The Communication Workers Union (CWU) has cancelled the strike ballot at BT, on the day the results of the ballot were to be revealed.
CWU said the ballot was cancelled after it took legal advice on potential technical breaches would potentially invalidate the vote. The union has received a series of letters from BT over the past few weeks, which it said amounted to a "legal challenge" to the union.
The talks concerned a pay deal that CIO 100 listed BT offered to members, which CWU has said was "not good enough" when the company reported profits of over £1 billion and paid shareholders a six percent dividend.
BT revealed in its 2010 annual report that its chief executive, Ian Livingston, received an annual bonus of £1.2 million – on top of a basic salary of £850,000.
BT has today offered to meet with CWU for further negotiations on pay, which the union has accepted.
Andy Kerr, CWU deputy general secretary, said: "We're bitterly disappointed that this ballot has had to be cancelled. It's devastating for our members and for trade union rights in the UK, and of course it doesn't help to resolve the outstanding issues over pay which we have with BT.
"We will take all necessary steps to allow us to re-ballot our members as soon as practically possible."
In a letter to union members, a copy of which appears on the CWU's Facebook BT Pay Campaign page, Kerr wrote:
"Although the CWU made every effort to address the various legal requirements associated with running a statutory ballot for industrial action, unfortunately the balance of power is not with us on this occasion and once again the formidable strength of the British anti-union laws in preventing unions exercising the right to strike in defence of their members' interests is manifested."
Meanwhile, BT said it was "pleased" that the CWU had withdrawn the ballot for industrial action.
"There were procedural issues regarding the ballot that we raised from the start and the union has now accepted this to be the case. Our door remains fully open to the union and so we hope we can sit down and resolve this matter," said BT.
The union sent out strike ballot papers on 18 June after talks with BT's management broke down.
BT's pay offer includes a two percent pay rise for employees from April 2010 to December 2010 and a three percent pay rise for the 2011 calendar year.
The company also pledged to ensure that no compulsory redundancies would be made among BT staff in the UK until the end of 2011. This pay deal was changed from the one-year, two percent pay rise that the CWU rejected before the talks took place.
However, the CWU has stood by its demand for a five percent pay increase for its members, and said that BT's most recent pay offer was not a "material improvement" on the previous offer.
BT said that its pay offer was worth 5.1 percent pay rise over a 21-month period. Other terms of the latest pay offer included the payment of a lump sum worth 0.5 percent of salary for the first three months of 2010 to reflect a two percent pay rise and a guaranteed bonus of £250 per member to be paid in July 2010. The company also offered a further bonus of £250 to be paid in mid-2011, subject to BT's performance in the 2010/11 financial year.
BT's troubled Global Services division, where CWU represents a number of employees, may also be affected if union members go on strike. The division cut 5,900 jobs as part of a total group cull of 35,000 jobs in the last two years.