Eircom wants to withhold a 2% pay increase until unions sign a memorandum of understanding on work practice reform and plans to make 900 staff redundant before 2010.

The pay increase was scheduled to come into effect on 1 May under national wage agreements and unions said they will now begin the two week procedure to ballot members for a strike.

Steve Fitzpatrick, general secretary of the Communication Workers Union, contradicted a claim from chief executive Rex Comb that Eircom had to increase line rental charges by 1.18 to pay for wage increases.

"He said he was putting up prices to pay staff, and then has not paid the staff. It's disingenuous and that's talking out of both sides of your mouth where I come from, " he said.

"This caught me by surprise and I'm still trying to figure out what [management] is doing, " he said. "This change of emphasis shocked me."

Eircom said it wrote to unions to work out the implementation of the 2% increase due in May. The company wants the unions to specify what exact work practices will improve as part of the 'Toward 2016' talks between unions, employers and government.

"Line rental increases are happening due to wage inflation, " said a spokesman. "But as prices go up so do customers' expectations and that's what we're trying to tackle."

Eircom chairman Pierre Danon has made no secret of his desire to create greater efficiencies within the former state telco since Australian private equity firm Babcock & Brown and the company's Employee Share Ownership Partnership (ESOP) bought Eircom from the Valentia consortium last year. B&B and associate investors hold 65% of Eircom, with the ESOP owning the remaining 35%.

In a statement, Eircom said it had "repeatedly attempted to fully engage with the senior members of CWU and Partnership and wishes to establish a framework agreement that elaborates more fully on the commitments made by all parties towards improved customer service."

Fitzpatrick said he was "happy to sit down and discuss everything but I won't agree to proposals before we've had those talks so we've had to ballot members."

Eircom said it "fully supports" the wage deal outlined in 'Towards 2016', and paid employees the first phase in November 2006. A spokesman said the company had seen no reciprocal action from staff in terms of swifter responses to fault reports, shorter waiting periods for new line connections, and answering customer queries in a "better manner".

"There's two sides to this coin: we're happy to pay, but there's been no movement on the other side, " said the spokesman. "We need to get more flesh on the bones from unions."