Unite has criticised Royal Mail for refusing to up a proposed pay increase, despite reporting a £608m profit in its latest results.

The postal service said it could face regulator fines if the dispute escalates further.

More than 4,800 Royal Mail employees are currently on a work to rule and an overtime ban as part of the ongoing dispute around a proposed 1.3% pay increase for the group’s managers, which the union’s members believe to be inadequate.

The £608m figure Unite used as a benchmark represents the operating profit of Royal Mail’s UK operation before transformation costs. The results for the whole group showed a 33% drop in pre-tax profit, against a 1% turnover rise.

Brian Scott, Unite officer for Royal Mail members, said: "With the UK part of Royal Mail making £608 million profit, it’s clear that the company can afford to reward Unite members for their hard work with an improved pay offer.

“It’s time for Royal Mail to recognise the invaluable role our members play by negotiating a pay offer which properly reflects their hard work.”

In its results document, Royal Mail said that if the dispute came to strike action, it could face charges from Ofcom for failing to meet its service targets.

The report reads: “Widespread localised or national industrial action would cause material disruption to our business in the UK and would be likely to result in an immediate and potentially ongoing significant loss of revenue for the Group.

“It may also cause Royal Mail to fail to meet the Quality of Service targets prescribed by Ofcom, leading to enforcement action and fines.”

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