LTB 072/21 – Post Office: One Year Pay Agreement – 1st April 2020

No. 072/2021

25th February 2021

Dear Colleagues

POST OFFICE: ONE YEAR PAY AGREEMENT – 1ST APRIL 2020

I am pleased to be able to report we have concluded a one year pay agreement from 1st April 2020 for our Post Office members which was unanimously endorsed by the Postal Executive earlier this week. In the event that our members ratify the pay agreement in the consultative ballot, full arrears backdated to 1st April 2020 will be made with April’s salaries. The attached Joint Statement was published late yesterday confirming the headlines of the agreement.

Key Features of the 2020 Pay Agreement (One Year Duration)

Crucially there is no conditionality, meaning the following key features are all beneficial:

• 1.5% pay increase – the headline pay increase of 1.5% applies from 1st April 2020 and flows through to all allowances, overtime rates, Scheduled Attendance and London Weighting.

• Bonus Consolidation: £750/£900 – we have secured the consolidation of bonus monies for all members from 1st April 2020. This means that as part of the arrears, our Crown and Admin/Supply Chain members will receive for 2020/21 £750/£900 respectively.

• New Pension Tier of 8% Employee/12% Employer contributions – the current maximum tier for pension contributions is 7%/11% (employee /employer). This has now been improved with a new tier which in total would put 20% of pensionable earnings into the scheme. This position is further improved with bonus consolidation (which is elaborated upon below).

• MTSF VR Payments – Removal of the Taper for those aged 64.5 and above – we have also agreed to remove the taper that was detrimental to members taking VR who are aged over 64.5.

• Removal of the Statutory Sick Pay Position for New Entrants in their First Year of Employment – during the pandemic, the Post Office has quite rightly suspended the application of SSP for new entrants (for Covid related illnesses/shielding). SSP will now be ceased going forward for new entrants.

• Pay Review Date 2021 – the next pay review date will be 1st April 2021.

New Higher Pension Tier (8% Employee and 12% Employer Contribution)

This additional benefit applies if members agree to pay 8% into the scheme. Those members already paying 8% or greater into the scheme voluntarily will immediately benefit with the employer’s contribution increasing to 12% (backdated to 1st April 2020). The table below demonstrates the new top tier in comparison to the previous arrangements:

£900 Bonus Scheme Consolidation – Admin/Supply Chain (Pro-Rata for Part-Timers)

The Admin & Supply Chain bonus scheme currently pays a maximum of £1,000 p.a. for on-target performance. The last bonus payment made with 2020 salaries was £874.62 for Admin members and £887.31 for Supply Chain, for the period 2019/20. Accordingly, as the consolidation of the £900 is fully pensionable, the Post Office will pay the employer pension contribution for each scheme member on the full £900. The new maximum employer contribution is 12%; therefore, once you add this money to the £900, this essentially means that our members (paying 8% into the pension scheme) will be receiving the full value of potential bonus payments as the employer would actually be paying £108 into the pension scheme.

The positive impact of bonus consolidation is not restricted to the pensionability as it would also improve hourly pay rates which in turn will flow through to overtime rates and also Scheduled Attendance payments (for Crew members).

£750 Bonus Scheme Consolidation – Crown Offices

The Crown Office scheme is a workplace based scheme with different payments for each Crown Office based upon performance. Consequently, we are pleased with the £750 figure as many Crowns have struggled to achieve good bonus payments in recent years. In fact, the scheme hasn’t been particularly lucrative for our members overall; therefore the £750 will be recognised by the majority of members as being beneficial. The same point about pension contribution as outlined above applies to the £750 (12% of employer pension contribution amounts to £90).

UPAP – For Part-Time Members (Crowns Only)

For our Crown members, as the bonus scheme pays equal amounts to both full and part-timers per Crown, we have protected the full value of the £750 by a combination of pro-rata consolidation based on contractual hours together with a monthly UPAP payment to account for the differential between the consolidated amount of money and the £750. An example of this is as follows:

➢ Part-timer on 17.5 hours contracted (50% of a full-timer’s contracted hours) would receive £375 consolidated into basic pensionable pay and the remaining £375 (making £750 in total) would be paid as a monthly UPAP supplement.

The UPAP supplement is also pensionable and is reckonable for MtSF/VR calculations which ensures there is no detriment whatsoever to part-time members. The UPAP supplement will also be uprated through future pay agreements, thus protecting the value of it going forward.

£550 Bonus Scheme Consolidation for Product Specialists (PS)

For our PS members (c.200) who work in Crown Offices, there is a further consolidation of £550 (making £1,300 consolidated in total when adding the £750). The same benefits above in terms of pensions equally apply to this bonus consolidation.

New Basic Pay – Full Value of the 1.5% Pay Increase Coupled with the Bonus Consolidation

The benefit of the 1.5% pay rise coupled with the bonus consolidation provides for consolidated pay increases across the various grades of c.5% (the PS is greater by virtue of consolidating £550+£750).

The various percentage increases above crucially flows through to the hourly pay rate and in turn overtime and also SA rates (for Crew members only).

Conclusion & Next Steps

Ballot Timetable

The Pay Agreement will now be the subject of an individual members’ ballot; the timetable is as follows:

• Ballot papers dispatched Wednesday 10th March
• Ballot closes and result declared Wednesday 31st March

I am certain the members will welcome this agreement overall. Whilst all of us would have wanted a better headline for the pay increase, the agreement has to be viewed holistically as it is a package of benefits. There is no actual downside to the agreement as conditionality is absent. The improvement in pensions, with the employer increasing their maximum contribution to 12%, is clearly a positive step in the right direction. Additionally, the consolidation of all bonuses into basic pay protects and secures these monies going forward.

We are obviously fast approaching the next pay review date of 1st April 2021 and we have started to consider and will be preparing to submit a new pay claim. Accordingly, following the ratification of the 2020 Pay Agreement by the membership, I plan to bring a draft pay claim before the Postal Executive. An LTB will be published following the submission of our claim.

Our Senior Representatives have been briefed and all of them are fully supportive of the agreement which is the best that can be achieved through negotiation and as such is worthy of members’ support. Consequently the Postal Executive has no hesitation in recommending this Pay Agreement to Branches and our members.

Yours sincerely

Andy Furey
Assistant Secretary

Attachment 1: 21LTB072 – Post Office – One Year Pay Agreement – 1st April 2020

Attachment 2: Joint Statement