A nursery worker who resigned because she feared children's safety was at risk due to a lack of staff has reached a financial settlement with her former bosses.

Theresa Franks was claiming compensation at an employment tribunal against the Daisy Chain nursery, run by her sister-in-law Wendy Franks and business partner Tracey Rose.

Mrs Franks told the Brighton hearing she resigned in July because she believed the nursery was breaching regulations over staffing levels.

Her allegations were denied by the nursery which claimed she had taken legal action because of a family dispute and jealousy.

Her bosses claimed they had evidence from social services and the local authority to prove regular spot-checks and registration checks on staffing levels and the running of the nursery, which cares for about 50 children, showed there were no problems.

After giving evidence, Ms Franks, who is now unemployed, reached a confidential agreement with the nursery, which included a financial payment.

She was represented during the hearing by her husband. The couple sat opposite Wendy Franks, who is Mr Franks' sister.

Theresa Franks, of Jevington Drive, Brighton, said she worked at the nursery, based at Brighton University's campus at Falmer, for six years but had left after her complaints over staffing ratios were ignored.

She said in the two months before she resigned there were staff shortages because of illness and holidays. But, despite her repeated warnings, her bosses refused to employ extra workers.

She feared the children could be at risk because there were not enough staff to look after them. There had previously been two accidents in which a child had broken an arm and another had suffered head injuries.

She claimed her two bosses, Wendy Franks and Tracey Rose, became hostile towards her following her complaints. She said: "They would just blank me. It was as if I did not exist. I had been there for six years. To be treated like that, I don't think was very fair.

"I only had one option - to resign. I was so stressed out, I felt I was going to have a nervous breakdown."

During cross-examination, Theresa Franks denied accusations from David Pollard, representing the nursery, that she was being vindictive due to a family dispute.

He said: "These allegations are unfounded and born out of nothing more than a family dispute and jealousy - nothing more than a personal and vindictive streak on your part."

Theresa Franks, who has no qualifications in nursery work, told the hearing she had been supervisor until June 1999 when she was demoted and her pay was cut due, she was told, to financial problems with the business.

She later discovered the job of supervisor was being advertised.