BT and the Communications Workers Union (CWU) have reached a deal on the pay dispute which had threatened to escalate into full blown industrial action.
The agreement means CWU members at BT will get an overall pay rise of 9.3 per cent over an unprecedented 39 months to run until March 2013.
Members will receive pensionable pay rises worth three per cent each financial year between April 2010 to March 2013 and the increase has been backdated to January this year.
The union had previously been after a five per cent rise in 2010/11 alone and had turned down BT's initial offer of two per cent.
The communications giant had also offered lump sum payments worth up to 500 for each member - again rejected by the CWU. These have now been removed from the new deal.
In the next few weeks, members will be sent a consultative ballot on whether they wish to accept the offer.
Given the average pay rise for workers from the Prospect Union, which represents around 30,000 BT employees, stands at around two per cent, it is perhaps no surprise that CWU is pleased with the agreement.
However, Prospect members have pay ranges and pay rises related to performance reviews something that CWU members will miss out on.
"This is a fantastic deal for our members providing a fair rise in their basic pay this year and for the following two years," said CWU deputy general secretary Andy Kerr.
"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."
He added: "Although our ballot for strike action was ultimately withdrawn, we believe it played a major part in getting BT back to the negotiating table with a significantly improved pay offer."
BT said the deal will provide wage stability for several years something the firm will be keen to secure in light of its big plans for broadband and the Olympics.
"BT will benefit from a long period of certainty whilst our employees will have financial stability during uncertain economic times," said BT's chief executive Ian Livingston.
