"We're not going to go ahead with it," says Chief Roy Fabian, noting various discussions leading to the agreement began last fall.
The court challenge -- launched by the previous band council -- followed an organizing drive among band employees by the Public Service Alliance of Canada (PSAC), which applied to the CIRB for certification to represent the workers.
Fabian says PSAC has agreed not to unionize band employees until the labour code issue is dealt with in the Deh Cho Process.
The KFN took the federal government to court a year ago, challenging the authority of the Canada Industrial Relations Board (CIRB) on the Hay River Reserve.
The KFN argued the Canada Labour Code, under which the CIRB operates, does not apply to the band or its employees because it infringes on constitutional and treaty rights to self-government.
Negotiations on the Deh Cho Process will also deal with the issue of a band worker who lost her job after being prominent in the union organizing drive.
Jean-Francois Des Lauriers, the union's regional executive vice-president in Yellowknife, declined to comment, since the constitutional challenge is still before the courts.
An NWT Supreme Court hearing on the case had been set for March 31, but was adjourned to July 21.
The suspension of the challenge will officially take effect then.
The chief notes the court challenge also affected the Deh Cho Process.
The federal government's policy is not to negotiate while First Nations are litigating against federal jurisdiction.
"I wanted to get it off the table," Fabian says.
Grand Chief Michael Nadli of the Deh Cho First Nations is happy the issue is being settled.
"It did set back one or two sessions."
However, he says the federal government was satisfied with developments as the court challenge began to be resolved, and the Deh Cho Process began moving forward again.
"Things got back to normal."
Fabian hopes everybody will feel good about the agreement.
"It's getting resolved and that's the key thing for me."