By his own admission, outgoing Central Bank Governor, Patrick Honohan, is more of a strategic issues and vision man, than a tactical operational and human resources manager.

And so, as he reflected loftily in a valedictory address to the London School of Economics earlier in the week about how our European partners might have been more helpful to us during the banking bailout crisis, he leaves a nice little HR mess behind on Dame St.

The issue is the payment by the Bank of what it is carefully calling “retention payments”  - definitely not “bonuses” - to a small cadre of thirty staff, mainly middle managers. The payments are being made to encourage them to remain working for the Bank for up to a period of two more years and to change their periods of notice from one month, to six months.

The Bank won’t go any further than to confirm that these key staff work in two specific areas, but it’s understood many of them are engaged in regulatory supervision of the banking and insurance sectors.

While most of the thirty have a relatively short level of service with the Bank, they will have acquired skills and insights into its workings that are in demand throughout the revitalised financial services sector here, and are therefore a significant retention risk. And if they leave, they will be difficult to replace at the salary levels the Bank is in a position to offer.

So far, so normal. Any private sector organisation faced with the same challenges would take action, including retention payments, to achieve the same outcome. And to put matters in further perspective, we’re talking here about average payments before tax of €16,500, that are not pensionable, and in many instances payable in instalments over a two-year period.

In other words, if these individuals manage to resist the bright lights and fat salaries of the private sector for a period of two years they’ll benefit, on average, by an additional €4,000 after tax per year. Not insignificant, but not worth assaulting the barricades for either.

To be fair to Unite, the principal trade union in the Central Bank, it doesn’t look like this will escalate into a major industrial relations issue.

You say 'retention payments', we say 'bonuses'

Unite's beef, as reported in Independent.ie, is their contention that these “retention payments” are actually “bonuses” by another name - that they are in contravention of the FEMPI emergency measures introduced by the Government during the financial crisis to cut public sector pay and benefits and are therefore effectively illegal - and that the policy has been activated by the Bank’s management on a highly secretive basis.

When boiled to its essence, Unite’s principal grievance seems based on their belief that the Governor, and probably his executive team, didn’t seem to deem it a significant risk that long-term staff would leave the Bank when salaries were cut and pension levies imposed at the depth of the crisis, but that now, a small troupe of relatively-new recruits are deemed as critical staff, and are being paid to stay.  

The issue is reflective of poor morale generally throughout the Central Bank and represents a challenge that the new Governor, Philip Lane will have to try to address pretty promptly.

It is also reflective of the sensitivity, from ministerial level downwards, attaching to the public and trade union perception of performance-related pay – known colloquially as bonuses – in the civil service, public service and wider semi-state sector. 

The Central Bank, which has no performance-related element of pay at all – remember, this row is about retention payments – is understood to have commissioned international consultants Towers Watson to carry out a thorough review of organisational structures and remuneration policy.

Best of luck with that Mr Lane.