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Royal Mail settles union dispute in ‘landmark’ pay deal for workers

Suban Abdulla
·2-min read
Royal Mail delivery vans are parked at the Mount Pleasant sorting office in London on December 19, 2016. (Photo by Justin TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
Royal Mail delivery vans are parked at the Mount Pleasant sorting office in London on December 19, 2016. (Photo by Justin TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)

Royal Mail (RMG.L) workers have won a “landmark” pay deal that ends a two-year dispute on job security, pay and hours.

The settlement announced jointly with its largest union, the Communication Workers Union (CWU) will pave the way for the postal services group to focus more on parcel deliveries.

The announcement comes as, Royal Mail and CWU had been locked in a dispute over a £1.8bn ($2.42bn) restructuring plan, proposed by former chief executive officer, Rico Back, who resigning in May amid the resistance.

CWU said the agreement includes a two-year pay deal backdated to April 2020, worth 3.7%, and a one-hour reduction in the working week. The company said it would increase workers’ pay by 2.7% from April 2020 and by another 1% from April 2021.

“This is a landmark agreement that means that even in these incredibly difficult times, when members stand in solidarity with their union, it is entirely possible to plan a future that can still benefit workers, customers and the company,” CWU general secretary Dave Ward said.

As the business introduces changes, there will also be no compulsory redundancies and Royal Mail's objective would instead be one of job creation, CWU said.

This means Royal Mail can move ahead with planned changes, including developing a 24/7 operation for parcels and new technology and automation.

Royal Mail hares rose almost 1.4% to 327.80 on Tuesday afternoon.

Royal Mail shares. Chart: Yahoo Finance
Royal Mail shares. Chart: Yahoo Finance

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The postal group which suspended deliveries to mainland Europe due to a travel ban on Britain following the new COVID-19 mutation, said its revenue in the eight months to November was £380m higher, thanks to growth in parcel demand during the pandemic.

Royal Mail's interim executive chairman Keith Williams said that the group has a “window of opportunity to focus” the business on what its “customers want today - an ever-growing need for more parcels, whilst providing a sustainable letters service.”

"This agreement provides a framework to do just that, but the proof will be in the pudding. We have been far too slow to adapt in the past and now need to deliver change much more quickly," Williams said.

Royal Mail revealed a £20m group operating loss, in November, for the first half of 2020 but it said a rise in the number of parcel deliveries during the pandemic would help its outlook.

In October, it said it recruited around 33,000 additional flexible workers to help during the peak season leading up to Christmas.

Watch: Why job losses have risen despite the economy reopening