Royal Mail
Royal Mail workers are in for a 9% pay rise spread over three years (Reuters) Getty

Royal Mail and the Communication Workers Union have shaken hands on a pay and working conditions deal that will see staff handed a 9% pay rise spread over three years.

A question mark over industrial relations and the threat of strike action had been blamed by the government and its investment bank advisers for depressing Royal Mail's offer price in its flotation on the London Stock Exchange. The CWU dismissed suggestions that industrial relations had any impact.

Under the deal and on top of the pay rise, workers will also receive a £200 pensionable lump sum in time for Christmas 2013. There have also been a number of legally binding protections agreed, including no outsourcing, selling or transferring by Royal Mail of any part of its business.

"The agreement breaks new ground in the UK by incorporating extensive legally binding protections for employees alongside a commitment to improve industrial stability," said Dave Ward, CWU deputy general secretary.

"The legal protections for Royal Mail employees come hard on the heels of the privatisation of the company and are unprecedented in delivering the strongest protections for employees.

"This is a good deal for the company and customers as well as for employees, but investors should be clear that this agreement commits them to growth and there will be no tolerance to a race to the bottom on services and jobs."

The legally binding agreements will be reviewed again in 2019. In full, they are:

    • The employer will not outsource, sell or transfer any part of its business.
    • The employer will remain an end-to-end service provider and will not franchise out any part of its business or make any employee self-employed.
    • The employer will not engage any new employee on inferior terms and conditions (no two-tier workforce).
    • The collectively agreed terms and conditions of employees will not be worsened in any respect or changed unless amended by agreement.
    • The over-riding objective will be for the employer to deliver all future change without recourse to compulsory redundancy.
    • The employment model will remain predominantly full-time and the agreed resourcing mix will be monitored on a quarterly basis.

A ballot of CWU members in January 2014 will determine whether members accept the terms of the agreement between their union and Royal Mail. It is expected to pass easily.

"I am delighted that we have reached an agreement in principle with the CWU," said Moya Greene, Royal Mail chief executive.

"This will provide long term stability and certainty for Royal Mail, our employees and our customers at this pivotal time. Working together we can create a strong foundation for the continued success of our business."