The U.S. Postal Service and one of its largest labor unions have reached a new 41/2-year deal that would give pay raises to about 205,000 postal workers, but force them to pay more for health-care insurance.

The tentative deal with the American Postal Workers Union would provide a 3.5 percent pay increase over the life of the contract starting with a 1 percent raise in Nov. 2012, the union said Monday. The deal for postal clerks, mechanics, truck drivers and maintenance staff would expire in May 2015 if they approve it in the coming weeks.

The new agreement is “a responsible agreement that is in the best interest of our employees, our customers and the future of the Postal Service,” according to Postmaster General Patrick R. Donahoe.The Postal Service declined to provide further comment on the deal pending ratification by the union.

APWU President Cliff Guffey said the deal will protect postal jobs and strengthens the cash-strapped mail agency. “The Postal Service’s desperate financial situation made these negotiations especially hard,” he said, but the new deal “will enable the USPS and its employees to get past these difficult days.” (Watch above or click here to see Guffey explain the agreement in detail.)

The agreement prohibits USPS from laying off career employees hired as of November, when the current contract expired, but leaves the door open to future layoffs of newer workers. Some work assigned to managerial personnel or outsourced to outside vendors in recent years also will be reassigned to APWU members, the union said.

And in a key concession for workers, the Postal Service will have to limit its use of excessing, or the reassignment of postal workers from one city to another. According to the new deal, postal workers may only be reassigned to a location between 40 and 50 miles from their current assignment. The restrictions should make the potential burden of reassignments easier, Guffey said, recalling that some workers had to uproot families and relocate in order to keep their jobs.

But USPS also made out well: By 2016, it will be contributing just 76 percent of a postal worker’s health premiums, down from 79 percent currently. Most federal agencies cover about 72 percent of employee health premiums.

The Postal Service employs about 583,000 workers and continues to cut its payroll through attrition. Postal officials are expected next week to detail plans to eliminate about 7,500 administrative and management positions, \and may offer early retirement incentives to others.

Negotiations between the Postal Service and APWU began in late September and were extended several times. Negotiations with another union, the National Rural Letter Carriers Association, ended at an impasse and will be mediated by a third-party arbitrator.

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