Emergency legislation which banned the payment of large scale bonuses to bankers in 2010, was not meant to apply to the payment of salary increments to general staff, the Employment Appeals Tribunal has been told.
Four workers at Permanent TSB are challenging the bank's decision not to pay them annual increments which had previously been agreed as part of their salary package.
Ray Ryan counsel for the workers who are listed as “Ann Kealy and four others”, told the Tribunal the bank offered staff a 2.5 percent pay rise in 2009 and 2010 “in lieu” of paying annual increments to staff.
He told Tribunal chairman Dara Hayes BL that as the financial crisis progressed the Government used powers under the Credit Institutions (Stabilisation) Act 2010 to effectively ban variable payments to bankers.
In June 2011 the Minister for Finance Mr Noonan wrote to the bank as he was about to become the principal shareholder, to reiterate the Government’ s opposition to variable bonuses.
But Mr Ryan argued the Government’s move was specifically aimed at bonus payments and he said the bank had been wrong to use the Government’s position as a reason not to pay increments to general staff which fell due form January 2011
He said the bank was subsequently wrong to rely on the minister’s letter of June 2011 in not paying the staff “an important part of their salary”. He said the bank had never sought clarity on the issue from the minister and he submitted the bank had no right to withhold the money. He said withholding the increment represented a unilateral deduction, the type of which were prohibited under Payment of Wages Act 1991.
However Tom Mallon for the bank said the pay rises of 2.5 percent in 2009 and 2010 did not simply represent a substitution of incremental pay. He said they included a performance review and were “a lot more” than incremental pay. He said while it was the banks custom and practise to pay increments this did not mean that they would be paid, or that there would be no decision made on them annually by the bank. He said the staff never had an increment “as of right”. “They had an increment subject to a review” he said.
