Virgin Australia has dodged the threat of disruptive industrial action from ground staff during the peak Christmas period, agreeing to a pay deal that will deliver some workers pay rises as high as 20 per cent in the first year.

The three-year pay deal involves a minimum 14.9 per cent increase across all pay grades, regardless of seniority, and comes after baggage handlers and cleaners won the right to a protected action ballot at the Fair Work Commission in late October.