Whistl: about 2,000 jobs at risk as postal group suspends deliveries
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Version 0 of 1. About 2,000 private postal workers, many of whom work on zero-hours contracts, are facing the sack after the collapse of private equity funding caused Whistl to suspend deliveries. The logistics group formerly known as TNT and owned by Dutch private postal group PostNL said it was reviewing the viability of shipping directly to UK homes and businesses. It will revert to collecting and sorting mail to be fed into the Royal Mail system for final delivery. About half of the workers affected will not be paid while Whistl finalises its plans as they are on “temporary contracts”, the company said. A question and answer document it has produced said they would not be paid throughout the consultation because they “will not be working any hours during this period”. The document did not give a timescale for reaching a decision on the future of the service. It advised employees: “You are free to seek work elsewhere as you are not on a restricted contract.” Whistl said: “As part of this extensive review, we will begin consultations with the relevant employees who are affected by the suspension of the service, and with their union representatives, with a view to identifying and exploring viable proposals to secure the continuation of this service.” The news follows an announcement by the Community union in March that it had negotiated an end to zero-hours contracts within the delivery division of the firm, with all Whistl staff who had worked for six months to be offered guaranteed hours. The union said staff were in the process of having their contracts switched. In December 2013, Whistl signed a deal with Lloyds Banking Group’s private equity arm LDC to establish a joint venture to deliver mail directly, known in the industry jargon as an end-to-end (e2e) postal delivery service. Last month, LDC pulled out citing “ongoing changes in UK postal market dynamics and the complexity of the regulatory landscape”. At the time, Whistl said it would hold back from expansion but planned to continue its existing service. However, it said on Monday: “Following the announcement from LDC that it would not proceed with the proposed investment to fund further rollout of e2e, we have now commenced an extensive review of the viability and potential for the rollout of an e2e postal delivery service in the UK. “To stem the losses from the operations we have taken the difficult decision to suspend the current e2e service during the review process and all mail will now be delivered through our longstanding downstream access service [via Royal Mail] until we have concluded the review.” Whistl UK lost £8m on turnover of £575m, according to its most recent set of accounts up to the end of 2013 filed with Companies House. The accounts also say the LDC funding was contingent on meeting certain conditions, adding: “A formal complaint in January 2014, for breach of competition law by Royal Mail, is being investigated by Ofcom and is relevant to closing the transaction.” The complaint related to a Royal Mail proposal to charge different prices to companies such as Whistl to deliver packages to certain parts of the country, which Whistl argues could be used to stifle competition in deliveries. The investigation is continuing, with no clear date on when it might be concluded, while a separate regulatory consultation which touches on zonal pricing is not anticipated to report until later this year. LDC said the two inquiries “relating to market competition and access pricing ... created ongoing uncertainty with respect to the regulatory environment”. Any future rulings by the regulator also face potential opposition from Royal Mail and its workers, as competitors delivering directly to homes and businesses threaten to put jobs at the formerly nationalised company at risk. Dave Ward, the incoming general secretary of the Communication Workers Union, said: “Our first reaction to this news [about Whistl] is concern for the workers who have lost their jobs. This is of course a difficult time for them and their families and, coming less than six months after City Link folded, is the most recent effect of a crowded post and logistics market. “Ofcom needs to pay attention to the impact of competition in the postal market which is not only causing job losses but playing a leading role in driving terms and conditions downwards. “The sad truth is if Whistl had been successful then it would have been at the expense of even more job losses in Royal Mail and the end of six-days-a-week deliveries to 29 million UK addresses. Ofcom must understand that promoting this model of competition in a declining letters market does not benefit workers, business or the public.” Royal Mail shares rose 3.9% to 497.6p following the news about Whistl. |