A “landmark” deal has been agreed to end a long-running dispute on job security, pay and hours for Royal Mail workers.

The Communication Workers Union (CWU) said it was an “excellent agreement” for postal workers, customers and the company.

The settlement includes a two-year pay deal backdated to April, worth 3.7%, plus a one-hour reduction in the working week, said the union.

As the business introduces change, there will be no compulsory redundancies and the stated objective of Royal Mail is now one of job creation, said the CWU.

Officials said Royal Mail can now introduce changes more quickly with the full support of the union including the development of a 24/7 operation for parcels, and the rollout of new technology and automation.

CWU general secretary Dave Ward said: “This is a landmark agreement that means that even in these incredibly difficult times, when members stand in solidarity with their union, it is entirely possible to plan a future that can still benefit workers, customers and the company.

“The agreement has also been made possible because of the fantastic efforts of postal workers, who as key workers have kept the country connected and met customer and social needs throughout the pandemic.”

Deputy general secretary Terry Pullinger said: “For the last two years we have disagreed with the company on their vision of the future in our belief that it was blinkered, unambitious and based on managed decline.

“It would have severely damaged this great public service, threatened the universal service, reduced social inclusion, and cost thousands of decent jobs.

“The irony of this terrible year is that it has demonstrated that postal workers are the most trusted provider on the doorstep, that the need for a universal equality of service provider is as real today as it ever was.”

Royal Mail’s interim executive chairman Keith Williams said: “We have a window of opportunity to focus Royal Mail on what our customers want today – an ever-growing need for more parcels, whilst providing a sustainable letters service.

“This agreement provides a framework to do just that, but the proof will be in the pudding. We have been far too slow to adapt in the past and now need to deliver change much more quickly.”