BT has resolved its pay dispute with the Communication Workers Union (CWU) after agreeing to cough up a 3% rise for each of the next three years.
The settlement for 55,000 BT staff came late on Friday, just days after the CWU was forced to call off a strike action ballot due to "legal technicalities", and will cost the telco giant £130m more than the 2% offer it had initially made.
"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," said CWU deputy general secretary Andy Kerr.
The fully pensionable 3% increase is lower than the 5% CWU had been demanding but it reckoned the prospect of industrial action had forced BT to re-think its position.
"Although our ballot for strike action was ultimately withdrawn, we believe it played an improved part in getting BT back to the negotiating table with a significantly improved pay offer," said Kerr.
CWU will recommend the package to unionised staff and a ballot will be held in the next couple of weeks.
However, it is still dwarfed by the 6% pay rise secured by BT chief executive Ian Livingston, who claimed that industrial action would have been "in no-one's interest".
"This agreement is good for BT, its employees, shareholders and customers. BT will benefit from a long period of certainty whilst our employees will have financial stability during uncertain economic times," he said.
It means that BT can now get on with rolling out its next generation broadband connections and running the communications systems for the 2012 Olympics without having to deal with swathes of disgruntled engineers.