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BT and the Communication Workers Union (CWU) have reached a pay deal that will grant staff a three per cent rise every year until 2013.

The accord means the threat of a summer of strikes is dropped.

It comes days after the union was forced to abandon a ballot for industrial action on a legal technicality. The CWU was unhappy with BT's offer of two per cent this year and three per cent next year, together with £500 lump sums.

Under the new deal, the first rise, expected to be implemented in August, will be backdated to January. The second three per cent boost a will kick in from January 2011. The final tranche will be implemented January 2012, on condition that inflation is within agreed upper and lower limits.

CWU members will be balloted to approve the deal in the next few weeks.

As is traditional, both sides are claiming victory today. BT pointed out that the CWU had demanded a 5 per cent rise this year, while union leaders claimed BT had bowed to the threat of strikes.

BT boss Ian Livingston said: "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."

The generous renumeration increases awarded this year to Livingstone and his senior colleagues was a major union gripe going into the negotiations.

CWU deputy general secretary Andy Kerr said: "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."

BT returned to profit this year following deep cuts, which were prompted by disastrous losses by its Global Services division. ®

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