Sigh.  A needless and petty fight.   The government is going to lose.

Deputy Ministers, MLAs, Officers of the Legislature and judges have been given 3% credit per annum (vs 2% for public servants of various ilks) for decades.   Good / Bad / Right / Wrong - immaterial.

If they were negotiating something different than that, they should've gotten it in writing -- preferably in the offer letter to her.  Since they didn't, if it goes to court (and it probably will) the government will probably lose.