Inside the world of business
Christmas bonus blow for EBS staff
THE BLOCKED payment of a Christmas bonus amounting to a month’s pay to EBS staff is a bitter pill for 370 employees – rank-and-file staff on average earnings of €30,000 a year – to swallow.
Staff are furious that management are getting their monthly payment as a result of a 1992 deal where the payment was brought into their annual salaries. Their anger is compounded by the fact that EBS management could have handled the whole affair better.
Staff were told last week, days before they were due to be paid, that the payment was being stopped by the Department of Finance under the recapitalisation deal with AIB, EBS’s new owner. The department told EBS in November that the payment could not be made under the “placing agreement” with AIB from July.
A one or two-year interest-free loan being offered to staff is hardly compensation given that this creates a benefit-in-kind tax charge. The employees claim the payment is not a bonus, but a “13th month” payment and a contractual part of their annual salary.
The fact, however, that it is defined as a Christmas bonus and a non-pensionable part of their pay, despite being part of their contracts, has given the department grounds to block the payments. If it came to it, the Government can block the payments under the emergency Credit Institutions Stabilisation Act 2010, making any legal action by staff pointless.
It is all the more galling for staff that former finance director Alan Merriman, who put his hands up for the building society’s biggest losses (on development loans), was paid €851,400 on top of pay of €630,000 when he left in 2009. More recently, it emerged that chief executive Fergus Murphy was allowed to breach the Government’s €360,000 pay cap for EBS by €20,000 for as yet unexplained reasons. A ballot for action by trade union, Unite, will be counted today and a one-day strike is expected to be the outcome. In the circumstances, this is hardly surprising.
Quick decision on Eircom debt restructuring needed
IT IS difficult to figure out just what Eircom’s latest owner is up to. Having submitted a proposal to restructure the company’s debts as far back as August, the group has been vociferous on the need for a decision. Yet, when the independent directors sought proposals, Singapore-based ST Telemedia (STT) first sought an extension to the November deadline and then opted not to participate.
At the time, it blamed the “continuing macro-economic uncertainty in the euro zone”. The decision came as a shock. As a 65 per cent owner of the telco, not only had STT been expected to participate in the restructuring but there had been widespread discussion of and consensus on what were understood to be its proposals.
Just 10 days later, STT yesterday said it had “submitted a balance sheet restructuring proposal to the independent directors . . . for their consideration”, citing its “commitment to assist in the long-term development of the company”.
It is difficult to see what has happened in the market to change its mind.
If anything, the outlook in the euro zone is even less certain following last week’s summit.
In its absence, the only proposals had come from two groups of the telco’s creditors which, understandably, have their own agendas. STT yesterday reiterated the need for the restructuring process to be expedited. For the sake of the company, its staff, its customers and its creditors, it should be.
The one thing that should be clear to all parties in Eircom is that the group cannot continue to be run on the basis of narrow self-interest that has all too often appeared to be the norm since the initial privatisation.
Today
The results of a ballot of ESB staff for strike action by the Unite union over the issue of bonus payments will be announced
Online
You can get the latest news each business day at irishtimes.com/business or by following us on Twitter at twitter.com/IrishTimesBiz. We also have a Facebook page at facebook.com/IrishTimesBiz where you can read the latest business headlines, blog posts and reader polls.
