Amelia DaviesRebuilding Royal Mail: EP Group / CWU Pay Settlement 2025–2027 — A Complete Guide for Workers (2026)
What Is the Rebuilding Royal Mail Agreement?
The "Rebuilding Royal Mail" agreement is a three-year pay and conditions settlement negotiated between Royal Mail Group — now trading under the ownership of EP Group plc, the vehicle of Czech entrepreneur Daniel Křetínský — and the Communication Workers Union (CWU). Announced in July 2025 and put to a consultative ballot, the agreement was accepted by CWU members on 26 August 2025 with a decisive 79.5% Yes vote on a 43.5% turnout.
The settlement covers approximately 112,000 CWU-represented postal workers across Royal Mail's UK operations. It runs from 1 April 2025 to 31 March 2028, delivering three years of pay certainty alongside enhanced redundancy provisions and a pathway to improved terms and conditions. The agreement is collectively bargained under the rights conferred by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA 1992), which governs collective bargaining and union recognition in the United Kingdom.
This guide explains what the settlement means for your pay, leave, redundancy, pension and other rights — in plain English.
Pay and Pay Award 2026
Year One (2025–2026): 4.2% Consolidated Increase
The headline pay award for Year One is a 4.2% pay rise, backdated to 1 April 2025. This is a fully consolidated increase, meaning it is built permanently into all elements of pay rather than being a one-off bonus. The rise flows through to:
- Basic pay
- Overtime rates
- Scheduled attendance pay
Consolidation matters because it increases the permanent baseline against which future CPI-linked rises are calculated, compounding the benefit over the three-year term. It also means your contractual rate of pay has risen — a right protected under the Employment Rights Act 1996 (ERA 1996), which prevents an employer from unilaterally reducing a contractual term.
Backpay timing:
- Weekly-paid staff: backpay credited on 26 September 2025
- Monthly-paid staff: backpay credited on 30 September 2025
Years Two and Three (2026–2028): CPI-Linked with Floor and Ceiling
For the remaining two years, pay rises are linked to the Consumer Price Index (CPI), with the following protections built in:
| Year | Basis | Floor | Reopener Trigger |
|---|---|---|---|
| 2 (April 2026 – March 2027) | CPI | 2% minimum | CPI exceeds 3% |
| 3 (April 2027 – March 2028) | CPI | 2% minimum | CPI exceeds 3% |
The 2% floor protects workers if inflation falls below that level. If CPI rises above 3%, a reopener clause is triggered, allowing the CWU to renegotiate the award for that year — preventing the real-terms pay cut that would otherwise result from a cap in a high-inflation environment.
Additional Earnings Opportunities
Beyond the base pay award, the settlement delivers:
- A new incentive scheme, currently in trial, designed to provide realistic additional earnings opportunities above contracted hours
- A commitment to prioritise overtime and scheduled attendance opportunities for CWU-represented employees ahead of agency or casual workers
These provisions add practical value on top of the headline percentage.
Working Hours and Leave Entitlement
The "Rebuilding Royal Mail" agreement does not alter Royal Mail's existing annual leave structure. Under the Working Time Regulations 1998 (WTR 1998), all UK workers are entitled to a minimum of 28 days' paid annual leave per year — inclusive of the 8 UK public holidays. Royal Mail's contractual entitlement for CWU-grade employees has historically exceeded this statutory floor, with leave rising with length of service.
You should check your individual contract of employment or the applicable Royal Mail HR policy for your specific entitlement. Where your contractual leave exceeds the 28-day WTR minimum, you are entitled to the higher contractual figure. If Royal Mail reduces your leave below your contractual level without agreement, this constitutes a breach of contract under ERA 1996 and you may raise a grievance or pursue a claim.
If you believe you have been denied agreed leave, raise a grievance through Royal Mail's internal procedures or contact your local CWU branch representative.
Redundancy Pay
Voluntary Redundancy: Significant CBA Enhancement
One of the most material improvements in the "Rebuilding Royal Mail" settlement is the enhancement to voluntary redundancy (VR). The maximum entitlement under the agreement has been raised to 52 weeks' pay, with accelerated progression through the benefit calculation structure to help more workers reach the maximum entitlement sooner.
This substantially exceeds the statutory position (see below) and represents a meaningful financial safety net if Royal Mail were to seek workforce reductions.
Statutory Redundancy Pay: The Legal Baseline
Under the Employment Rights Act 1996 (ERA 1996), all eligible employees with at least two years' continuous service are entitled to statutory redundancy pay, calculated as follows:
| Age | Per completed year of service |
|---|---|
| Under 22 | 0.5 week's pay |
| 22–40 | 1 week's pay |
| 41 and over | 1.5 weeks' pay |
From April 2026, the weekly pay cap for redundancy purposes is £700 (as uprated under ERA 1996). The maximum statutory redundancy payment is therefore £21,000 (30 weeks × £700 cap).
The CBA voluntary redundancy maximum of 52 weeks is calculated on actual weekly earnings rather than the statutory cap, making it considerably more valuable — particularly for longer-serving or higher-earning employees.
Collective Redundancy Protections
If Royal Mail proposes 20 or more redundancies within 90 days, collective consultation obligations apply under TULRCA 1992:
- Minimum 30-day consultation period (45 days where 100 or more redundancies are proposed)
- The CWU must be informed and consulted as recognised trade union
- Selection criteria must not be discriminatory (Equality Act 2010)
Any compulsory redundancy, where it occurs, must comply with ERA 1996 statutory minimums unless more favourable CBA terms have been specifically agreed.
Notice Period
Statutory Minimum Under ERA 1996
Under Section 86 of the ERA 1996, the statutory minimum notice you are entitled to receive from your employer is:
- 1 week per completed year of continuous employment
- Up to a maximum of 12 weeks for employees with 12 or more years' service
For example, a Royal Mail worker with 15 years' service is entitled to at least 12 weeks' statutory notice.
Your employment contract may specify a longer contractual notice period, which takes precedence where it is more favourable. During the notice period, you continue to accrue annual leave and receive all normal contractual pay — including any scheduled attendance pay you are entitled to under the CBA. You are also obliged to give the notice period specified in your own contract (or at least 1 week under statute).
Pension Rights
Royal Mail's Pension Arrangements
The Royal Mail Pension Plan (RMPP), a defined benefit scheme, was closed to new members in April 2008 when the UK Government assumed responsibility for the scheme's historic liabilities. New Royal Mail employees are enrolled in a defined contribution (DC) pension arrangement.
Under the Pensions Act 2008, all eligible workers must be automatically enrolled into a qualifying workplace pension scheme. The statutory minimum contributions from April 2025 are:
| Contribution | Statutory Minimum |
|---|---|
| Employee | 5% of qualifying earnings |
| Employer | 3% of qualifying earnings |
Royal Mail's DC scheme may offer higher employer contributions for certain employee groups or contribution levels — consult your pension welcome pack or contact Royal Mail's pensions helpline for your personal rates.
Employee Collective Benefit Trust
A novel provision in the "Rebuilding Royal Mail" framework establishes an Employee Collective Benefit Trust, under which CWU members collectively receive 10% of any dividend paid by Royal Mail Group once the company returns to profitability. This profit-sharing arrangement is separate from, and in addition to, pension contributions. It reflects the union's negotiating position that employees should share in the commercial upside following the company's transition under EP Group ownership.
Your Rights Under the Agreement
The "Rebuilding Royal Mail" settlement sits within a framework of statutory and collectively bargained rights. Key points to know as of 2026:
- Legally binding terms: The CWU holds statutory recognition under TULRCA 1992. Once ratified by ballot, the terms of this agreement are incorporated into your individual employment contract and are enforceable under ERA 1996. Royal Mail cannot unilaterally reduce them.
- Consolidated pay rise: The 4.2% Year One rise is permanently embedded in your contractual pay. Overtime rates and scheduled attendance pay have also risen accordingly.
- Enhanced voluntary redundancy: Up to 52 weeks' pay under a VR scheme is a significant improvement above the statutory floor. This is a contractual entitlement if a VR scheme is offered.
- Two-tier workforce equalisation: The agreement commits Royal Mail to begin negotiations immediately to equalise pay and conditions between employees on legacy contracts and those on newer, less favourable arrangements. A formal agreement was targeted by December 2025.
- New entrant pay equality: A first step towards equalising new entrant pay was committed by September 2025, with a full equalisation plan due by December 2025.
- Sick pay improvements: Enhanced sick pay provisions were committed for agreement by September 2025. Until any such agreement takes effect, the statutory minimum — Statutory Sick Pay (SSP) at £116.75/week (2026 rate) from the fourth day of absence — applies as the legal floor under ERA 1996.
- Profit sharing: Once Royal Mail returns to profit, members receive 10% of any dividend through the Collective Benefit Trust.
Interactive Calculator Use our Royal Mail CWU Pay Settlement Pay & Rights Calculator to estimate your personal pay increase, redundancy entitlement, annual leave and pension under this agreement.
Frequently Asked Questions
Q: When does the 4.2% Year One pay rise take effect?
The rise is backdated to 1 April 2025. Backpay for the period from April to September 2025 was paid to weekly-paid staff on 26 September 2025 and to monthly-paid staff on 30 September 2025.
Q: Does the 4.2% apply to my overtime?
Yes. The increase is fully consolidated into all elements of pay, including overtime rates and scheduled attendance pay. Your overtime will now be calculated on your uplifted base rate.
Q: How is my Year 2 or Year 3 pay rise determined?
Both are CPI-linked. You will receive at minimum 2% regardless of how low inflation falls. If CPI exceeds 3%, the CWU can trigger a reopener clause to renegotiate the award for that year rather than accepting a below-inflation settlement.
Q: Am I automatically entitled to the 52-week voluntary redundancy package?
No — the enhanced VR terms apply only where Royal Mail opens a voluntary redundancy scheme and you choose to apply. It is not triggered automatically. If Royal Mail were to make compulsory redundancies, the statutory ERA 1996 formula would apply unless a higher contractual or collectively negotiated sum has been agreed for that purpose.
Q: What is the Employee Collective Benefit Trust and do I need to do anything to join?
The Trust entitles CWU members collectively to 10% of any dividends paid by Royal Mail Group once the business returns to profit. You should be automatically eligible as a CWU member in scope — consult your CWU representative for details of how distributions will work in practice.
Q: What if I think my pay rise has been calculated incorrectly?
First, check your payslip against the 4.2% uplift applied to your pre-April 2025 basic pay and allowances. If you believe there is an error, raise the matter with your manager or HR. If it is unresolved, raise a formal written grievance under Royal Mail's grievance procedure — a right you hold under ERA 1996. Your CWU branch representative can support you through this process.
Q: Does this agreement change my pension?
The settlement does not directly alter pension contribution rates. If you joined Royal Mail after April 2008, you are in a DC scheme subject to the Pensions Act 2008 auto-enrolment minimums. The Employee Collective Benefit Trust provides a profit-share element on top of your pension — it does not replace it.
Background: EP Group's Ownership and Why It Matters
In January 2025, Royal Mail Group completed its acquisition by EP Group plc, the investment vehicle of Czech entrepreneur Daniel Křetínský. The "Rebuilding Royal Mail" agreement is the first major pay settlement under the new ownership structure and signals the direction of industrial relations under EP Group's stewardship.
The CWU described the settlement as "a step towards a better future" — acknowledging genuine progress on pay whilst recognising that significant work remains to resolve the two-tier workforce structure, equalise new entrant conditions, and address long-term pension adequacy. For workers, understanding both what has been agreed and what remains under negotiation is essential to navigating your rights in 2026 and beyond.
The National Living Wage (NLW) for workers aged 21 and over stands at £12.21 per hour from April 2026. All Royal Mail CWU-grade pay rates must meet or exceed this statutory minimum.
This guide is for general information only and does not constitute legal advice. For advice specific to your situation, consult your union representative or a qualified employment solicitor.
