Dispute over bonus payment resolved at Bank of Ireland

In July 2008, the Chief Executive of the Labour Relations Commission, Kieran Mulvey, averted a threatened 24-hour work stoppage over a disputed bonus payment at Bank of Ireland, one of Ireland’s largest banks. After suspending his involvement in June, Mr Mulvey re-engaged his role in the dispute, advising that the trade unions should accept a one-off non-pensionable payment of 3% for eligible staff from October 2008.

A finding by the appointed joint facilitator, Kieran Mulvey, who is also Chief Executive of the Labour Relations Commission (LRC), helped to resolve a planned 24-hour strike by 10,000 members of the Irish Bank Officials’ Association (IBOA) and by 600 members of the Unite trade union on 8 July 2008. The outcome means that the employees concerned will secure a disputed 3% payment that had initially been withheld by Bank of Ireland (BoI). In return, the employees must cooperate with a number of performance-related measures, which were clearly outlined by Mr Mulvey.

Both sides involved in the dispute have also renewed their commitment to an agreed and existing four-year process under the BoI’s 2005 Strategic Transformation Programme. The latter programme seeks to reduce costs and change the bank’s organisation structure to a more consolidated operating model; the programme, which has been run under the auspices of Mr Mulvey, is due to expire in one year’s time.

Background to dispute

The immediate cause of the dispute arose out of a unilateral decision by the board of BoI to award a 3% payment under a Staff Stock Issue (SSI) scheme – similar to a gainsharing agreement – instead of the maximum of 6%, which had been paid in the two previous years under the scheme. The bank stated that, while the 3% bonus was justified as cost savings targets were met by the employees, the second 3% was contingent on ‘earnings per share’ growth targets being achieved. However, the IBOA refuted the bank’s argument and threatened industrial action in pursuit of the withheld payment.

Director of Industrial Relations at the Irish Business and Employers’ Confederation (IBEC), Brendan McGinty, described the position adopted by the IBOA as a ‘throwback to 1970s style industrial relations, which has no place in the modern Ireland’. He claimed that it was ‘an old-fashioned response in a modern world’ and a blatant breach of the [Towards 2016 (2.86Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Towards2016PartnershipAgreement.pdf) national partnership agreement.

In early June 2008, Mr Mulvey temporarily suspended his involvement as facilitator in the dispute after expressing criticism of both sides. He suggested that BoI had acted too hastily in imposing a 3% payment, while criticising the trade unions for being too inflexible in demanding the full 6% payable under the SSI scheme.

Re-engagement of dispute facilitator

In a letter to the parties involved, Mr Mulvey explained that he could not issue a ‘determination’, as his investigation had indicated that ‘there is no change in their respective positions and it appears to me that no amount of mediation will assist in achieving a mutually acceptable solution that will be acceptable to both sides’. Nonetheless, after receiving informal signals from both employer and unions, Mr Mulvey re-engaged his involvement in the process in a bid to avert a threatened 24-hour stoppage, which was timed to coincide with the BoI’s annual general meeting (AGM) in Dublin.

In what he labelled as an ‘elaboration of arbitration findings’, Mr Mulvey outlined that since he had issued his interim findings on 4 June 2008, ‘further engagement has taken place between the unions and BoI in view of the industrial action being contemplated by them’. To maintain the integrity of the agreement of June 2005 ‘and a positive working relationship between the parties’, Mr Mulvey advised that the trade unions should accept a one-off non-pensionable payment for eligible staff of 3% from October 2008.

Determining factors of payment

Payment of the 3% award will be determined by the:

• cooperation of staff with ongoing change;

• continued improvement in cost objectives under the current plan;

• overall profit performance of the bank;

• real growth trajectory of the bank;

• real growth in earnings per share;

• overall trading position of the bank;

• position on offsetting the one-off cash payment of 3% to staff in October 2008.

Efforts towards more favourable relations

Mr Mulvey added that there is a requirement ‘to re-establish a degree of trust and re-engagement between the parties and discussions should commence as a matter of urgency on these matters’. Accordingly, the parties should re-affirm the principles and procedures contained in the 2005 agreement, which includes a section on the continuity of employment.

Brian Sheehan, IRN Publishing