Royal Mail’s Business Recovery, Transformation and Growth Agreement has been ratified by the postal executive committee of the Communication Workers Union (CWU) and will be put to a ballot of the union’s membership with a recommendation to approve.
The agreement includes a 10% salary increase and a one-off lump sum of £500 (US$620) for CWU-grade employees in Royal Mail and Parcelforce (broadly equivalent to 2% of pay and pro-rated for part-time employees). This includes the previously consolidated 2% pay rise that applied from April 1, 2022. It also includes a consolidated 6% pay rise, which applies from April 1, 2023.
In addition to the pay increases, an agreement has been reached on a profit-share scheme over the life of this agreement. Subject to Royal Mail returning an adjusted operating profit in any financial year up to and including 2024/2025, 20% of the adjusted operating profit will be distributed as a one-off payment to employees, paid after the publication of the company’s audited accounts.
Other key initiatives in the agreement are: later start times; seasonal working patterns; an optimized single parcel network for larger parcels; more efficient indoor mail preparation; Sunday working; no compulsory redundancies; changes to sick pay, attendance standards, ill-health retirement; and revised contracts for new starters.
From March 2024, start times in delivery will be moved back to help Royal Mail respond to the market demand for more next-day parcels, reduce its impact on the environment through the removal of 18 flights a day, improve the quality of service and create greater capacity to grow. A program of work on the pipeline will seek to limit changes to start and finish times in delivery by 60 minutes, with the option to move times by up to 90 minutes if needed. The last letter delivery time will move to 4:30pm at this time.
From autumn 2023, the company will deploy new seasonal working patterns. Delivery postmen and women will work 39 hours per week in the peak Christmas season, 35 hours per week in the quieter summer season, and 37 hours for the remainder of the year to better reflect the seasonal variations in letter and parcel volumes.
Royal Mail reported that there is duplication across the Royal Mail and Parcelforce Worldwide networks, with both companies carrying the same format of parcels and visiting the same customers on the same day. The creation of an optimized single-parcel network between Royal Mail and Parcelforce Worldwide is intended to maximize synergies between the two brands and improve competitiveness in the delivery of larger parcels.
The company also revealed that currently postmen and women spend up to two hours a day re-sorting mail before their delivery rounds. Under this agreement, Royal Mail will reduce the amount of time spent sorting by 20-35 minutes so that more time can be spent delivering to customers.
Furthermore, new employee contracts will include a requirement for regular Sunday working, enabling Royal Mail to grow its seven-day parcels business and adapt to changing customer demands. The agreement includes a commitment to no compulsory redundancies for the life of the agreement. There will be a joint review of this position in April 2025 to consider whether circumstances enable the company to extend this commitment.
According to Royal Mail, this agreement provides a platform for the next phase of stabilizing the materially loss-making business while continuing to drive efficiency and change. The operational changes in the agreement are designed to improve competitiveness, particularly in next-day parcels, reduce cost and environmental impact, and improve the quality of service for customers. A three-year pay deal will provide certainty for employees and ensure Royal Mail remains the industry leader on pay, terms and conditions.
Read more key personnel updates from the parcel and postal technology industry, here.