BT agrees 'unprecedented' 3% pay deal to avoid threat of walkout

BT HAS agreed a new 3 per cent annual pay deal for its workers that will last for 39 months and should avert the threat of a mass walkout after months of wrangling with trades union leaders.

The company and the Commercial Workers Union had been at loggerheads after the union asked for a 5 per cent pay rise for this year and accused BT of applying double standards in the way it treated those at the top of the firm and those at the bottom.

The deal, which means BT workers will receive a 9.3 per cent pay rise over the next three years or so, appeared generous in the current economic climate. But fears that it might trigger spiralling wage rises elsewhere by forcing other private companies to follow suit were downplayed by analysts, who pointed out that the deal was merely keeping pace with inflation.

BT, which has laid off 35,000 staff in the past two years, had originally offered a 2 per cent rise and a one-off payment for the more than 50,000 CWU members, prompting the union to launch the first ballot for industrial action at the firm in more than two decades.

The ballot was halted on Monday amid fears that the company would launch a legal challenge.

The company yesterday described the deal as "unprecedented" while the union said it was "fantastic" for its members.

Under the agreement, staff will receive pensionable pay rises worth 3 per cent each financial year from April 2010 to March 2013, with the rise being backdated to January 2010.

"This agreement is good for BT, its employees, shareholders and customers," chief executive Ian Livingston said in a statement.

"BT will benefit from a long period of certainty whilst our employees will have financial stability during uncertain economic times. Industrial action would have been in no-one's interest."

The union welcomed the 3 per cent consolidated and fully-pensionable increase to base pay. Andy Kerr, CWU deputy general secretary, said: "Following a very difficult set of negotiations and the first national ballot for strike action in BT since 1987 we're delighted to have resolved this pay dispute through talks.

"This is a fantastic deal for our members providing a fair rise in their basic pay this year and for the following two years.

"This deal is among the highest pay settlements in the country this year recognising the contribution of staff and BT's success over the last year."

Mr Kerr added: "Although our ballot for strike action was ultimately withdrawn, we believe it played a major part in getting BT back to the negotiating table with a significantly improved pay offer."

The CWU, which represents 55,000 BT workers including engineers and call centre workers, will now hold a consultative ballot of its members recommending that they endorse the deal in the coming weeks.

The union had previously argued that BT could afford a 5 per cent rise over one year after the company reported a 1 billion annual profit and revealed that Mr Livingston would be paid a 1.2 million bonus for last year.

Ian Watt from Enders Analysis said the 9.3 per cent offer "sounded impressive" but in reality was "just keeping pace with inflation".

The City estimated the deal could cost the company around 50 million extra a year by 2013,z