Royal Mail staff to get £500 Christmas bonus for delivering post on time

Royal Mail staff will be handed a £500 bonus if they meet delivery targets over Christmas as the company battles to turn itself around amid mounting losses.

Posties could earn the sum if they hit local and national quality targets over the busy festive period as part of a newly-launched incentive scheme. 

The bonus, which is the first of its kind, marks efforts by Royal Mail to avoid a repeat of last Christmas when deliveries were thrown into chaos by strikes.

Citizens Advice said that more than 30 million people – half the population – had letters and parcels delivered late over Christmas last year, including some critical post such as health appointment letters.

Union chiefs told The Telegraph last December that undelivered post was left outside depots during industrial action, leaving foxes and vermin free to eat through packaging.

This year, Royal Mail will hire 16,000 seasonal workers and open five temporary sorting centres.

Martin Seidenberg, who took over as chief executive of Royal Mail three months ago, vowed to “pull out all the stops” to avoid disruption.

Royal Mail is battling to salvage its reputation after years of poor performance.

Earlier this week the company was fined £5.6m by Ofcom after failing to deliver more than a quarter of first class post on time.

The fine, which is the largest ever handed down for missing delivery targets, came after the company missed required standards for both first and second class post by a “significant and unexplained margin”.

Royal Mail has hired 7,000 additional permanent workers to reduce its reliance on agency staff and has established a new quality control centre to help improve its services.

Mr Seidenberg said his priority was to “stabilise” the workforce, adding that industrial disputes were “never helpful”.

The Royal Mail chief admitted it was “too early to say” whether the company would hit its delivery targets in the year ahead.

As well as improving performance, the business is trying to stem deepening losses as it reels from the impact of strikes and a slump in letter volumes.

Operating losses ballooned to £319m in the first half of the year, an increase of £100m compared to the same period in 2022.

The company blamed the deepening losses on a pay deal with staff struck in April, which saw workers handed a 10pc pay rise over three years and a one-off payment of £500.

It followed an almost year-long row with unions over pay and working conditions. The walkouts dragged Royal Mail to a £1bn loss last year, with bosses warning it was losing more than £1m a day at the height of the dispute.

Royal Mail is also still feeling the impact of customer losses suffered during the dispute, as well as a wider economic downturn.

Parcel deliveries declined by 6pc to £1.85bn in the first half of the year as a result of lower volumes and customers trading down to cheaper services.

Letter volumes also continued to decline, although revenues were up 1pc to £1.7bn thanks to increases in stamp prices. Overall, revenue fell 3pc to £3.5bn in the six months to September 24.

Mr Seidenberg reiterated calls for Saturday letter deliveries to be scrapped, saying the need for reform was “increasingly urgent”.

He said: “Most other comparable countries have already reformed their Universal Service and the UK is getting left behind.

“The UK is not immune to the trends that we see across the world and it’s simply not sustainable to maintain a network built for 20bn letters when we’re now only delivering 7bn.”

Regulator Ofcom is currently reviewing Royal Mail’s universal service obligation, but any changes will ultimately need to be approved by the Government.

Royal Mail is also facing a £600m lawsuit from parcel rival Whistl, which is seeking damages over alleged anti-competitive behaviour.

The company has already been hit with a £50m fine from the regulator over claims it abused its market power to squeeze Whistl out of the market, resulting in 2,000 job losses.

Royal Mail has said it will fight the claim, which it believes is “without any merit”.

Royal Mail’s losses dragged its parent company deeper into the red. International Distributions Services (IDS) reported an operating loss of £243m in the first half, wider than the £157m posted last year. It came despite a £150m profit for its European parcel delivery firm, GLS.

Mr Seidenberg said he had taken steps to stabilise Royal Mail, including cutting costs and “ruthlessly” prioritising high-return projects.

IDS said it expects to break even in the full year. It is targeting a return to profit for Royal Mail by 2025, but acknowledged the current economic slowdown was a “significant headwind”.