Royal Mail has reached an agreement with the postal union, ending the threat of further strikes.
The postal service and the Communication Workers Union (CWU) reached the deal in the long-running row about pay and working practices which resulted in nationwide strikes last year.
Postal workers will receive a 2% pay increase this year, followed by a 1.4% pay rise in 2011 and a 3.5% rise in 2012.
Full-time staff will also receive a bonus of £400 and a further £1,000 will be paid once the planned changes are implemented.
In return, the union has agreed to the use of new machinery and new working patterns, the BBC reported.
Staff will work shorter hours – down from 40 to 39 hours a week – but Royal Mail has agreed to retain at least 75% of the current workforce.
The CWU will now refer the deal to its members who will vote on whether to accept it.
David Ward, CWU deputy general secretary, said: “It’s been a long time coming, but this deal delivers on the major issues which postal workers have fought for.”
Gregor Gall, professor of industrial relations at the University of Hertfordshire, told the BBC that he expected union members to accept the agreement.
He said: “They are getting some money up-front while they have also got some control over the process of change.”
Mark Higson, managing director of Royal Mail Letters, said: “This is crucially important in allowing Royal Mail to compete successfully in the highly competitive communications market and to help counter the effect of the ongoing decline in traditional mail volumes.
“It enables the business to rapidly complete the introduction of the latest-generation sorting technology and new delivery methods to improve efficiency.”