The last three years have seen the most bitter dispute in our history, the complete and deliberate mismanagement of Royal Mail by the Board and a relentless attack on postal workers and the service they provide – the status quo is not sustainable.

The actions of the Board laid the ground for a takeover bid from Daniel Kretinsky’s EP Group.

The CWU believes Royal Mail should be in public hands. It should never have been privatised. We also have an obligation to our members to recognise the reality of our industry and the future for the company. We know there are legitimate concerns about Royal Mail Group being owned by a foreign private equity investor – we share those concerns. This is why, following a unanimous mandate from our annual conference earlier this year, we set out to engage EP Group to reach an agreement that, in the reality of privatisation, could address all our concerns and create the opportunity for a fresh start.

Our Conference called for us to secure an agreement covering:

  • No break-up of the company
  • No franchising
  • No outsourcing
  • No introduction of a 3 or 4 day USO
  • No raid of pension funds

 

We are pleased to say we have achieved all the above and a series of commitments well beyond this.

 

The outcome we have reached is a groundbreaking agreement that provides extensive job security protections, changes the very nature of how a private company operates, provides employees with a meaningful stake in the business and resolves several outstanding issues- including a phased removal of the inferior two-tier terms and conditions imposed by the Royal Mail Group Board.

Additionally, we have also been involved in direct talks with the Government on the takeover. As a result, you will have seen that the Government has negotiated a contract with a Deed of Undertakings from EP Group and has engaged with the CWU throughout these discussions. The key details from the Deed of Undertakings are set out within this briefing.

It is important we make the point to members that the agreement only comes into effect, if EP Group successfully completes the takeover. We anticipate they will be successful and could likely be in place by the end of March 2025. This means the Royal Mail Board will continue to run the company until the transaction is complete and we want to reassure members that we will be immediately engaging with Royal Mail to ensure they start to act within the spirit and intent of this agreement. To this end, this week we have agreed with Royal Mail that 11,000 part-time employees will have their contractual hours increased, (including thousands moving to full time) on the legacy terms. This shows the collective power of the union – whoever we are dealing with.

You can see a link to the full agreement here cwu.org/rebuildingroyalmail and we set out below the areas where we believe will deliver a fresh start for Royal Mail, completely reset employee and industrial relations and ultimately, give us the platform to rebuild Royal Mail.

 

LEGALLY BINDING FRAMEWORK

 

As part of their assault on our members’ terms and conditions, Royal Mail removed all agreed legally binding protections. In contrast, this agreement delivers the following legally binding commitments:

  • No sell-off or break-up of any operational part of the existing company.
  • There will be no outsourcing of any CWU-represented grades or franchising of any part of the existing parts of Royal Mail.
  • EP will not establish a separate Royal Mail branded, or otherwise, parcel company and will pursue all growth opportunities through existing employees and the core business.
  • EP Group confirm they will not operate Royal Mail as a ‘gig economy’ employer, there will be no recruitment of ‘owner drivers’ (self-employed drivers) into Royal Mail and there will be no increase above the 25% of owner drivers already employed in Parcelforce.
  • Ensuring Royal Mail maximises full-time employment, remaining a predominantly full-time employer.

By their nature, all legally binding commitments have a review clause and the opportunity in circumstances where the very future of the business is threatened for a company to serve notice. It is clear Royal Mail abused this position when they ripped up the previous legally binding protections, prior to which had served us well for over nine years following privatisation. This is a very important legally binding framework, and we are confident that it will serve us well under EP Group’s ownership of the company.

 

PAY, TERMS AND CONDITIONS – RESOLVING OUTSTANDING ISSUES

 

Upon the completion of the transaction and EP Group becoming owners of Royal Mail, negotiations will begin to reach full agreement on the agreed and established principles below:

  • The equalization of pay terms and conditions for new entrants through the introduction of a new career path. The first step for this will be agreed no later than three months post–transaction.
  • The introduction of a new agreed resourcing model to address concerns over Quality of Service, retention of staff and employee motivation.
  • A review of the level and utilisation of agency workers with a view to significantly reducing them
  • A review of all overtime and scheduled attendance rates.
  • A commitment to improving basic pay with a pay deal being reached no later than three months post the transaction.
  • The introduction of a genuine and new individual performance incentive scheme – engaging frontline workers in the development of such a scheme.
  • A review of voluntary redundancy terms, as a key measure to avoid any compulsory redundancies.
  • A review of sick pay arrangements with a view to reaching an improved agreement that reflects a more supportive approach for employees.
  • Piloting a new way of working, including mechanisms to allow postal workers more say over day-to-day operations and management of workload, including a more supportive way of utilising technology.

 

USO REFORM

CWU agreement to any reform of the USO will be conditional on EP Group abiding by their commitments on pay, terms and conditions set out above. This should give members confidence in the status and strength of the agreement.

 

On the future of the USO we have agreed that:

  • Following the outcome of any pilots of the proposed USO reforms, EP Group and the CWU commit to reaching a full agreement on how any changes to the USO will be implemented, in a mutually beneficial way.
  • EP Group has committed to there being no compulsory redundancies throughout the period of implementation and full deployment of any agreed USO reform. Following the deployment of any agreed reform, both parties will agree a new long term job security agreement with a view to extending the commitment to no compulsory redundancies.

This means the 2025 ‘cliff-edge’ moment on compulsory redundancies is removed and, as we anticipate the full deployment of USO reforms to not take place until late 2026, it is clear that we have secured a significant extension alongside a commitment to potentially extending it further via negotiations.

 

A MEANINGFUL STAKE IN THE BUSINESS FOR EMPLOYEES

 

One of the most damaging actions from the Royal Mail Board that preceded the 2022 dispute was the decision to hand hundreds of millions of pounds to shareholders and then plead poverty to the workforce.

We have secured a groundbreaking agreement that will ensure never again will Royal Mail employees not share in the success of the company. 

EP Group has committed to creating a post-Transaction Employee Collective Benefit Trust (“ECBT”), into which 10% of dividends from operating profit generated by Royal Mail in the preceding year will be placed. These funds will be distributed to employees. This is in addition to yearly pay bargaining and the new incentive scheme – representing one of two additional earnings opportunities we have achieved.

 

A NEW BUSINESS AND GOVERNANCE MODEL

 

We will formally end the “Our Business to Run” era of Royal Mail by introducing a new radical governance and business model that will change the way a private company operates. These changes will be anchored the company’s Articles of Association.

An Advisory Committee, composed of representatives of the CWU and EP Group, will be empowered to comprehensively review proposals, input into the development of operational changes and ultimately, present their recommendation in advance of the Board taking decisions. This is designed to ensure that the voice of postal workers is embedded in decision-making at Royal Mail.

A Government representative will be invited on at least a twice-yearly basis to hear from the Advisory Committee on the direction of the company. This will provide an unprecedented layer of oversight and accountability for a private company in the UK.

A new ‘mission statement’ will be created, which will state that Royal Mail will be governed in the interest of customers, employees and the company, rather than just the shareholder(s). The statement will also place maintaining Quality of Service and Royal Mail’s important social role in communities across the UK as primary goals of the company, alongside returning to profit.

 

EXECUTIVE REMUNERATION

 

We will set an example for companies across the UK by refusing to reward failure. No longer will senior executives have their pay and reward packages on dismantling services and cutting costs.

EP Group has committed to reviewing executive remuneration and will introduce terms that ensure it is subject to ensuring prioritisation of Royal Mail’s long-term goals, over short-term profits. It will also include feedback from employees in its criteria.

 

PROTECTING PENSION SURPLUSES

 

There has been a real fear that EP Group would, at some point, look to access the pension surplus that exists to pay out to shareholder(s). We have addressed this concern.

EP has agreed not to access the pension surplus and instead it has been agreed to split this between investment into Royal Mail and for the benefit of employees, with agreed funds to be distributed into the Employee Collective Benefit Trust. This is not likely to happen in the short term, but we have the security we need in place.

 

GROWTH AND INVESTMENT STRATEGY

 

EP Group and CWU have agreed that we will jointly design a new plan for growth and investment built on the competitive advantage of our infrastructure and our presence in every community, with one of the most trusted workforces in the UK.

 

GOVERNMENT AGREEMENT

 

The agreement also reflects the Deed of Undertakings, made between EP Group and the Government.

We have to be absolutely clear – there is no way this agreement would have been possible under a Tory Government or any of the other political organisations claiming to represent the views of working people. We have our ongoing issues with Labour, but the new Government has been helpful in both securing their own agreement with EP Group and backing the separate negotiations we have held.

The Government Undertakings include:

  • Protecting the pension surplus.
  • Keeping the brand name and Royal Mail’s headquarters and tax residency in the UK for the next five years.
  • Restrictions on moving dividends out of Royal Mail Group.
  • Respecting agreements and recognition of the CWU.

This means the Government now has a formal role in Royal Mail for the first time since privatisation. The CWU is proud to have influenced this outcome.

 

INDUSTRIAL RELATIONS

 

EP Group have committed to improving industrial relations and abiding by all agreements between Royal Mail, EP Group and the CWU (following the sale being finalised).

EP Group has also committed to fully respecting existing agreements with the CWU, including the Industrial Relations Framework.

 

SUMMARY

 

This is a huge moment for the future of Royal Mail. Despite extremely challenging circumstances, we have delivered an agreement the whole union can be proud of.

The last few years have been difficult. We will now see how the takeover plays out but be in no doubt that we will also engage the current Royal Mail leadership on many of the issues within our agreement to test their willingness to move on in advance of the takeover.

Let’s use the coming months to recruit new entrants into the CWU.

Let’s use the coming months to ensure every office has a local representative.

Let’s use the coming months to rebuild Royal Mail.

Thank you for your loyalty and support – that is what has forced one of the most powerful business groups in Europe to reach an agreement.

 

Yours Sincerely,

Dave Ward

General Secretary

Martin Walsh

Deputy General Secretary Postal