Royal Mail strikers given 48 hours to accept pay deal amid administration fears

Royal Mail
Royal Mail

Royal Mail has given its trade union 48 hours to accept a below-inflation pay deal amid claims that the company's UK arm is at risk of going bust.

Company negotiators have told the 115,000-strong Communication Workers Union (CWU) that it has just days to back revised proposals submitted on Friday, following fears that administrators could otherwise be called in.

Royal Mail warned the CWU that further strikes risk tipping its British operation over the edge – a move that would throw letter deliveries across the country into doubt.

The company is understood to have slightly improved a pay offer after a previously proposed 9pc proposal was spurned by the CWU and its leader Dave Ward.

However, it is understood that the revised terms do not meet Mr Ward’s long-held demands for a “no strings, inflation-based” wage increase.

A senior CWU representative appeared to suggest that “we are into a totally new arena of potentially administration” in a social media post after talks broke up last Friday. The post was subsequently deleted.

Royal Mail strikers - JULIAN SIMMONDS
Royal Mail strikers - JULIAN SIMMONDS

As talks falter, executives are said to have explored putting the regulated postal service into a kind of special administration – similar to that of energy provider Bulb – with administrators appointed by the Government.

Only the parts of Royal Mail bound by the universal service obligation – which requires the postal service to every address, six days a week, for a uniform price – would be involved, the Guardian reported. Other parts of the group’s parcel operations, including Parcelforce, would be unaffected.

Sources close to Royal Mail questioned whether the word “administration” had been used by its negotiators or if this was a conclusion drawn by the CWU.

It is understood that Royal Mail executives also believe union leaders are stoking claims of possible administration to “sell” the latest pay offer to members on the basis that the consequences would otherwise be worse.

However, another source told the BBC: "Administration is a real possibility for Royal Mail if the industrial action continues. It is not a negotiating ploy.”

Investors did not appear to take the threat seriously. Shares in International Distribution Services, Royal Mail’s parent, fell just 0.6pc.

With the situation described by insiders as "precarious", Royal Mail is pressing ahead with plans to unilaterally make sweeping changes to working practices if the CWU rejects the latest pay offer.

These include greater use of technology to automate sorting and other manual processes, as well as extending the working week so that it includes Sundays.

It is thought that the main change that Royal Mail will not be able to unilaterally impose is forcing existing staff to start and finish work later.

Royal Mail and the CWU have been in discussions for almost a year over the biggest overhaul of working practices since the business was privatised under David Cameron in 2013.

The company has said it is losing £1m a day, with strike action by the CWU costing £200m in lost business and additional costs.

Hopes had been raised of a breakthrough earlier this month when Sir Brendan Barber, the former head of the Trades Union Congress and ex-chairman of conciliation service Acas, was drafted to oversee the most recent round of intensive talks.

A spokesman for the CWU said: “It is clear Royal Mail Group is in a serious financial situation.

“This is as a direct result of mismanagement and recklessness at the most senior level of the company. Those individuals who have led the company into this crisis have no right to lead us out of it.

“The company as a whole now has a decision to make – do they reach an agreement with the union or do they continue their relentless and daily assault on postal workers in workplaces across the UK?

“There is no positive future for Royal Mail without the support of the workforce.”