Update on negotiations with the CWU

6 December 2017

Royal Mail plc

Update on negotiations with the CWU

Royal Mail (RMG.L) is today providing an update on the pay and pensions negotiations with the CWU.

The parties have now received the report prepared by Professor Lynette Harris, who has mediated talks between Royal Mail and the CWU under the dispute resolution procedures set out in the Agenda for Growth (AFG). The Company thanks Professor Harris for her time in mediating the talks and preparing the report.

The mediation process was helpful in bringing Royal Mail and the CWU together to advance the discussions. Mediation has helped both parties to better understand their respective positions.

The mediator's report made a number of recommendations. These are not legally binding on either side but have been useful in framing further discussions. Royal Mail and the CWU are continuing talks with the aim of reaching agreement on the full range of issues under discussion. Agreement on certain issues is more advanced than on others but all issues remain open for negotiation and final agreement. Further announcements will be made in due course.

A summary of the mediator's recommendations is set out below. 

Pensions

·     Royal Mail and the CWU should commit in principle to the future introduction of a Collective Defined Contribution (CDC) scheme with a Defined Benefit element.

·     To support the introduction of a CDC scheme for all, Royal Mail and the CWU should establish a Pensions Forum. The Forum will have responsibility for lobbying the Government to make the necessary legislative and regulatory changes so that a CDC scheme can be established, and for overseeing its governance.

·     In the meantime:

o  For members of the Royal Mail Pension Plan (RMPP), Royal Mail should implement - from 1 April 2018 - a Defined Benefit cash balance scheme on the terms already proposed by the Company.

o  In addition, existing Royal Mail Defined Contribution Plan (RMDCP) members with five years' or more continuous service in the standard section of RMDCP should have the option of joining the Defined Benefit cash balance scheme.

o  Royal Mail should auto-enrol current and future members of RMDCP to the top tier of contributions (10% from the Company and 6% from the member).

Pay and the working week¹

·     From April 2017, an increase of 2.6% including base pay, overtime and allowances.

·     From April 2018, an increase of 2% to base pay.

·     During 2018-19, a one hour reduction to the working week (currently 39 hours) on the condition that Royal Mail and the CWU work together on a range of initiatives, including delivery methods trials, automated hours data capture and later delivery times.

Delivery times

·     Last delivery time should move back by 30 minutes to 3.30pm in urban areas and 4.30pm in rural areas.

Royal Mail and the CWU working more closely to advance the Agenda for Growth objectives

·     Royal Mail and the CWU need to work more closely together to improve working culture.

·     Review the Agenda for Growth agreement in 2019, as planned.

¹The negotiating group that is covered by the mediator's report applies to CWU represented grades in Core Operations, Logistics (excluding RM Fleet), Engineers, RMSS and Royal Mail International. It is under discussion between us and the CWU and is subject to contract. Separate negotiations will take place for other CWU grade employees within Royal Mail as per current arrangements.

Investor Relations

Catherine Nash

Tel: 07436 560910/020 7449 8183

Email: investorrelations@royalmail.com

Media Relations

Peter Tilley

Tel: 07841 803 316

Email: peter.tilley@royalmail.com

Company Secretariat

Kulbinder Dosanjh

Tel: 020 7449 8133

Email: cosec@royalmail.com

LEI 213800TCZZU84G872M70