AIB and bank union sign career framework agreement

Allied Irish Banks (AIB) and the Irish Bank Officials Association (IBOA) recently agreed on a new career framework that includes pay rises and introduces new performance systems. The agreement builds on what has become known as a ‘second generation’ partnership agreement, which the two sides concluded in 2005.

A new career framework agreement, announced between Allied Irish Banks (AIB) and the Irish Bank Officials Association (IBOA) in February 2006, allows for major change at AIB. In addition to an implementation payment of 2.5%, the agreement provides for increases in junior and managerial salary scales, a new performance pay system and bonus payments. Kevin Foley of the Labour Relations Commission (LRC) drew up this new framework agreement.

The deal was revealed after AIB announced profit results of €1.7 billion for 2005, and covers most of the bank’s 8,000 staff in the Republic of Ireland. Negotiations were carefully monitored by other major Irish banks and by the social partners engaged in national talks on a new partnership programme.

Company–union partnership initiative

The Career Framework follows on from a pact concluded between AIB and IBOA, in November 2005, on their ‘second generation’ partnership agreement, which succeeded a 2002 partnership initiative between the two sides. The aim of the second partnership agreement is to foster increased problem-solving at local level, while ensuring a greater emphasis on strategic issues at top union–management level. At the annual employment relations conference, held by the Irish independent weekly magazine, Industrial Relations News (IRN), in March 2006, the success of this initiative was measured by the fact that the number of local issues being referred to central level had fallen by 75%. The entire partnership process in AIB is being chaired by Peter Cassells, the former Head of the National Centre for Partnership and Performance (NCCP) and ex-General Secretary of the Irish Congress of Trade Unions (ICTU).

Examples of such company–union partnerships are rare in Ireland, despite the country’s success in social partnership at national level since 1987. AIB Chief Executive, Eugene Sheehy, has said that partnership in AIB was like the ‘phoenix that rose from the ashes of the 1992 dispute’, a reference to a major national bank strike that year.

The 2003 agreement stated that no ‘strait jacket’ should be put on AIB’s change and transformation agenda, but that best practice was to apply in relation to consultation and agreement, adherence to existing agreements, and a commitment to consensus-based bargaining. The second generation partnership built on this approach and the new career framework agreement underlines the concept of change and reward related to performance.

In drawing up the career framework agreement, Mr Foley recommended that all materials developed to support implementation ‘should reflect the AIB/IBOA partnership principles’.

Performance-based benefits

Under the Career Framework, new performance management processes will be put in place, with more regular reviews and greater accountability expected at all levels, as well as a strong developmental focus. AIB staff will have the option of staying on incremental pay systems or of moving to performance-related systems. However, the agreement does not envisage a ‘dual’ career system in the bank. While the pay system is optional, the new performance drivers will be common to all staff.

This is not the first time that AIB and the IBOA have concluded an agreement involving major changes within the bank in the context of their partnership relationship. In 2001, staff secured a pay deal ranging from a low of 1% to a maximum of 16%, above the terms of the then national social partnership agreement, the Programme for Prosperity and Fairness (PPF).

Commenting on the new career framework agreement, IBOA General Secretary, Larry Broderick said that its implementation ‘will bring about serious change within AIB, but it brings change through agreement and most importantly brings considerable benefits to staff’.

Staff benefits in the agreement are as follows:

• a 2.5% pensionable increase in salaries covering all staff;

• an increase of up to 15% in salary scales for junior staff;

• an increase of up to 7.5% in salary scales for managerial grades;

• the introduction of a new voluntary performance-related pay system;

• bonus payments ranging from 3.7% to 7.3%.

AIB stated that the framework offers it a ‘more modern and focused career, performance and reward process to underpin and sustain a high performance and ethical culture within the bank’. Career Framework is a key component of AIB’s plans towards this aim.

Brian Sheehan, IRN Publishing