(Sharecast News) - A longstanding scuffle between Royal Mail and the Communications Workers Union (CWU) looked set to be coming to an end on Friday, with International Distributions Services announcing that it had reached an agreement with the CWU's Postal Executive Committee.
The FTSE 250 company said the deal would now be put to a ballot of the union's membership, with a recommendation to approve.
It said Royal Mail was currently facing significant losses, calling the agreement a "crucial step" towards its turnaround.
The privatised postal operator said the operational changes outlined in the agreement were aimed at enhancing its competitiveness, particularly in next-day parcel delivery, as well as reducing costs and environmental impact, and improving the quality of service for customers.
A three-year pay deal was agreed on, which IDS said would provide employees with certainty and ensure that Royal Mail "remains an industry leader" in terms of pay, terms, and conditions.
The key parts of the agreement included later start times from March next year, in a bid to meet market demand for next-day parcels.
A programme of work on the pipeline would seek to limit changes to start and finish times in delivery by 60 minutes, with the option to move times up to 90 minutes if needed.
The last letter delivery time would move to 4.30pm at that time.
Additionally, seasonal working patterns would be deployed from this autumn, with posties working 39 hours per week in the peak Christmas season, 35 hours per week in the quieter summer season, and 37 hours for the rest of the year, to better reflect the seasonal variations in letter and parcel volumes.
An optimised single parcel network for larger parcels would also be created between Royal Mail and IDS stablemate Parcelforce Worldwide, which the company said would "maximise synergies" between the two brands, and improve competitiveness.
Additionally, the agreement covered changes to sick pay, attendance standards, ill health retirement, and revised contracts for new starters.
IDS said the pay offer included a 10% salary increase, and a one-off lump sum of £500 for CWU grade employees in Royal Mail and Parcelforce, broken down into a consolidated 2% pay rise from 1 April 2022, a consolidated 6% pay rise from 1 April 2023, a one-off non-consolidated lump sum payment of £500, and a consolidated 2% pay rise from 1 April 2024.
The deal also included a profit share scheme over its life.
Subject to Royal Mail returning an adjusted operating profit in any financial year up to and including 2024-2025, 20% of adjusted operating profit would be distributed as a one-off payment to employees, after the publication of audited accounts.
Finally, IDS said the agreement would see a commitment to no compulsory redundancies for its life, with a joint review in April 2025 to consider whether the company could extend the commitment.
New employee contracts would include a requirement for regular Sunday working, however, in a bid to allow Royal Mail to grow its seven-day parcels business, and adapt to changing customer demands.
At 1227 BST, shares in International Distributions Services were up 0.61% at 247.6p.
Reporting by Josh White for Sharecast.com.
