Irish Life & Permanent has given an 8 per cent pay rise to over 800 staff in return for being allowed to offer higher rates to new recruits. For the first time this will put them significantly ahead of bank officials and could spark knock-on claims.

The old entry rate had been as low as £10,000, but now the company can offer as much as £15,750 to recruits, depending on their qualifications and experience.

The agreement also allows the company to offer increased pay to existing staff earning over £15,750, if they are offered more by competitors.

MSF national secretary Mr Jerry Shanahan, who negotiated the deal said: "It's labour market pressures which are dictating pay levels." He added that the pay rises for existing staff were on top of a reduction in the 27 year long scale to 25 years. This was to ensure they would not earn less than new recruits. The deal only applies to staff in the Irish Permanent division of the company. The 1,700 employees in the Irish Life, or insurance division, already have their own "fast tracking" system to reward high performance employees.

The company's director of human resources Mr Niall Saul said that the new rates made the Irish Life & Permanent more competitive in labour market terms, but added that the company could still recruit school leavers at £10,000 to £11,000. The higher entry rates were related to performance and qualifications. The new scale for permanent staff on the clerical/administrative scale will be £12,000 to £27,000 a year. Bank officials earn between £10,000 and £24,000.