What the Royal Mail float means for employees

Published by Mark King on 12 September 2013.
Last updated on 12 September 2013

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While members of the public will be able to buy at least £750 worth of shares when it floats (through intermediaries such as Interactive Investor, Hargreaves Lansdown and The Share Centre) it's a different story for Royal Mail employees.

Q: I'm a member of staff. Will I receive shares?

A: Yes. Shares will be given to 150,000 UK-based Royal Mail employees.

Q: Will I have to pay for them?

A: No, employees will receive free shares.

Q: How many will I get?

A: That depends on a variety of factors, but the government has said that, collectively, employees will receive 10% of the shares (the rest will go to institutional and private investors). If the estimated sale price of £3 billion is correct, this means the free shares could be worth up to £2,000 per head.

Q: Can I buy more shares if I want?

A: Yes. As well as the Employee Free Shares Offer, the government is also allowing staff to take part in an Employee Priority Offer, run as a separate scheme.

Q: How many extra shares can I buy?

A: There is no maximum limit, but employees wishing to buy additional shares must buy a minimum of £500 worth - £250 lower than the minimum amount set for members of the public.

Q: Is this good news for me, then?

A: If the share price rises by the time you want to sell, you will cash-in on the free shares and make a profit from any additional shares you bought. If the price falls, you will lose money on the shares you bought (but not the free shares).

Q: So why are strikes planned?

A: The Communication Workers Union wishes to halt the sale of Royal Mail until safeguards are put in place to protect thousands of post offices. It is planning to ballot its members for strikes over pay, jobs and other issues linked to privatisation. It also wants an improved deal on pay and conditions for Royal Mail's workforce and has rejected an 8.6% basic pay rise over three years offered by management.

The National Federation of Sub-postmasters is also urging ministers to retain a chunk of Royal Mail to give it a say in future decisions about its operations that may impact Post Office closures and customer service.

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