Mr Blair was sacked two years ago before reorganisation made Lochabar part of Highland Council.
He won a claim for unfair dismissal at industrial tribunal last October. Highland was ordered to re-engage him on his previous salary of more than£42,000, and pay£70,000 in compensation.
Highland offered him a solicitor's post but the salary was below Mr Blair's original wage and his pension was not protected. The council argued it could not offer the former chief executive his old salary as this would have been more than the head of legal services earns at Highland.