AGREEMENT BETWEEN ROYAL MAIL AND THE …

1 Negotiators AGREEMENT AGREEMENT BETWEEN ROYAL mail AND THE UNITE AND COMMUNICATIONS WORKERS UNIONS ON THE FUTURE PROVISION OF FACILITIES MANAGEMENT SERVICES TO ROYAL mail 1. Background In 2014 the two shareholders of Romec, ROYAL mail and Cofely, conducted a review and concluded that their preferred option was to dissolve the joint venture and for ROYAL mail to transfer its stake in Romec to Cofely. ROYAL mail informed Unite and CWU who requested that before a decision was made they had the opportunity to explore the implications of such a decision for employees and put forward an alternative option of ROYAL mail becoming the sole owner of Romec. These talks began in February 2015; during the process the case for both alternatives has been fully evaluated and the impact on employees explored. As a result, the agreed positions as set out below will form part of the basis of a recommendation for ROYAL mail to take full control of Romec that is being put to the ROYAL mail Board.

2 Subject to Board AGREEMENT and the outcome of discussions with Cofely, the signatories agree to deliver the changes outlined below during 2016/17. Once the necessary discussions with Cofely have concluded, the actual acquisition date will be shared. 2. Governance It is agreed that Romec employees will remain subject to Romec terms, conditions, collective agreements and pay bargaining, and that ROYAL mail agreements, terms and conditions will not apply automatically. 3. Working Arrangements There is a joint commitment to ensure that the services provided to ROYAL mail by a fully owned subsidiary match the external market in terms of quality, efficiency and cost effective working Engineering Efficiency An agreed programme of engineering efficiency will be developed and implemented expeditiously in order to ensure that engineering productivity matches that of other suppliers in terms of utilised and productive time.

3 The detailed AGREEMENT referred to in paragraph one will set out the process and timelines for this. The number of engineers required to support the specification will be determined during this process and will drive the extent of any recruitment or redundancy. The agreed position is the optimising of productive working time throughout the full duty across the mobile and residential workforce and utilising the full benefits of technology, including an effective work scheduling system and GPS tracking, to allocate, manage and monitor jobs in the most efficient and timely way, aligning with SFG standard task timings. The basic model will be one of self delivery except in those cases where the in-house workforce does not possess the necessary skills or it is not cost effective to use in house labour. An increase in utilised and productive time of around 15 percentage points on current levels is agreed through this joint exercise, which will be undertaken with external professional support.

4 Once the required performance level is achieved, a process of annual review against market levels of efficiency will be conducted in order to maintain the position. Cleaning Efficiency Negotiators AGREEMENT Following full implementation of the current Cleaning Efficiency Programme an annual benchmarking exercise will be conducted to ensure cleaning efficiency remains at the market levels already agreed. There will be a review of opportunities for suitably equipped and trained cleaners to do some routine work currently requiring engineering presence in order to improve integrated FM service provision to ROYAL mail Group. Overheads There is AGREEMENT to undertake a joint review of the overheads structure in Romec in order to eliminate and avoid unnecessary duplication of support services BETWEEN Romec and ROYAL mail .

5 The implementation of changes will take account of the need to ensure continuity of service during any transition, the impact of any potential changes on ROYAL mail roles and the need to identify and resolve any surpluses in line with the processes agreed in the separate but similar Managing the Surplus Framework agreements in place in both businesses. Romec surplus employees will be considered for suitable and reasonable positions within ROYAL mail , if they wish, and ROYAL mail employees will be considered for redundancy if this creates an opportunity for a Romec surplus to be resolved. A surplus Romec employee who transfers to a role in ROYAL mail under this exercise will retain continuity of service and assume ROYAL mail terms and conditions of employment in line with the Mtsf agreements.

6 Non FM services There will also be a joint review of the non FM services currently provided by Romec: Manufacturing, Automation, Projects, Fire & Security. Print & Reprographics, Office Management Services, Street Furniture, and Wheeled Equipment in order to determine their future. This will take account of current and foreseen ROYAL mail requirements and the need to deal appropriately with the people impact of any changes in line with current agreements. 4. Terms and Conditions General Existing employees will retain their current terms and conditions of employment after the acquisition. Pay As part of this AGREEMENT , pay rates for CWU graded employees will be increased by , flowing through to the usual allowances and premium payments, and backdated to 1 April 2015.

7 Further increases of in April 2016 and in April 2017 will be paid, on the same basis. The next pay review will be 1 April 2018. Broadbanded employees have already had their pay reviewed for 2015 and will have further reviews in April 2016 and April 2017. The current cleaners bonus scheme and the engineering Training Allowance will cease after March 2016. Existing recipients will receive compensation equivalent to the total payments they earned under the scheme in the year April 2015 March 2016, and this will be calculated and paid as soon as possible in 2016/17. Discussions will take place over a new incentive scheme which will incentivise and reward efficiency and productivity beyond the performance levels set out in paragraphs and New Entrants With effect from the acquisition date, new entrants into Romec will receive the same terms and conditions of existing employees, except as outlined in this AGREEMENT .

8 All existing procedures and agreements will apply to them as well as existing employees, again except where explicitly excluded in this AGREEMENT . Negotiators AGREEMENT New entrants will be entitled during their second year of employment to full rate sick pay for 6 weeks of sickness absence followed by 6 weeks at half pay. This will increase in their third year of employment to 13 weeks full pay in a twelve month period followed by 13 weeks half pay. The sick pay arrangements for new employees from their fifth year of service onwards will be determined in a joint review two years after the date of acquisition, taking into account business circumstances, absence trends within Romec and benchmark sick pay levels at the time. SSP will be paid where appropriate outside these limits. The leave entitlement for new entrants will initially be 20 days per year, plus bank holidays and this will rise to 25 days after 5 years service.

9 With effect from the acquisition date, all new cleaners will be appointed on an incremental scale. The scale consists of a minimum, midpoint and maximum rate, with progression on the same basis as now. The minimum rate shall correspond to the adult national minimum wage (plus London Weighting where appropriate) and the maximum rate, payable from the third anniversary of appointment, will correspond to the full Romec rate for cleaners (plus London Weighting where appropriate). The mid point will be paid from the beginning of the 19th month to the end of the 36th month from appointment. Redundancy Terms From 1 December 2015, the current maximum value of benefits available to any Romec employee in the event that they are redundant will be capped at a maximum of 2 years salary. A joint review by the signatories will be conducted during 2016 on future redundancy terms during which time the current terms will continue to apply except as described above.

10 5. Management and Supervision The signatories will jointly review best external practice across both Hard and Soft FM upon concluding this AGREEMENT . The outputs will form the basis of a new management and supervisory structure and set of leadership competencies. Existing managers and supervisory employees will undertake a development and skills review to ensure that they have the necessary skills and knowledge for future roles within Romec. 6. New Employee Relations Culture It is agreed that a new culture needs to be created, in which all employees are committed to providing a service to the customer which is highly commercial, flexible, efficient and cost effective and are fully involved and engaged in the business both directly and through the recognised unions. There will be a joint review of new and improved procedural mechanisms for achieving this, followed by a joint programme of activity to implement the new approach.