Royal Mail declares war on unions as bosses warn it must adapt or die

Postal service accuses CWU of using agreement to ‘frustrate’ modernisation push

Royal Mail workers have held strikes across the UK in protests over pay Credit: Justin Tallis/AFP

As union chiefs filed into a meeting with Royal Mail bosses on Thursday, there was tension in the air.

For months, the Communication Workers’ Union (CWU) had been at loggerheads with management over pay and conditions, with both sides accusing the other of acting in bad faith.

The dispute erupted into the open last month with three days of strikes that brought the postal service to its knees. Union leaders have threatened more disruption unless their demands are met.

On Thursday morning it was Royal Mail’s turn to up the ante, as company bosses issued what was effectively a declaration of war.

In a heated discussion that lasted over an hour, chief executive Simon Thompson told Dave Ward, general secretary of the CWU, that the company was fed up with the lack of progress towards modernisation and was instead terminating every major agreement the parties have struck since 2013.

The move – long threatened by management – blows up a string of legally-binding deals that executives say are making badly-needed reforms impossible to push through.

But it has also plunged industrial relations at the business to a new low, with the CWU condemning the decision as an “all-out attack” on the company’s 115,000 postal workers.

“Royal Mail Group has launched a full-on offensive on our agreements and our members’ terms and conditions,” a CWU spokesman said in response to the announcement. “We will challenge this by every single means possible.”

The showdown is now set to play out across picket lines, the media and almost certainly the courts, in the most significant test yet of the team led by Royal Mail chairman Keith Williams.

Workers are demanding a pay rise that would at least match soaring inflation – expected to hit 11pc in October Credit: Adam Vaughan/Shutterstock

Royal Mail’s relationship with the CWU has long been governed by agreements that would be unthinkable at most other companies.

The most totemic of these is the “Agenda for Growth”, struck by former chief executive Moya Greene in December 2013 just months after the company’s bumpy stock market debut two months previously.

Described as “groundbreaking” and “the first of its kind in the UK”, the contract commits the parties to “a can-do culture”, while granting an extraordinary range of protections to workers and even in some cases handing veto powers to the CWU.

It includes promises not to outsource any part of the business, to grant all new employees the same employment terms as staff who joined before them, to allow workers to keep their hours if they want to, and to not make anyone redundant where possible.

While the deal would have looked iron-clad to the union bosses who signed it at the time, it can be terminated in certain exceptional circumstances, including if there is “national-scale industrial action”.

Under the terms of their 2013 agreement, an extensive process is laid out for both sides to resolve disputes – but within Royal Mail this is now seen as pointless.

Bosses argue that the deal, and others like it, are simply being “used by the CWU to frustrate transformation”.

On Thursday the company claimed that, after five months of talks, the CWU “continues to delay and block the changes we need to compete and protect jobs long-term”.

“We need to break the impasse and move ahead with our transformation,” a spokesman said, adding that it had invited the CWU to talks with dispute resolution service Acas.

Williams and the company’s board knew the decision to end the agreements with the CWU would be an incendiary move, but felt they had no other choice.

When the moment finally came, it appeared to shock union leaders at Thursday morning’s meeting, one insider claimed.

“They might have seen it coming but I don’t think they expected us to actually pull the trigger,” the person added.

Royal Mail has gone for the nuclear option as it pushes for changes that management believe are vital to safeguarding the future of the business.

As letter volumes plunge and demand for parcel deliveries grows, the company wants ways of working that better suit the age of internet shopping.

This includes the introduction of automatic parcel-sorting machines, the construction of vast parcel delivery hubs, rota changes that would require postmen to deliver later into the evening and on Sundays, and the introduction of parcel tracking for customers.

Royal Mail says these are basic changes that will allow it to compete against much nimbler rivals, including Evi, DPD and Amazon. It handed staff a 2pc pay rise in April and has offered another 3pc if there is progress on modernisation.

But the CWU and its members have been belligerent. In an example cited by company bosses, union members refuse to clear jams in parcel sorting machines unless they are paid an extra “jam-busting allowance” – even though the problem can be solved by simply removing the parcel and pressing a button.

The refusal typically results in two hours of inactivity each time while an engineer is called out.

Ward and his colleagues have repeatedly claimed that many of the reforms are little more than a cynical attempt to turn Royal Mail, which pays staff more than rivals such as Evri, DPD and Amazon, into a no-frills “gig economy” company.

“We are willing to progress change, as well as dealing with pay simultaneously, but that has to be change that's in the interests of our members, customers and of course the company,” Ward told a BBC television interviewer recently.

The union is also dismissive of Royal Mail’s pay offer. The CWU has demanded a pay rise that would at least match soaring inflation – expected to hit 11pc in October.

The CWU points to Royal Mail Group’s £758m profit last year as proof the company is not sharing its spoils equitably, after bosses handed £400m to shareholders during the same period.

In response, executives claim the UK part of the business is now losing £1m-a-day and was only temporarily buoyed by the exceptional number of parcel orders made during the pandemic.

Simon Thompson, Royal Mail's chief executive, is terminating every major agreement with the CWU since 2013 Credit: Jeff Gilbert

That has not convinced workers on the picket lines, who have taken aim at Thompson with a chant to the tune of DJ Ötzi’s hit “Hey Baby”.

In a video posted online, they can be heard singing: “Hey, hey Thompson – ooh, ah – we wanna know where the money's gone!”

With Thompson and his colleagues now tearing up the “Agenda for Growth”, relations between the two sides are unlikely to thaw anytime soon.

While the move could ultimately prove a canny one, the hope at Royal Mail will be that bosses have not just accidentally shot themselves in the foot. CWU’s leaders are not known for backing down.

“We’re going to fight,” CWU’s deputy general secretary Terry Pullinger told members in 2017, when Royal Mail was trying to overhaul staff pensions.

“Every postal worker I’ve ever known built this industry. I’d rather smash it to bits than hand it over to them, to stuff their mouths with gold and make your lives a misery.”

As Thompson gears up for yet more clashes with the union, those words may be ringing in his ears.