In what has been an on-going story of the past number of weeks, Anglo Irish Bank, now known as The Irish Bank Resolution Corporation, has been instructed to offer staff redundancy terms which have been approved already by the Department of Finance. As a result they have also been requested not to attend a Labour Court hearing on the issue which has angered the unions.
The Government acting through the Department of Finance is looking to standardise severance payments to staff across the State guaranteed banking sector. In essence the Department of Finance wants all of the banks, including privately owned but State-dependent Bank of Ireland, to stick to the basic formula for all State employees laid down via the HSE deal late last year.
The HSE redundancy agreement was for three weeks’ pay for each year of service, plus statutory entitlement (which is two weeks per year of service and a bonus week at the end) and while the IBRC (Anglo) terms are worth four weeks (which includes the statutory entitlement), these terms have also been sanctioned by the Department of Finance. This means that banks like BOI and AIB, who between them are seeking 2,750 redundancies, will have to offer terms that do not exceed the HSE or IBRC terms. According to reports, the IBRC management has been told to make the four weeks’ pay per year of service offer to its staff. Some 130 volunteers will be sought in the initial phase as the bank is seeking to gradually wind down operations over the next decade or more.
The rationale behind the Bank not attending the Labour Court is simple, namely what would be the point in doing so if the Court knows that the Government had already decided on the terms. However the main union involved, the IBOA (Irish Bank Officials Association) is unhappy with this position, because like any trade union, it regards the Department of Finance’s line as an interference with normal industrial relations processes and procedures.
The IBOA is requesting that the Bank return to “agreed negotiating procedures and commit to refer the voluntary redundancy (VR) terms to the Labour Court, as was agreed up until Monday morning of this week”.
However the bank is not in a position to go against the instructions of the Department of Finance, and has accused the IBRC of doing a “totally unacceptable U-turn in refusing to refer the matter of Voluntary Redundancy terms” to the Court.
“This is in breach of our negotiating procedures, our collective bargaining agreement and commitments given to both the Labour Relations Commission and the Labour Court - both institutions of the State.”
The IBRC’s redundancy offer, originally proposed in September 2011, is as follows:
- Four weeks' base pay per year of service (inclusive of statutory redundancy entitlement);
- A payment cap of €175,000 will apply and for the purposes of calculation of enhanced redundancy payments, an annual salary cap of €175,000 will apply;
- A minimum redundancy payment of three months' base salary (inclusive of statutory redundancy entitlement); this was later increased by IBOA to a minimum payment of €12,000 or three months' pay, whichever was greater;
- In the event that a redundancy payment exceeds a permanent employee's earnings to retirement or a fixed-term employee's earnings to expiry of his/her fixed-term contract, the employee will receive the lesser of the two amounts;
- The Voluntary Redundancy scheme will be open to all eligible Republic of Ireland permanent and fixed-term employees on the Bank's payroll who have in excess of two years' continuous service with the Bank;
IBRC also proposed that these terms would apply in respect of redundancies made by the bank over the next five years, subject to an annual review and on the basis that “there is no unforeseen budgetary deterioration”. It remains to be seen if the IBRC will go to the negotiating table with the Unions however, one thing is certain that these redundancies will be sought by the bank in an effort to reduce costs and streamline their workforce. It will be a situation well worth watching.
