Royal Mail has reached a three-year pay deal worth 9.06 per cent with its main union, including a legally binding agreement to prevent industrial disruption and protect terms and conditions.
The newly part-privatised company said the agreement with the Communication Workers Union on industrial stability was believed to be the first of its kind in the UK.
Royal Mail and the CWU, which represents the majority of the postal company’s staff, said last week an agreement had been reached in principle on pay, pensions and working conditions, averting the risk of a strike taking place over the busy Christmas period.
The union rejected an 8.6 per cent pay increase over three years in July. The new deal includes a 3 per cent pay rise in 2013-14 backdated to April 2013, the same rise in 2014-15, and a 2.8 per cent rise subject to inflation in 2015-16.
The 139,000 staff will also receive a £200 lump sum payment in December, a new employee incentive scheme, legal protection of workers’ terms and conditions, and higher pension contributions from Royal Mail.
The company said the agreement would not change its financial outlook. “It represents a joint commitment to radically improve industrial relations and create a can-do culture in the interests of customers, employees and the company,” Royal Mail said.
The threat of industrial action formed part of the backdrop to the privatisation of Royal Mail, opposed by the CWU but sealed in October when the government sold a 60 per cent stake and handed 10 per cent to staff.
Shares in Royal Mail have since risen more than 80 per cent above its 330 pence offer price, prompting debate over whether it was sold off too cheaply. Shares in the company, which is set to move into the FTSE 100 on Wednesday, were up 0.25 per cent at 596p on Monday.
Dave Ward, CWU deputy general secretary, said: “This is a good deal for the company and customers as well as for employees, but investors should be clear that this agreement commits them to growth and there will be no tolerance to a race to the bottom on services and jobs.”
The industrial stability framework aims to resolve workplace issues at a faster pace and without disruption, Royal Mail said. Defined processes and strict timescales would be applied to resolve any disputes.
In return, staff will receive protections including: the maintenance of existing terms and conditions of employment; a commitment to retain a predominantly full-time workforce; no additional franchising or outsourcing; and an objective to continue to manage change without recourse to compulsory redundancy.
There is no time limit, but there will be periodic reviews from 2019. Both parties have the right to terminate their undertakings under certain circumstances “including the breakdown of industrial stability”.
The CWU executive said it would recommend the agreement in a ballot of members. The union has pledged no industrial action during the ratification process, including the Christmas trading period.
Moya Greene, Royal Mail chief executive, said: “I am delighted that we have reached an agreement in principle with the CWU. This will provide long-term stability and certainty for Royal Mail, our employees and our customers at this pivotal time. Working together we can create a strong foundation for the continued success of our business.”