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Recommendations from Ireland’s industrial relations bodies have formed the basis of a comprehensive new agreement on working conditions at the state-owned Allied Irish Banks (AIB). The Labour Relations Commission and the Labour Court worked together to produce a set of recommendations that cover new pension arrangements, early retirement schemes, job security and future terms and conditions. Similar provisions were extended to staff at the AIB-owned EBS Building Society.
Following the financial collapse of Allied Irish Banks (AIB) in 2009, the Irish government took control and now owns 99.8% of the bank. In early 2012, AIB and the Irish Bank Officials Association (IBOA) entered a mediation process at the Labour Relations Commission (LRC).
LRC Director of Conciliation, Kevin Foley, said the bank had ‘an urgent need to reduce its cost base and restructure its business model in order to secure a viable and sustainable future’.
A range of voluntary severance and early retirement schemes were agreed which will be in operation until 2014. The AIB voluntary severance terms match the public sector’s standard severance package. In June 2012, AIB notified staff that it was closing its defined benefit pension scheme, in which the employer carries the long-term financial risk, as opposed to defined contribution schemes, where this risk is carried by the employee. The closure of the defined benefit scheme was initially scheduled to take effect at the end of 2012 and the parties entered into negotiations which continued into early 2013.
The negotiations involved both state industrial relations bodies, the LRC and the Labour Court. Previously, an issue of this magnitude would have been dealt with at the LRC and, if agreement could not be reached, the matter would then be passed to the Labour Court.
On this occasion, however, a ‘dovetailing’ approach gave the LRC responsibility for establishing the core principles of the recommendations, including the conduct of industrial relations and HR issues. The Labour Court simultaneously developed recommendations on practical, day-to-day industrial relations.
The Labour Court issued its recommendations on 1 July 2013, and the LRC followed with its proposals four days later. The LRC Director of Conciliation, Kevin Foley said the two sets of recommendations should be read in conjunction with each other.
The IBOA held a ballot of its members, encouraging them to accept the proposals because they were ‘the best that can be achieved’. IBOA members voted to accept the deal in August.
The main provisions of the agreement are as follows.
Ireland’s EBS Building Society (EBS) merged with AIB in 2011 and efforts were made to harmonise the terms and conditions of EBS staff with those of AIB. As EBS then fell within the remit of what is known as the ‘placing agreement’ (the preclusion of the payment of bonuses to staff working in financial institutions under state ownership), a dispute erupted over the non-payment of a bonus due to EBS staff in December 2011. This dispute, between the management and the union Unite representing EBS staff, remained unresolved into 2013.
In 2013, it was decided that harmonisation talks would also deal with the long-running bonus dispute issue. The LRC produced a set of proposals covering several aspects of harmonisation, such as EBS staff moving to the AIB payroll and EBS defined benefit pension scheme members moving to the AIB defined contribution scheme. These proposals were accepted by staff in September 2013. Outstanding issues were then referred to the Labour Court on the agreement that its recommendations would be accepted as binding by both parties without a staff ballot.
As the Labour Court announced its recommendations in October 2013, management agreed to pay the disputed outstanding bonuses to EBS staff. The Labour Court had already recommended in April 2013 that EBS pay the balance of the 2011 bonus in light of the ‘late notice’ given to staff that they would no longer receive it.
The court also recommended that future pension increases for EBS’s staff should match those for AIB’s staff, as should a phased two-hour increase in working hours in line with Unite’s proposal. As a result, harmonisation of AIB and EBS staff terms and conditions was completed at the same time as the EBS bonus dispute was resolved.
Andy Prendergast, IRN