The Communication Workers Union said it will now ballot all members at BT on strike action after the telecoms company failed to increase its pay offer.

CWU announced its intention to hold a strike ballot last week, giving BT until 4 June to come up with a higher pay increase offer than two percent.

BT’s troubled Global Services division, where CWU represents a number of employees, may also be affected by the potential strike. The division cut 5,900 jobs as part of a total group cull of 35,000 jobs in the last two years.

Andy Kerr, CWU deputy general secretary, said: “We’re obviously very disappointed that BT has not improved its pay offer of two percent despite their healthy profits this year.

“We now have no option than to put the wheels in motion to ballot all appropriate members in BT for strike action, which would be the first action of its kind in over 20 years.”

CWU’s demands for a five percent pay increase was met with BT’s final offer of a two percent consolidated increase and two non-consolidated and non-pensionable £250 payments, the latter being dependent on meeting undisclosed end of year targets.

Kerr said that two percent offer was “not good enough” when the company is reporting profits of over £1 billion and paying shareholders a six percent dividend. The company revealed in its annual report 2010 last week that its chief executive, Ian Livingston, received an annual bonus of £1.2 million – on top of a basic salary of £850,000.

However, Kerr added: “We remain open to discussions with BT at any time, but only a revised pay offer will bring this dispute to an end.”

While BT previously claimed that the offer would be equal to a 5.4 percent pay rise to the lowest-paid members, CWU said that in reality only seven people in the company who earn a salary of just over £14,000 would benefit from this, and the final £250 would not be paid until June 2011.

A spokesperson for BT said that the company was "keen" to resolve the "current impasse" and is willing to meet with the union.

"Industrial action is in no-one's interests and it would be disproportionate given our offer could see the average union member get a package worth around four per cent. This offer is fair, realistic and more generous than those accepted by the union elsewhere."

He added: "As for bonuses, up to thirty thousand staff will benefit this year but that's because their packages are tied to the company's performance and BT has performed well. If the CWU wish to discuss performance-related bonuses for their members we would be delighted to discuss that with them."