ALLIED Irish Banks will have to increase pay for hundreds of workers because senior executives received nearly €4m in secret bonuses allegedly designed to prevent them from abandoning the State-owned institution.
A Northern Ireland employment tribunal has told the bank it has to pay as much as £2m (€2.5m) to nearly 700 staff there after they took cases demanding AIB hand over money they said they were owed.
Evidence at one of two separate tribunal hearings showed that senior members of the bank's management at First Trust -- AIB's Northern Ireland unit -- and its UK operations received a total of £3m in covert "special awards".
The payments were made last year and the recipients were warned not to tell anybody they'd received the cash.
A human resources bank official told the tribunal that the secret bonuses, which included £426,000 paid to 24 senior managers at First Trust in Northern Ireland, were "retention payments".
She tried to persuade the tribunal that contested payments being sought by call-centre staff were bonuses, which related to past performance. She argued that the payments made to executives couldn't be classed as bonuses because they were designed to retain staff in the future.
The bank also argued that general economic hardship meant it shouldn't have to pay the claims being sought under the tribunal.
"The tribunal finds such an assertion at odds with the payment of what are euphemistically termed Special Awards made to senior members of the bank's management structure," said the tribunal ruling, which classed those awards as bonuses.
The general secretary of the Irish Bank Officials' Association, Larry Broderick, has called on AIB to make payments due to all of its staff on the island of Ireland and in Britain. He described the secret payments to AIB executives as "outrageous".
The IBOA represents about 8,000 of AIB's 12,500 staff.
He said it "beggars belief" that the payments were made to executives while the bank is "pleading poverty".
Finance Minister Michael Noonan acknowledged last January that State-owned banks were still paying commission and retention payments to some staff.
"Where the institutions are deleveraging businesses or assets at overseas locations, retention and contractual payments deemed necessary to achieve optimal results arise," he said at the time.
The Department of Finance spokesman declined to comment directly on the payments yesterday. "This is a matter for AIB as the employer of those individuals pursuing the actions in both Northern Ireland and London," he said. AIB said last night that payments were made to protect the value of the UK business..
The tribunal decided that 60 staff at AIB's call centre in Belfast were entitled to receive performance-related awards that are each worth between £2,000 and £10,000.
The tribunal also heard a case that affects 600 staff at First Trust after employees made a claim for pay increments.
They'd received increments until September 2009, when they stopped. AIB initially argued that the staff had no contractual entitlement to the increments, but later agreed they did.
The tribunal lashed out at the bank for withholding the increments.
"The tribunal is astonished that the respondent would seek to contend that it holds a right to unilaterally vary the terms of contracts with their employees because of the underlying financial circumstances the respondent faced in a difficult market place," said the ruling.
The 600 staff are now in line to receive about £3,000 each in respect of pay increments they're due. AIB is understood to be appealing a decision by a London employment tribunal that instructed the bank to pay performance-related bonuses of an average of £1,000 each to 250 staff.