1.Introduction

The purpose of this Key Principles Framework agreement is to take forward the Joint Statement agreed in July, by setting out a clear pathway to change that will bring major benefits to customers, employees and the company.

We all know that our industry is in a time of unprecedented change and this brings with it enormous opportunities to achieve the ambitions of our previous agreements and deliver growth in customer services, jobs and revenue.

To make this happen we must now rebalance the focus and resources within the RMG operation from declining letters to a rapidly growing parcels market, creating a more efficient business that is better aligned to the changing needs of customers.

We recognise this will require new ways of working, a more flexible business, the greater use of technology and above all, the insight of the workforce to build on our biggest advantage - the fact that we own trust on the doorstep.

This means we now have a strong foundation, in a rapidly changing market, to meet ever increasing customer expectations and bring forward our own innovations to match and surpass the competitors.

2.The Pathway to Change - Key Principles

The key principles set out below will enable change to take place in a mutually beneficial way. These principles will shape our future and act as an ongoing reference point for the more detailed programme of work RMG and CWU will now jointly undertake.

2.1. The Strategy and Future Direction of the Royal Mail Group

The Joint Statement in July confirmed that the RMG would not be pursuing UK parcel growth through a separate parcels company. This Key Principles Framework agreement reinforces that position and goes further by making it clear that our existing Delivery, Mail Centre and Distribution Networks will remain at the heart of all future plans to sustain and grow the business. Furthermore, the RMG also wish to make clear that its future plans are not about abandoning letters or limiting our ambitions on growth just to parcels. 

Therefore, we can confirm that the strategy and future direction of the Royal Mail Group

will be based on the following aims and objectives:-

• To secure and grow Royal Mail Group’s position as the UK’s number one parcels company by increasing capacity and delivery times in our existing networks, developing a 24/7 operation, introducing dedicated parcel duties and enhancing our network with new automated parcel hubs.

• To diversify and grow the business beyond letters and parcels by exploring new commercial markets and expanding the role of postal workers in supporting communities, environmental change, local and regional business growth, government services and developing new local to local services. This will be achieved by encouraging the workforce to be directly involved in shaping these new diversification initiatives, tapping into the local knowledge of postal workers and building on their trusted relationship with customers.

• The RMG is committed to the delivery, collection and processing of letters continuing to be an important part of our future and the company recognises that the letters market has a wider social and economic value to UK society. Although letter volumes are predicted to decline further, RM and CWU will explore new ways of minimising this.

“Developing a joint strategy to maintain the USO as part of the social fabric of the UK, including exploring the potential for new USO products to support its long-term economic sustainability."

Since then on the 26th of November Ofcom published its review of user needs setting out options for changing the Universal Service. Whilst it made no firm recommendations there will now be a wider debate about the future of the USO and any final decision rests ultimately with the government. RMG and CWU will continue to explore a joint strategy on how best to sustain the USO as part of the social fabric of the UK. These discussions will also cover the need for a fairer regulatory framework.

2.2Culture

RMG and CWU recognise that to be successful in the future RMG must become an organisation where the overarching culture is one of engagement and local managers, CWU reps and employees being encouraged and empowered to agree local solutions on day to day operational issues. To this end, we are committed to working together on workplace culture which deals with the issues identified in our joint culture visits, reflects the agreed commitment to our people, and raises the profile of emotional intelligence, mental health, morale and incentive in line with our existing agreements.

2.3The approach to capturing growth in the parcels market

RMG has a major opportunity to grow the business and capitalise on the recent material changes to consumer behaviour in respect of the parcels market.

This opportunity to capture growth in parcels is here now and will be at a premium over the next two years. This means the business must introduce change at a greater pace, with new operational solutions and an integrated approach to the three key strands of work set out below.

Rebalancing the Operation from Letters to Parcels

The immediate priority is for our existing delivery, mail centre, collections, RDC and distribution networks to undertake local revision activity to rebalance and realign resources to workload, reflecting the change in volumes between letters and parcels. The key objectives being to capture parcel growth, maintain the USO and improve overall efficiency across the business.

This rebalancing activity will vary in approach between the respective functions and will build on existing agreements and the interim solutions agreed as part of the July Joint Statement. They will also take into account learning experiences from the Christmas peak operation and any ongoing implications from the Covid-19 pandemic.

The national parties will agree further guidelines on how this rebalancing activity will be undertaken, including the following:

• The approach to capturing parcel growth through maximising what is delivered with the core and the introduction of efficient dedicated parcel deliveries and Sunday deliveries (on a voluntary basis), where this is justified by customer needs and workload.

• Capture all new products and services within the activity. e.g. consumer collections, inflight1&2.

• Take account of PBS2/EMP.

• The approach to maintaining the USO and improving overall efficiency across the business.

• The approach to support local solutions on duty patterns, attendance times and maintaining reasonable earnings levels.

• The approach to table top or structural revisions in each local office that will allow the efficient implementation of the second hour of the shorter working week; all revisions to be signed off by the local manager and local rep and implemented by no later than the end of October 2021.

The national guidelines will be published before the end of January 2021 and planning for revisions will commence immediately thereafter, with deployment from March 2021 onwards.

All local discussions will be in accordance with the Industrial Relations Framework Agreement and will also fully take account of the operational impacts of Covid-19 in consideration of deployment timescales and scope.

The respective functional approaches to rebalancing activity will be as follows:-

Delivery

Revision activity will be spilt into two categories with one approach adopted for each unit for deployment during 2021. This revision activity will be either a table top revision as outlined above or for circa 400 units this will entail a full structural revision, the process for this is detailed below. It is confirmed that both of these activities include the second hours’ reduction to the working week. The national guidelines will encourage local solutions, along with a positive approach and options for innovative duty arrangements, without imposing a standard one in six approach.

Processing (Mail Centres, RDC, WBC and Air Hubs)

The interim arrangements agreed for Processing in summer 2020, outlined a more structural approach to dealing with the immediate demand and both parties believe that this approach remains fit for purpose.

All processing units will therefore undertake a realignment review in line with the terms of the July statement. Planning and activity will commence in January 2021 with an aspiration for a deployment by April 2021.

It is recognised though that the immediate activity will need to factor in evolving Covid-19 impacts and operational mitigation measures into agreed arrangements.

Distribution (National & Area)

In line with the principles established in the July 2020 Interim statement, planning will commence in January for a National Network Review and PAD Revisions. These reviews will be based on the latest planning and will be progressed in line with the respective established processes, with a target deployment in April 2021, though this will be subject to joint review.

Delivering Structural Change within Delivery

Both parties fully commit to Annual revisions within the delivery function. The Criteria for determining the scale and scope of the activity necessary for each unit will be jointly established Nationally. It is not envisaged that significant change will be necessary on an annual basis in most units.

National discussions will continue in line with section 19.3.1 of the Guiding Principles Agreement supported by Joint Working Group Activity in order to finalise the process, guidelines and programme for structural deployment of revisions within the Delivery function by no later than the end of January 2021. This activity will also include progressing the delivery specific, appropriate recommendations and ongoing commitments from the productivity joint working group.

It is jointly recognised that a swifter and faster revision process is necessary in order to enable efficient, fair and achievable workloads for all delivery staff, whilst also ensuring that the Delivery specification and USO are achieved, along with all new products and services, with the changing dynamic of workload and the shift between parcels and letters fully taken into account and factored into all revision activity.

These new revision proposals will be planned using the updated Route Manager, Geo Route and Duty Builder systems, and an enhanced Unit Readiness Checklist, incorporating the outdoor study values/indoor study values for the IWT (Indoor Workload Tool) and will also be planned with forecasted traffic volume / workload assumptions, revised Model Week data and applications to give a more all year round understanding, current arrival times, efficient, fair and manageable outdoor spans and duty patterns in each office, utilising the menu of duty options, and direct local involvement, whilst ensuring that work hours are productively utilised. The full detail of the elements as above will be jointly developed and agreed.

It is agreed that we will jointly commence planning activity immediately after publication of national guidelines for circa one hundred structural unit revisions. It is confirmed that within these units all planning, base data and any other associated activity will be subject to full joint CWU local/Area involvement, necessary release and carried out in line with the new revised process and guidelines as outlined above, with all information being shared and jointly validated. Royal Mail confirm that these are new revisions and will follow the new agreed process, while reflecting pre work base data undertaken by planning teams. Both Parties agree that we will jointly identify 30 of these units, which will be selected as part of an upfront pilot approach in order to test and resolve any issues or improvements that are necessary with the new revision process (including the updated revision tools and systems and the local parties training arrangements) and any issues raised are jointly resolved before further deployment of unit Delivery revisions takes place.

It is jointly accepted by both parties that the ongoing impact of COVID-19 both within the UK and the operation will mean that deployment of the 30-unit pilot and the further revisions following the new process within Q4, and onwards throughout 2021 will be subject to ongoing and continued national joint review and agreement.

In addition to the above there will be a Joint programme of National activity in order to put in place new solutions to the current indoor operation through addressing the increased volumetric of parcels in sortation, prep and storage and the operational challenge this is creating within DO’s. This activity will also inform delivery design including the use and size of vehicles within the operation and provide solutions to these factors.

Future Revision/ Resourcing Activity in Processing/ Distribution

Processing

Across all Processing facilities (MC’s, RDC’s, WBC’s), both parties reaffirm the commitment to joint resourcing & realignment activities. Annual realignment will continue to be progressed in line with the terms of the 2018 national Joint Statement on Resource Realignment and associated processes

Both parties also recognise the importance of being able to accommodate volume fluctuations between realignments. In Processing this will be progressed through the structured weekly and Quarterly Resourcing engagement processes. defined in the 2018 Joint Statement on Resource Realignment.

In addition, both parties will reengage on national discussions to progress the joint commitments contained in section 19.1 of the Guiding Principles agreement. These discussions will now incorporate the application of the outputs of the Productivity Working Group on Processing Revision and Realignment activity and discussions on refining current model week processes to incorporate forward looking workload assumptions and activities to improve performance.

Distribution

Both parties reaffirm the commitments in sections 16.3.2 and 16.3.5 of the Guiding Principles agreement both to annual revision activity in the Distribution Functions and the progression of Business as Usual (BAU) Change in line with the terms of national agreements.

With regard to annual revision activity, the immediate Q4 Revisions will be considered the 2020/21 activity and planning on the 2021/22 revision will take place to allow a target deployment in Q4 21/22. The joint aspiration will be to align future annual revisions to a Q4 deployment.

Royal Mail and the CWU recognise the significant levels of flexibility our Professional Drivers provide however, with the significant growth in parcel traffic and volumetric within the Distribution Network, a requirement to progress change between revisions has increased. As such both parties commit in line with the principles of section 19.1 of the Guiding Principles agreement to reinvigorate arrangements within current national Logistics/Distribution agreements to better accommodate volume fluctuations, while maintaining stability and continuity for Drivers. This may include the development and deployment of joint training on national agreements.

BAU activity between revisions will seek to optimise resourcing to track traffic and volumetric fluctuations, customer or commercial contract changes, improve vehicle utilisation, reduce empty running and regulate the efficient use of “as directed” time within driving duties.

It is jointly recognised that the significant parcel volume growth has also driven an increased reliance on external driving resource. To align with the initial revision activity in National and Area Distribution a recruitment exercise will be conducted to ensure that agreed resourcing arrangements with regard to the use of external resource are restored.

Activities in Collections, Fleet and Engineering

Collections

As part of the ongoing National Joint collections working group activity, both parties will jointly develop and agree the approach to the ongoing changing dynamics of declining letters and growth in parcels within the collection function. This approach will consider the collection approach for low volume letter postboxes, the increased use of priority postboxes, the expansion of the parcel postbox network and the growth in consumer collection services.

Fleet and engineering

Guidelines for Fleet and Engineering will be jointly developed and agreed by the end of January 2021. The agreed guidelines will form part of this agreement.

Enhancing the Parcels Network, Opportunities for Growth and Developing a 24/7 Operation

The next phase of capturing parcel growth will be the introduction of a significantly enhanced parcels network that will maximise automation in new parcel hubs and our existing estate, alongside the development of a 24/7 parcels operation.

To support the introduction of an enhanced parcels network, a fundamental review of all current operations will commence in early 2021 and conclude with joint recommendations in April 2021.

The scope of this review, which has no predetermined outcome, is as follows:

•Parcel automation in our Mail Centres

•Design and Build of Automated Parcel Hubs (coming on stream in 2022/23)

•Design and roll-out of Dedicated Parcel Routes to allow more frequent delivery across the whole day from all units

•Enabling new customer propositions beyond parcels and letters

•Maximising and promote the value of letters

•24/7 operation and 7-day delivery of parcels

•Underpin the sustainability of the USO

•Ensure a minimum of 85% of parcels delivered through the core network in order to utilise the high efficiency of processing and delivering letters and parcels together

•To ensure the reinvigoration and expansion of the door to door product

•Scope for dedicated parcel deliveries across the whole day from all delivery units

•No reduction in the Mail Centre and RDC estate (although some RDC’s may operate out of a new parcel hub)

•Create the capacity for greater entry points for the greater parcel mix throughout our operational network and not just via the hubs

•Target growth to ensure that any unit deemed unable to reasonably deliver the larger parcels will see the equivalent growth in smaller parcels & packets to replace any lost larger parcels

When the enhanced parcel hub network is in operation, we do not envisage any significant changes to the footprint of our existing delivery, mail centre and distribution networks, nor to the current dispatch, arrivals and out on delivery times for the joint delivery of letters and packets/parcels. Indeed, we see the existing networks as delivering more parcels over time and we view these as a distinct advantage over our competitors because it takes us closer to the customer.

Parcelforce

As we develop our parcels growth strategy we are committed to maintaining and investing in both the Parcelforce Worldwide brand and operational structure while developing the synergies and product development and alignment opportunities that exist with the rest of the Royal Mail Group in a mutually beneficial way.

We will continue to honour the existing agreements relating to the use of third party contractors (which will remain exclusive to the Parcelforce operation).

We also recognise the market and economic challenges which Parcelforce faces and there will be integrated discussions to improve productivity building on the agreed measures and onward change agenda in the PFW interim arrangements document concluded as part of the July 2020 National Joint statement. These discussions will produce an outline plan that will commence execution no later than 1st May 2021.

In these uncertain economic times we recognise that security of employment is a crucial issue for the workforce.

As a result of the parcel growth we have already experienced and our plans for further growth, as set out in this agreement, RMG is now able to give the following commitments and assurances to employees on their job security:

• By implementing the agreed change agenda and working together to capture market growth, we will be in the best position to protect jobs and achieve our ultimate aim of job creation.

• In line with our existing agreements and by utilising the flexible processes within these, as change is deployed, RMG will avoid compulsory redundancies. This commitment will be jointly reviewed in May 2023.

• In line with our existing agreements, as change is deployed, the MTSF voluntary redundancy terms will continue to apply. This commitment will be jointly reviewed in May 2023.

• In line with our existing agreements, as change is deployed, the legal protections will continue to apply. This commitment will be jointly reviewed in May 2023.

• As part of local revision activity, where justified, through workload and better alignment of resources, there will continue to be opportunities for part time staff, who wish to do so, to increase their hours to full time employment.

• All future revision activity will reduce reliance on agency/casual staff and restore the Agenda for Growth/Four Pillars commitments on staffing and criteria for the use of external resource.

2.5 Technology

The greater use of technology will be crucial to the future success of the RMG and to support its plans for growth, innovation, fairer and more manageable workloads, improved efficiency and providing customers with the level of services they require today and in the future.

It is agreed that all individuals have a right to privacy at work and it is accepted that there is a mutual obligation of confidence and trust applied to every contract of employment and that all parties should act in a way so as not to break that relationship.

In rolling out all new technology RMG recognise the need for this to be introduced in a way that gains the support of employees.

RMG also confirm that technology will not replace the need for consultation and negotiation as outlined in the Industrial Relations Framework. Therefore, the use of technology is designed to support more informed discussions between RMG and CWU and not replace them in any shape or form.

As such, both parties reaffirm that the key relationship in all operational decision making on a daily, weekly or longer term basis will remain that between the Local Manager and Local Rep.

In this regard Scan In/Scan Out will be the underlying technology tool used as the automated solution for employees to log in and out when an individual starts/finishes work and capture collective hours of attendance; this will be rolled out across all Royal Mail Group offices from January 2021.

The development of Resource Scheduler is continuing and a three month trial on this will restart in February 2021 under the previously agreed terms of reference. The national parties will agree the plan for the rollout of this technology in parallel with the joint review of the success of the trial versus the criteria.

RMG give the following commitments and assurances that will cover its use and any impact on employees.

2.6 Improving Efficiency / Productivity

RMG and CWU will work together to implement new efficient and productive ways of working and to raise overall standards across the operation. This will include understanding the range of different performance levels across units and take action to narrow this broad range.

As we work towards improving efficiency, we are also committed to ensuring greater fairness for all our employees and providing a manageable workload.

Against this backdrop and in line with 10.2 of the 2018 Four Pillars Agreement, a Joint Working Group (JWG) has been established involving operational and work study expertise from both management and the CWU. The JWG has now produced a report and joint recommendations on the best way to move forward productivity and efficiency within Royal Mail.

The national parties accept the JWG report and its recommendations and will now utilise this as follows:

•For internal measurement of productivity down to individual unit level in processing and delivery, the metric of Weighted Items per Work Hour (WIPWH) is agreed and will be used as the most appropriate form of internal productivity measurement.

•Both parties recognise that WIPWH is not a precise measurement but is the best available measure at this stage to support local discussions and enable units to both maintain and improve upon their current productivity.

•As a first step, as we move forward the relevant revision activity outlined in this agreement, we will use WIPWH to calculate an individual Unit’s productivity against a previous reference period in the same unit. This will establish a baseline for the unit’s productivity and will enable local discussions to scope opportunities for improving performance.

•The national parties have now authorised the JWG to continue its work and make further recommendations on all the issues outlined in the report, including the following:

- To agree BSI standards of performance (utilising WIPWH) in all relevant parts of the operation reflecting the ambition to work at standard performance whilst taking full account of local circumstances.

- To look at the range of performance and agree a three year flightpath programme to achieve the relevant agreed BSI standards (utilising WIPWH).

- To consider new ways of ensuring greater fairness and manageable workloads.

This next phase of work undertaken by the JWG will be overseen by the national parties and will conclude by March 2021.

Separate discussions utilising our respective subject matter experts will review current productivity measures in Parcelforce in line with the principles contained within the JWG Report.

3.The second hour of the shorter working week or equivalent benefit to be implemented at the point that a 2021 revision activity is deployed in a function/unit.

Less than full time employees and those on the new 35hrs full-time duties introduced in the 2018 Agreement will see their hourly rate increased in lieu of the shorter working week.

The full value of this offer will also be offered and applied to all other business units and functions in RMG including Fleet. This will include the option to increase pay in lieu of the shorter working week, and where possible will also involve revision activity. Where we agree that it is more appropriate to agree a pay rise in lieu of the shorter working week, this rise will be implemented either at the point the revision activity is deployed or, where there is no appropriate revision activity, the parties will agree the date that the pay rise takes effect, which will be no later than the end of October 2021.

4.Additionally, the parties will work together to develop incentive schemes that can be implemented during 2021/22 that will reward tangible revenue growth e.g. doorstep parcel collection.

In Parcelforce it is agreed that the two year pay deal up to and including March 2022, will mirror the agreed arrangements in Royal Mail with regard to value and structure.

Discussions will align the deployment of operational change to match the agreed to timescales for revision activity described in this agreement.

Property & Facilities Services Limited is outside of this agreement.

Achieving the third and fourth hours of the shorter working week will be the subject of continuing planning in line with the 2018 Guiding Principles Agreement.

2.8CWU / Royal Mail Relationship - Working Together

The Joint Statement in July and this Key Principles Framework agreement have restored trust between the national parties and we are committed to working together to ensure that relationships are now rebuilt at all levels of the organisation.

RMG and CWU will continue to operate in accordance with the Industrial Relations Framework agreement and are committed to maintaining meaningful consultation and negotiation on all aspects of change, particularly at local level where we want to empower more local solutions.

We recognise that our future success will require change to be introduced at greater pace and to achieve this we commit to the following:

Trial and Deployment of New Methods, Technology and Automation

Royal Mail and CWU will consult fully on the aims and objectives of proposed new methods, technology or automation at the concept design stage. A trial will be designed to seek to validate the proposed change. A terms of reference will describe the content, location and success criteria. Timescales for the trial should be expedient and will not exceed 90 days. When success criteria are demonstrated as met, this will trigger deployment, subject to business case approval.

The trial agreement will be updated to cover the aforementioned principles.

Consultation in line with the terms, spirit and intent of the BT 2010, National Generic Trial and Deployment Frameworks will take place at national level to discuss and consider the aims/objectives of carrying out a trial. This consultation will take place early enough to allow meaningful input/involvement in shaping the most appropriate trial that will meet the stated objectives, prior to any business case being concluded.

Dispute Resolution Procedures (DRPs)

It is our shared aim that effective dispute resolution processes should enable the resolution of matters in a positive and timely manner. The focus should be on finding solutions and avoiding conflict. Whilst we remain committed to the principles of the IR Framework (1992, 1994) and the Procedural Agreement in Parcelforce, we recognise the need to refresh specific elements regarding external mediation in the legally binding DRPs (specifically schedule 3, section 4 of the legal contract) and the respective section of the Agenda for Growth Agreement (specifically section 5.4 of the agreement) and the parties will work together to with our respective legal advisors to introduce the following changes by no later than 28 February 2021.

•A more effective and robust way of jointly managing the application, recording and timescales of the procedures.

•Review managerial and CWU interfaces at local, area and divisional level (or equivalent) to ensure that these individuals meet with full authority to resolve disagreements in line with the procedure

•To introduce a clearer distinction between achieving local and national agreements.

•To introduce a time-bound one-month process for resolution of national issues after a dispute has been raised and prior to the national parties informing each other of their intentions. (External mediation can be part of this process, if both parties agree to it, but cannot extend the time without agreement). This will replace the relevant extended procedures currently set out in the legal contract schedule 3, section 4 and the Agenda for Growth Agreement section 5.4.

•To reinvigorate the principles of resolving issues and achieving agreement at local level. Once the local dispute process has been exhausted on an issue, if resolution hasn’t been achieved, there will be an opportunity for referral to the national parties for a time-bound one week review (or longer by mutual agreement) to agree a resolution, following which the local dispute process will be regarded as completed and there will be no recourse to national intervention within the formal procedures.

Separate discussions will commence on reviewing and updating the Procedural Agreement in Parcelforce to ensure that it remains fit for purpose in line with the principles of the legally binding DRPs. These discussions should conclude by the end of April 2021.

The revised procedure will remain contractual and will be supported by the rollout of a joint training programme of all relevant managers and CWU representatives.

2.9Attendance and other Policies

Negotiations on Attendance and other policies will continue. Any final agreement from the discussions will form part of this agreement.

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