BT has agreed a two-year pay deal for its workers as part of a package of measures including a new pension scheme.
Staff will receive a 3% pay rise this year and again in 2019 under a deal which will now be put to a ballot of members of the Communication Workers Union.
The telecoms giant also announced the closure of its defined benefit pension scheme from the end of May and the establishment of a “hybrid” scheme, combining elements of defined benefit and defined contributions.
BT said the changes ensured “fair, flexible and affordable” pensions for all its employees.
A deal has already been reached with the Prospect union, which represents managers.
BT said it will work with the CWU on the new pension arrangement, which is designed to support employees on lower pay scales.
Chief executive Gavin Patterson said: “I feel it’s critical that we provide fair, flexible and affordable pensions for all our people. I’m committed to helping them save for retirement, so I’m pleased we’ve reached an agreement with our unions.
“These changes also bring far more financial certainty for the company in terms of our future pension arrangements.
“This will help us balance the needs of BT pensioners with the investments we are making to future-proof the UK’s communications networks and improve customer experience.”
CWU deputy general secretary Andy Kerr said negotiations have taken place against a “tough backdrop”, with the pensions deficit last measured at nearly £14 billion.
“As a result BT has been increasingly determined to end defined benefit provision completely.
“Against this background, the CWU has secured a defined benefit pension option for current BTPS members as part of the new hybrid pension. This is an innovative solution that will share future risk between our members and BT.
“We would not have achieved this deal without the wholehearted support of our members who firmly rejected the proposals contained in BT’s original consultation.”
CWU members are being recommended to accept the proposals in ballots being held in the coming weeks.