The news was bittersweet for SdE employee family member Lynda Mooij, who had not been told prior to a press release from Southland District Council.
"I suppose it's better than nothing, but at the end of the day our guys still want that work. It's prolonging the inevitable really ... I'm pleased we got the 12 months but can we look at getting the eight-year [contract] back? That would be my choice."
SdE employs 82 people with disabilities to work on the recycling contract.
The agreement between WasteNet and SdE is to be formally endorsed by the three WasteNet partner councils - Gore District Council, Invercargill City Council and Southland District Council - early next week.
WasteNet spokesman Gary Tong said the agreement was good news: "[It] gives us all some space while ensuring the workers at SdE can continue to come to work every day."
The current contract was due to expire at the end of the month and had been put out for tender since last year, but will now continue through until June 30, 2020.
SdE general manager Hamish McMurdo was optimistic about the agreement and said: "We'd like to see this as a sign we will remain in the conversation."
He said it was good communication between SdE and WasteNet that resulted in the agreement - "they were wanting to knuckle down and sort this all out."
Mr McMurdo said he wanted to thank the three councils for taking the meeting to work through the problem.
Late last month SdE chose to break confidentiality and inform staff the contract was, at that time, likely to go to another tenderer.
The process has been contentious and councillors at Invercargill City Council debated whether it had been transparent enough.
It was later found that, partly in response to a meeting on the issue at the beginning of this month, Cr Karen Arnold voiced to council her intention to resign.
She said, specifically regarding the WasteNet contract, she had lost confidence in the current council's decision-making process.
Following the meeting, Gore Mayor Tracy Hicks and Southland Mayor Gary Tong issued a press release which provided information about SdE and why it was not the preferred tenderer, including claims of stalled financial negotiations.
In response, SdE released its own that disputed a lot of what was written by the two mayors.
SdE chairman Stephen O'Connor said the statement of the two mayors was "not an accurate account" and "misinformation" had been circulating about the negotiations.
SDC released a second statement saying both Mr Tong and Mr Hicks stood by what they had said in the earlier release and that staff had been asked to
"fast-track the review of what further information can be released without jeopardising any future decision around this tender process ..."
Discussions on the tender for the new recycling sorting contract are to continue between the three councils.