Royal Mail set to tear up nine-year trade union deal as battle over the future of the business intensifies
Royal Mail has announced plans to rip up a nine-year deal with trade unions as a battle over the future of the business intensified.
The FTSE 250 post carrier said that the agreement that it signed when it was privatised in 2013 was being used by the Communication Workers Union (CWU) to ‘frustrate’ efforts to overhaul the company.
The 506-year-old business is haemorrhaging £1million a day and has been attempting to change working practices and improve technology to compete with rival delivery services such as Amazon.
Pay row: Royal Mail said the agreement that it signed when it was privatised in 2013 was being used by the Communication Workers Union to ‘frustrate’ efforts to overhaul the company
But it said the CWU has ‘blocked any meaningful discussion’ around the changes while also not putting forward ‘any viable alternatives’.
The 2013 deal restricts Royal Mail from employing new workers on different terms to existing staff, making compulsory redundancies or using temporary workers.
But management views the agreement as a barrier to making vital changes that they believe are needed for the business to remain competitive.
The deal contains a clause that allows the company to break the agreement if it can demonstrate ‘material adverse effects’ on the business, including strikes.
As a result, Royal Mail said it was planning to throw out or ‘review’ the deal as well as others signed with union bosses over the years to ‘move to a more modern industrial relations framework’.
It is thought such a move could trigger a legal challenge, but the company said it needed to ‘break the impasse and ensure it can move ahead with its transformation’.
The CWU said the company’s action was ‘sickening’ and amounted to ‘an all-out attack’ on the union.
Shares in the group, which listed on the stock market at 330p when it was privatised back in 2013, plunged 4.8 per cent, or 10.3p, to 204.6p yesterday after the announcement.
The decision comes amid a long-running pay dispute between Royal Mail and the CWU, which represents around 115,000 postal workers.
The union went on strike in late August and early September. More walkouts are planned next week as relations continue to deteriorate.
CWU leaders have been pushing for Royal Mail staff to receive a pay rise at least in line with inflation, which is currently running at 9.9 per cent, having previously rejected the firm’s offer of a 2 per cent standard pay rise with the potential for 5.5 per cent if certain changes were agreed.
The union has also opposed alterations to working patterns such as delivering packages later in the day as part of the company’s modernisation plans.
The union is also pushing for the working hours of its members to be reduced and for those aged over 55 to be given lighter duties.
Aside from tearing up previous deals with the unions, Royal Mail has also written to the CWU to propose that negotiations be taken to Acas, the dispute resolution service.
The group said that it was considering breaking up the firm, separating its UK arm, Royal Mail, from its more profitable international business GLS if it failed to implement its turnaround plans.
Earlier this month, Royal Mail was also forced to deny claims from the CWU’s general secretary Dave Ward that it was in ‘secret talks’ over a possible sale of the business to a private equity firm.
Aside from Royal Mail, industrial action has affected Britain’s railways over the summer while airline staff and even barristers have also staged walkouts in arguments over pay and conditions.
CWU union also in pay dispute with BT
The union is also in a pay dispute with telecoms giant BT – with around 40,000 workers striking next month.
CWU members including hundreds of 999 call handlers walk out on October 6, 10, 20 and 24 – a move the union says is a bid to ‘up the ante’. BT said it will do whatever it takes to protect 999 services and redeploy staff, and condemned the CWU’s ‘reckless’ action.
The dispute came after BT announced a £1,500 per year pay rise in April, an average increase of 5 per cent, after failing to agree a deal.
The union says it is a salary cut in real terms.