LTB 623/15 RE: MTSF Review

[TrueBlueTerrier]

No: 623/15
Ref: PTC/RE/dj/020

Date: 23 September 2015



TO: ALL BRANCHES WITH POSTAL MEMBERS

Dear Colleague,

RE: MTSF Review

Further to LTB 350/2015 discussions with Royal Mail on the MTSF review have now concluded.

Attached is the review agreement which has been endorsed by the Postal Executive, together with “Additional guidance on ETE cases” which is a Royal Mail policy document which has been amended in consultation with CWU but does not constitute a formal agreement.

Background

Two elements of the MTSF section of the Business Transformation Agreement of 2010 were “time limited” and subject to review. These were:

The suspension of a “cap” of two years pensionable pay on cost to the business of redundancy (which had the effect of enabling members of the Royal Mail Pension Plan aged over 55 to take a package including immediate payment of an enhanced pension).

An additional two years support and an increase in the cap on Excess Travel Expenses from £1,500 to £20,000 for those in the former Letters business whose travel costs exceeded £1,250 per year following redeployment.

These terms were originally due to cease on 31st March 2013 but were extended a number of times, most recently by the “Joint Statement: Balanced approach to growth, efficiency and incentives” which deferred the review until May 2015.

In addition to this, during 2014 HMRC changed its policy on taxability of buy down of hours payments, to make them reckonable for tax and National Insurance (NI). As part of the Joint Statement Royal Mail agreed to pay 50% of the cost of tax and NI, or provide the option of payment of buy down lump sum into pension, again reviewable in May 2015.

Voluntary Redundancy Cap

It has not been possible to persuade the business to further extend the suspension of the cap. With effect from 1st October this year the suspension will be lifted. This does not affect redundancy terms based on the multiplier but will limit the ability of members of the Royal Mail Pension Plan (RMPP) to receive immediate payment of enhanced pension to circumstances in which the total cost to the business does not exceed the equivalent of two year’s pensionable pay.

Where the combined redundancy and pension cost would exceed the equivalent of two years pensionable pay, cash compensation of 104 weeks pensionable pay will be offered instead.

If a redundancy exercise is already in progress and some employees have a last day of service before 1st October and some after, the current terms will apply throughout.

Excess Travel Expenses

The temporary enhanced Excess Travel Expenses (ETE) for employees redeployed to a new workplace with an additional cost of journey exceeding £1,250 a year have been made permanent on the current basis and are no longer subject to review.

Buy Down

The 50% company contribution to tax NI at the basic rate or the alternative of payment direct into pension will remain in place and will be reviewed again in March 2017.

“Additional Guidance on ETE cases”

Arising from these discussions management guidelines on ETE have been amended in consultation with the CWU and these revised guidelines are attached for information. It should be emphasised that these guidelines do not constitute an agreement and the union has retained the right to make representations on behalf of individuals and groups of members where it can be demonstrated that application of the guidelines could unfairly disadvantage them.

Any enquiries should be addressed to PTCS department, quoting reference PTC/RE/dj/020.
Email address: djeffery@cwu.org

Yours sincerely

Ray Ellis
Assistant Secretary

[TrueBlueTerrier]

MTSF Agreement

Two elements of MtSF agreed as part of the Business Transformation Agreement of 2010 were due to be reviewed and cease on 31st March 2013. There have been various extensions of the review with the last extension agreed as part of the “Royal Mail / CWU national joint statement – growth, efficiency and incentives”which deferred the review until May 2015.

The two agreed changes that were due to be implemented were:

The removal of the suspension of a “cap” of two years pensionable pay on cost to the business of redundancy

Ceasing the additional two years support for those in the former Letters business whose travel costs exceed £1,250 per year following redeployment.

Royal Mail and CWU have met on a number of occasions to discuss the changes. Royal Mail and CWU also reviewed the interim arrangements that were in place to enhance buy-down of hours payments and took the opportunity to clarify the application of the Excess Travel Expenses part of MtSF.

Following these discussions Royal Mail and CWU have agreed the following:

Voluntary Redundancy Terms

The suspension of the cap will be removed at the end of September 2015. Any voluntary redundancies that take place on or after 1st October 2015 will have the cost cap of two years applied. If a redundancy exercise at a site means that employees offered voluntary redundancy are released on dates straddling the 1st October 2015, all such employees will receive terms applicable at the beginning of the exercise.

This means that the total cost of compensation (including pensions) will be limited to two times annual pay (as per the definition in MtSF) for all employees. If the total cost of compensation including pensions exceeds the above limit, cash compensation equivalent to two years’ annual pay will be paid.

Excess Travelling Expenses

The additional two years support for Excess Travel Expenses(ETE) for employees in the former Royal Mail Letters business where travel costs exceed £1,250 per year following redeployment will continue to apply, with a maximum payment of £20,000 over the five years as per the terms agreed in 2010.


Buy Down of Hours

The two enhancements to current buy-down options will remain in place until end March 2017. These enhancements are:

When buy-down of hours compensation is taken as a lump sum payment, the company will enhance the overall payment to cover the cost of 50% of the lower rate tax and National Insurance levy on the original sum.

Or

Employees will have the opportunity for their buy-down of hours compensation payment to be paid as an employer pension contribution into their Royal Mail Pension Plan or Royal Mail Defined Contribution Plan. Under this option the lump sum due will be calculated with a 25% increase to the current MTSF formula. This option also means employees will not be liable to pay any income tax or National Insurance contribution under current HMRC guidelines.

[TrueBlueTerrier]

Additional Guidance on ETE cases

CWU MtSF Excess Fares is designed to provide support equivalent to the difference between the cost of the journey from home to new office, and the cost of the journey from home to old office. As such a core principle is that ETE addresses excess costs once the costs of home to old office have been deducted from the claim.

In most examples the calculation of home to old office travel costs (through mileage or public transport costs) are self-evident. However there follows further guidance on principles to be applied where the home to old office journey is not undertaken by either car, motorcycle or some form of paid-for public transport, with the expectation that wherever practicable the same rates must be used in the calculation of home to old office, and home to new office, travel costs.

Where transport is provided by the business

Where the business provides support to get employees from one location to another, for example through the provision of a bus, no other payment would be made to employees opting to use the business provided transport. If that support is withdrawn prior to the end of the excess travel period that would normally apply, the employee would be able to make a claim for the remainder of the period.

Employees cycling to the old office

Where employees cycle to the old office, and will cycle to the new office, the existing cycle T&S rates (20ppm, reducing to 16ppm after 10,000 miles) should be used for both pedal and electric bikes.

Where an employee cycled to their old office, but will be driving to their new location, then the home to old office distance previously covered by bike should be deducted from the ETE mileage claim.

If a cyclist will be travelling on a public bus to their new office, then wherever practical the cost of a bus fare from home to the old office should be deducted from their claim. If the employee will be commuting on a train for the new journey, again a train fare closest to their home to old office journey should be deducted (or, if not realistic, the equivalent bus fare). If neither are realistic, the cost of the home to old office journey at the bicycle T&S rates above should be deducted.

Where employees lived within a 4 mile radius of their old office and cycled, but will travel to the new location by public transport, their claim can be authorised with the home to old office journey deducted against the cycle rate rather than public transport costs.

Employees walking to the old office

If claiming mileage based ETE the distance previously walked should be deducted from the ETE claim.

If using public transport to get to the new office, the appropriate public transport cost for home to old office should be deducted. Exceptionally, where employees will be travelling to the new location by public transport and they lived within a 1 mile (or more than a mile where the employee can demonstrate that there is no advantage to using public transport) radius of their old office, then their claim can be authorised as having nil home to old office travel costs.

Employees who received a lift in a colleague’s vehicle to their old office

The expectation is that where people took lifts from colleagues they are likely to nonetheless have had indirect travel costs (e.g. giving the driver fuel money occasionally).

Following a move to a new office, so as to ensure the passenger is not treated more favourably than the driver who will have home to old office mileage deducted from their claim, employees who received lifts should reduce their ETE claim by 25ppm in respect of their journey to the old office where they had a lift.
Where an ETE schedule is underway involving an employee and a passenger, and within the life of the ETE claim the car sharing practice subsequently permanently ceases, the following should apply: –

The driver’s ETE should be adjusted to reflect they are no longer entitled to the passenger supplement

If the passenger is to be given a lift permanently by another employee, the new driver may claim the appropriate passenger supplement for the remainder of their ETE term.

If the passenger no longer receives a lift from anyone, and begins to bear the cost of their own journey to work (e.g. by either their own car or public transport), they will be eligible to claim ETE but only for the remainder of the 3/5 year period from the date of transfer (not the date of the change to their travel arrangements).

Return of Business Vehicle
Where an employee had an arrangement to take home an RM vehicle (perhaps due to garaging restrictions at their workplace) which ceases for whatever reason, but they remain employed at the same location, travel costs to their workplace will be their own responsibility and ETE will not be paid. Where the cessation of the arrangement coincides with a change of location, employees will be required to deduct their home to old office mileage from any ETE claim.

Changes to the number of working days
Where an employee transfers to a new office and upon transfer increases the number of attendances they make, excess travel will be payable for the additional attendances, but with the ETE for the additional attendances calculated as the excess cost (after deducting home to old office travel costs).

Where an employee decreases their number of attendances upon transfer, ETE will only be payable for the reduced number of attendances rather than against their previous attendance pattern.  If an employee already in receipt of ETE subsequently increases their number of attendances, ETE will not alter. Where an employee already in receipt of ETE subsequently reduces their number of attendances, ETE will be adjusted. 

[moyaspawn]

Can anybody please explain in simple words how this change might effect 'us if we were to take a package. My understanding is I would not be allowed to access my own pension at the same time I took a package, which seems a little odd to me. Surely my pension is obviously mine to take as and when I Wish.

[petercostello]

The way I understand it you will either get 2 years pay or enhanced pension which ever costs the business the least.You would however be able to access your pension but of course if its not enhanced you would loose 5% a year in other words at 55 you would loose 25% instantly.

[Rommagic]

Bump