24 years of service. The previous deal would have given him credit for an extra year and a $130,800 pension.
Stothert is promising to delay any firefighter layoffs or major cuts until after Dec. 21. Previously, she had promised to delay any major cuts until next July.