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Leaked Post Office (PO) terms suggest a new two-tier pay structure on parcels will be introduced, giving partnered stores an “estimated £10m per year extra” in remuneration.

Area managers provided retailers with information about their new rates, which were then shared with betterRetailing. The terms show a difference in payments for main and local branches for what one subpostmaster described as “doing the same work”.

Main branches will receive 18% of the price for Special Delivery parcels, compared to 13% for local branches. Mains will receive 16% of the price of a first class parcel, compared to 12% for local branches.

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Second class and Parcelforce items will bag a main branch 13%, but a local branch 9%. It is understood that there is no change in fees for stamps or to the 28p commission for in-branch parcel collections. One source claimed prepaid parcels are also due to change but segregations, non-mails, and dangerous goods would remain the same, however this was contested by another source. The future of prepaid parcels was described as ‘a big question mark’ by one retailer who said the product had become even more dominant under lockdown.

PO refused to comment on the terms for “contractual confidentiality reasons,” but confirmed changes to mails pay would be introduced from December 2021. It added an “interim additional monthly remuneration payment” would be given from April 2021. By linking payment levels to the price of the product sold, store are rewarded for ‘selling more’ and for selling add-ons such as additional compensation or guaranteed delivery days.

Mails product portfolio director Mark Siviter told betterRetailing: “This new Mails Distribution Agreement will see postmaster remuneration for sales linked to the price of Royal Mail products and services and provides them with opportunities to maximise their remuneration.

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“Mails makes up most of the remuneration that postmasters receive which is why we are providing every postmaster with detailed information as to how their branch or branches could be impacted by the new commercial structure. The vast majority will benefit and overall postmasters will receive an estimated additional £10 million worth of remuneration this year.”

“The new agreement enables the Post Office network to open up to other parcel carriers for the first time in our history and this will generate further, increased remuneration for postmasters.”

The NFSP said it had worked ‘extensively’ with the Post Office over the changes to ensure ‘the overall outcome is positive for the network.’ The NFSP added it would be providing support on how Post Office stores could maximise their parcels income under the scheme.

CWU branch secretary and subpostmaster Mark Baker said: “We’re keeping an open mind and we’re yet to see what it looks like when applied to our own sales. It appears to have a strong focus on upselling, so the risk is that it incentivises subpostmasters to sell customers what they want to sell, not what the customer needs.”

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Baker added: “The structure makes first class and specials really important, and it may be tough for those in non-affluent areas where cheapest will nearly always take precedent.”

Describing its plans to support the parcel changes, a spokesperson from the NFSP commented: “Over the last few months, the NFSP has engaged extensively with Post Office Ltd on the proposed remuneration approach. Our input has helped ensure that the overall outcome is positive for the network. 

“Our new Mails Support Team are here to help NFSP members take advantage of the opportunities to grow their income. This includes advice and guidance for subpostmasters and their staff on how to enhance mails sales and increase remuneration, as well as ongoing mails segregation support to take advantage of the revised targets. On current performance, hitting the targets for 1st and 2ndParcel bags in addition to the Letter/Large Letter bag is highly achievable.”

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