A ballot that could have brought more than half of BT's staff out on strike has been cancelled following legal advice.
The Communication Workers Union abandoned the vote after its lawyers warned that "technical breaches" meant BT would probably have overturned the result in the courts.
It is the latest in a series of strike actions to have been defeated by the lawyers, and comes six months after British Airways won an injunction against the Unite union in the high court that prevented a strike over Christmas. In May a later BA injunction was lifted by the court of appeal.
Neither BT nor the union would reveal precisely how the CWU's ballot might have broken Britain's trade union legislation. It is understood that BT's employee relations department had written to the union several times in recent weeks, flagging up potential problems with the balloting process.
The decision to abandon the ballot is a blow to the CWU, which had been due to announce the results today. Its deputy general secretary, Andy Kerr, said the decision showed that Britain's trade union laws are unfairly restrictive.
"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 it doesn't help to resolve the outstanding issues over pay which we have with BT," Kerr said.
The CWU had held the ballot after rejecting BT's offer of a 2% pay rise plus bonuses worth £500, and demanding a 5% increase. A walkout could have disrupted BT's services, making it harder for the company to handle customer calls or fix faults. The union has about 55,000 members within BT's overall workforce of nearly 100,000, mainly working as engineers or in its call centres.
Several other attempted strikes have collapsed in the past year, after lawyers argued that balloting processes were not fully in accordance with Britain's labour relations laws.
"Today's outcome would suggest that the CWU has accepted that the company has made a decent case that the union made errors in the balloting process," said Marc Meryon, industrial relations lawyer at Bircham Dyson Bell. "For BT to make headway it must have shown that these mistakes were significant ... The union is the author of its own misfortune to have got into this predicament."
The CWU said it would ballot its members again for a new strike vote, but would also reopen negotiations with BT.
BT said it welcomed the decision to drop the ballot.
"There were procedural issues regarding the ballot that we raised from the start and the union have now accepted this to be the case," said a BT spokesman.
"Our door remains fully open to the union so we hope we can sit down and resolve this matter. An amicable agreement is in everyone's interest and the withdrawal of the ballot provides both sides with a window of opportunity in which to reach such an agreement."
The CWU's climbdown comes as relations between unions and the government come under pressure. Today the Cabinet Office denied that ministers were planning to cut redundancy terms due to civil servants, a move that could have lowered the cost of slimming down the public sector. Employers groups are also calling for further tightening of trade union legislation. Last month the CBI said unions should need to secure the support of at least 40% of all workers before a strike would be legal as well as a majority of those who vote.
Members of Prospect, the second-largest union at BT, recently voted in favour of the pay deal the CWU has rejected.
The BT dispute has been rumbling on most of this year but escalated in May after it emerged that chief executive Ian Livingston received a bonus of more than £1m. He was given a 6% pay rise for 2010 but promised to give4% to charity.
Analysts have warned that industrial action could cause major problems for BT,especially if it ran for some time.
The company bounced back into the black in the last financial year, with a pre-tax profit of just over £1bn. But its revenues are in decline, a trend that is not expected to reverse until 2012/13.
BT staff last went on strike in early 1987. Then, the disruption ran for more than two weeks until BT agreed to a two-year pay rise worth 12.66%.
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