Abolition of Default Retirement Age / Impact on MTSF

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Letter to Branches




No. 605/2012
Ref: PTC/MA/dj/035
Date: 9 August 2012


TO ALL BRANCHES WITH POSTAL MEMBERS


Dear Colleague

RE: Abolition of Default Retirement Age / Impact on MTSF

Further to LTB 26/2011 and 1034/2011 regarding the abolition of the default retirement age from 1st October 2011 and the implication for members reaching the age of 64.5 in a VR situation, agreement has now been reached with Royal Mail which was endorsed at a special meeting of the Postal Executive on the 6th August 2012.

It was reported to branches that the initial position of the business was to exclude those aged above 64.5 from redundancy exercises, following representation from the union it was agreed at the end of 2011 that the employees above this age would be included in preference exercises and where they were sufficiently senior to qualify for VR, redundancies would be held for them, pending a resolution of discussions on the terms applicable. We can confirm that we have been able to secure standard MTSF terms including pay in lieu of notice for those whose redundancies have been held since October 2011. The list of the employees in this group will be subject to a joint review with CWU Headquarters.

Attached to the LTB is a copy of the communication statement and briefing notes which will be communicated to our members in the near future.

For further information branches should note that the additional MTSF terms will be tapered by a month’s pay for each month or a part month of service aged after 64 years and 6 months, subject to the pay being no less than the employers statutory redundancy entitlement or 6 month’s pay whichever is the greater. The taper would run from aged 64 until this level is reached which for the employee who, prior to tapering, would receive the maximum payment of 2 years will be at age 66. These new arrangements will apply from the 1st August 2012.

In respect of the terms going forward there is some logic in linkage to retirement age. The normal retirement age under all Royal Mail pension schemes is now 65 but the state pension age, which is due to increase to 66 in 2018 is also a relevant consideration for our members. We have been able to achieve an outcome which tapers down from full MTSF terms over an 18 month period producing a minimum level of payments for those aged 66 and above which remains for the vast majority of our members significantly better than the statutory redundancy terms.

The changes to this document apply to Royal Mail Group employees only and do not include Post Office employees. Andy Furey, Assistant Secretary is currently holding discussions with the Post Office regarding this subject.

Any enquiries should be addressed to Ray Ellis’s department, quoting reference PTC/MA/dj/035.
Email address: rellis@cwu.org

Yours sincerely



Peter Donaghy,
Acting Assistant Secretary



Communications Statements for CWU represented employees
 
For employees where other individuals within their work area / unit have not been made an offer of voluntary redundancy, but a surplus situation is anticipated.
 
"As a result of the change in legislation and the suspension of the retirement age for employment purposes of 65, you will be aware that RMG has been reviewing its position with regard to the age cap of 64.5 years for eligibility for Voluntary Redundancy/Severance. This will be relevant to those employees who turn 65 on or after 1st October 2011 and have not already received a notification of retirement.
 
RMG has considered the impact of the change in legislation on the approach to offers of voluntary redundancy/severance for those approaching and over 65 who previously would have been compulsorily retired. We have consulted and agreed interim terms with CWU & Unite for those employees.
 
Any permanent employee in a CWU represented grade with two or more years’ service aged over 64 ½ and who otherwise meets the criteria for receiving a voluntary redundancy payment will be offered compensation of no less than six months’ pay or statutory, whichever is the higher.
 
Where the employee is not eligible for a pension enhancement, this payment will be calculated on the following basis, and subject to a maximum of two years’ pay before the taper is applied:
 
0.5 weeks’ Pay for each full year of service where age during year less than 22
weeks’ Pay for each full year of service where age during year is 22 or above, but less than 41; and
1.5 weeks’ Pay for each full year of service where age during year is 41+; Multiplied by 3.75
This amount is then reduced (tapered) by a month’s pay for each month or part month of service after age 64 years and 6 months, subject to the payment being no less than the employee’s statutory entitlement or 6 months’ pay whichever is the greater.
 
Provided you meet the other eligibility criteria for an offer, you will now be provided with a voluntary redundancy quote based on your anticipated  Last Day of Service and will be subject to the same timescales as other colleagues impacted by the change.”
 
For employees where other individuals within their work area / unit have been made an offer of voluntary redundancy between 1 October 2011 and 1 August 2012
 
“As a result of the change in legislation and the suspension of the retirement age for employment purposes of 65, you will be aware that RMG has been reviewing its position with regard to the age cap of 64.5 years for eligibility for Voluntary Redundancy/Severance. This will be relevant to those employees who turn 65 on or after 1st October 2011 and have not already received a notification of retirement.
 
RMG has considered the impact of the change in legislation on the approach to offers of voluntary redundancy/severance for those approaching and over 65 who previously would have been compulsorily retired. We have consulted and agreed interim terms with CWU & Unite for those employees.
 
Following consultation with CWU & Unite, it has been agreed that tapered terms will apply for employees and operational managers who would be surplus and who leave on voluntary redundancy after age 64 years and 6 months and who are not eligible for any pension enhancements.
 
In recognition of the time it has taken to reach this agreement, it has also been exceptionally agreed that the taper will not be applied to the terms agreed to employees who have been placed “on hold” between 1 October 2011 and 1 August 2012 whilst other individuals within their work area / unit have been made an offer of voluntary redundancy.
 
Therefore, where you otherwise meet the edibility criteria for voluntary redundancy, your offer will be based on the terms that would apply to employees aged less than 64 years and 6 months with no taper being applied subject to signing a compromise agreement.
 
We will provide you with information relating to your situation as soon as possible.”