The Central Bank has told Minister for Public Expenditure and Reform Brendan Howlin it is working on introducing a "flatter" organisational structure, which will include "performance-related pay progression".

In a letter to the Minister on November 11th, released under a Freedom of Information request, former governor of the Central Bank Patrick Honohan said the reorganisation was designed to move it from being a grade-based organisation to a role-based one, with "flatter structures and wider spans of control".

“This is being carried out to ensure the Central Bank has the skills, capabilities and the roles and structure necessary to deliver its mandate effectively,” Mr Honohan wrote.

A “key aspect” of the changes was a more “flexible and differentiated reward model” linked to the new roles, which would provide an alternative to the service-based increments.

This reward model would be “informed by market data”.

“Such a reform is needed to enable the Central Bank to better differentiate between the different roles and skillsets required to deliver on its statutory functions and retain and attract staff with these skills and capabilities,” he wrote.

Staff retention

His letter noted the Central Bank was “struggling to attract and retain staff in certain key areas because of the blanket nature” of the Financial Emergency Measures in the Public Interest (Fempi) legislation introduced by the Government to reduce the public sector pay bill.

He said the “organisation redesign” was consistent with the “principles underlying” Fempi and trusted “this legislation will not prevent such a redesign being implemented”.

In response, Mr Howlin said the Fempi Bill 2015, which will unwind some pay cuts imposed on public servants in the past six years, would become part of the statutory framework applying to pay and pension rates to all public servants including staff at the Central Bank.

Mr Howlin sought confirmation from Mr Honohan the bank was not making payments that did not comply with Fempi.

In a reply dated November 25th, Mr Honohan wrote: “Having received legal advice, the bank is satisfied that it is not making any payments to staff that do not comply with the Fempi Acts.”

The Central Bank was mired in controversy recently after it emerged it had operated a scheme since 2011 that saw €234,176 being paid to certain staff in retention payments.

Unions angered

In a subsequent statement, the regulator said the policy applied to 29 staff in two areas.

“These are retention payments and not bonuses,” the bank said.

These payments have angered trade union Unite, which has described them as bonuses and questioned why only certain staff were offered them.

In response to questions from The Irish Times about its new structure and pay model, the Central Bank said the review began in 2014.

“An organisation structure redesign process was piloted in the first half of 2015 and the redesign process is now underway for all areas of the bank,” the regulator said.

“It is expected that the future structure will be fully defined by mid-2016 . . . followed by the implementation phase in the second half of 2016.”

The bank said a new reward model was at the “early stages of development”.

“Implementation of a new, more flexible reward model, is subject to detailed design and costing, agreement with key stakeholders and legal obligations under the Fempi Acts 2009-2015,” it added.