The 12th bilateral agreement finalised on 08 March 2024 is an important milestone in the history of India’s banking sector. The agreement, which covers the period from 01 November 2022 to 31 October 2027, brings several amendments in the wages, benefits and other working conditions of bank employees. The agreement, negotiated between the Indian Banks’ Association (IBA) and the United Forum of Bank Unions (UFBU), aims to address the growing concerns of bank employees amid economic challenges and inflationary pressures.
What is a bilateral agreement?
Bipartite settlements are negotiated agreements between the bank’s management and employees’ representatives, usually including trade unions. These negotiations determine the wages, benefits and working conditions of employees and are usually revisited every five years. The process involves detailed discussions and negotiations between the Indian Banks’ Association (IBA), representing bank management, and the United Forum of Bank Unions (UFBU), representing bank employees.
12th Bilateral Agreement
The 08 March 2024 agreement under the 12th Bilateral Agreement is a package that addresses the emerging needs of bank employees. By offering substantial wage increases, enhanced benefits and new incentives, the agreement sets a positive tone for the future of employment in India’s banking sector. As the industry grapples with economic challenges, the agreement provides much-needed stability and assurance to the workforce, ensuring that bank employees remain motivated and are well remunerated for their contributions.
12th Bilateral Agreement: Key Points
The 12th Bipartite Agreement contains several important amendments that directly affect the compensation and working conditions of bank employees. Some of the key highlights of the 12th Bipartite Agreement are given below.
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- This agreement has increased the basic salary of bank employees by about 17%. This revision is effective from 01 November 2022 and will be reflected in the salary starting from March 2024, with the arrears being distributed for the period between November 2022 and February 2024.
- The basic pay in various pay scales has been revised to make compensation more competitive. The revised pay scales are expected to benefit employees at all levels from clerks to officers, ensuring that salaries are adjusted for inflation and cost of living.
- A new performance-linked incentive (PLI) scheme has been introduced as part of the agreement. The scheme is designed to reward employees based on their performance, with a portion of their compensation linked to the achievement of individual and organizational goals. The PLI will be paid annually, with the first payment scheduled for April 2025.
- One of the most important outcomes of the agreement is the revision of pension benefits. Employees retiring after 01 November 2022 will receive higher pension reflecting the revised pay scales. Additionally, retirees who have been receiving pension for more than 10 years will be provided a one-time special pension adjustment.
- Family pension has also been increased, with the maximum limit being raised to 30% of the last pay drawn, to benefit dependents of deceased employees.
- Employees working in metro cities and other high-cost locations will get an increase in location-based allowances. This adjustment takes into account the higher cost of living in these areas.
- The agreement also improves home loan limits and medical reimbursement policies, providing better support for employees’ housing and healthcare needs
- Recognizing the growing need for work-life balance, the Accord has taken several initiatives aimed at reducing stress and improving the overall well-being of employees. These include flexible working hours, more holidays and improved leave policies, including better provisions for maternity and paternity leave.
12th Bilateral Agreement: Implementation Timelines and Backlog
The wage revision and other benefits mentioned in the 12th Bipartite Agreement are effective from 01 November 2022. However, due to the timing of finalisation of the agreement, the revised wages and benefits have been reflected in the March 2024 salary. The arrears for the period between November 2022 and February 2024 will be distributed in a phased manner.
12th Bilateral Agreement: Impact on Industry and Responses
The 12th bipartite settlement has been welcomed by bank employees across the country. The UFBU has expressed satisfaction over the outcome, noting that the settlement addresses many longstanding demands of the employees. On the other hand, the IBA has highlighted the balanced approach of the settlement, which takes into account the financial health of banks while ensuring proper compensation for employees.
Industry experts believe that the introduction of performance-linked incentives and enhanced pension benefits will have a positive impact on employee morale and productivity. The agreement is also expected to help banks attract and retain talent in a highly competitive job market.