We calculate that only 6.5% of Lloyds Banking Group staff voted in ballots to accept the bank’s pay proposals this year but they are still being implemented on 1st April 2020.

According to a survey it had conducted last year, one of the HR approved staff unions accepting the bank’s pay proposals was reported in the press as saying that one-third of its members were struggling financially. Now, we know that Unite has less than two thousand members and their surveys are not particularly rigorous or taken seriously by the bank, but how could it accept a pay deal, which gives average increases of 2.4% and means up to 37% of staff receiving increases below inflation. And they failed to address the elephant in the room, namely ‘pay progression’. That’s always been the key issue and the two in-house staff Unions fail to address it because to do so is difficult and would need them to have some difficult conversations with the bank.

‘Enabling Pay Progression’ In Lloyds

According to Mrs. Jennifer Tippin, Group Director People and Productivity, ‘Enabling Pay Progression’ is one of the Group’s key pay principles. She says:

“For our 40,000 colleagues at grades A-C, anyone not in the market zone will be awarded an increase to a minimum of 95% (market zone is usually 95%-105%) after 6 months of delivering in role; this represents 60% of all colleagues in the Group”.

So, after 6 months grades A-C staff should expect to be at the minimum of the market zone according to Mrs Tippin. Members in grades A-C should check the new pay scales to make sure they are at the minimum of the market zone in April 2020.

But what about movement towards the mid-point, which is 100% of the market zone? If we take what’s happened this year as a starting point, then that will show why pay progression in Lloyds is so slow. For a grade C, the minimum of the new market zone is £24,225 (Pay Zone 3) and that’s the position staff should be at after 6 months. The mid-point for grade C is £25,500. This year a grade C member of staff in the market zone will get a 2.5% pay award and the mid-point (100% of scale) will increase by 2%. If we extrapolate forward, using the pay award and mid-point increases, then it will take a grade C member of staff 10 years to be paid the market rate for the job.

Is that acceptable to staff? Whether it is or it isn’t, that’s what the in-house staff Unions have agreed.

10 years to be paid the market rate for a job, which most staff are delivering in role after 12 months. It will be the same for grades A and B staff. The figures for grades D-G staff are just as bad and will be covered in a separate Newsletter.

It’s ironic because when it comes to executive directors, it’s almost taken as a scientific law that they must be paid the market rate for the role immediately.

And what’s even more disturbing is that at grade C, the bank will be recruiting externally on salaries significantly higher than the market rate for the job.

Furthermore, members shouldn’t be deceived into believing that ‘Job Families’ is going to make a blind bit of difference to pay progression in Lloyds when it’s introduced later this year. It’s not.

The Santander Approach

Santander has announced a two-year pay deal with staff getting increases of up to 3% for 2020 and 2021, depending on position in salary range. But that only tells half the story. Santander have put in place a unique pay progression system which means that lower graded staff are moved quickly to the mid-point of their pay range. In some customer facing roles, the mid-point, or rate for the job, can be achieved in 12 months. And then depending on level, Santander sets out exactly where staff should be relative to the mid-point at 12 months, 18 months, 24 months and 36 months in role. It’s not perfect but it’s a good starting point. Staff eligible for pay progression, get annual pay increases and progression increases to make sure they are in the right position.

Is it beyond the wit of Lloyds HR to put in place something like that, especially for staff in the lowest grades?

Pay Cut For Lloyds CEO? Don’t Bank On It!

Members will have seen the recent press reports regarding changes to Mr Horta-Osorio’s pay package. The idea seems to be that he gives up his long-term incentive plan (LTIP – worth up to 300% of his base salary of £1.3m) for a scheme that pays out a set number of shares. Essentially, he would be giving up the possibility of a bigger pay out for the guarantee of a smaller one.

It’s a con, designed to compensate Mr Horta-Osorio for the fact that he fails to achieve his full LTIP award because the bank’s share price performance is lamentable. Lloyds shares are worth less now than when he took over running the bank 9 years ago. If you’d performed like that you would have been sacked long ago. The changed package is also designed to compensate him for the loss of his pension allowance, which was worth up to £200,000 per year.

Rest assured we will be poring over the details of the new scheme when the bank publishes its results next week.

Helping Britain Prosper

The Bank quite rightly takes great pride in its carbon footprint targets. As part of its drive to be cleaner and greener, it’s banned the use of plastic cups in many locations and instead provided staff with aluminium water bottles emblazoned with the ‘Helping Britain Prosper’ marketing logo. The only problem is the water bottles were manufactured in China (the 15 biggest container ships produce more sulphur oxide pollutants than all the cars in the world put together). Now the pollutants involved in transporting those water bottles is one thing, but surely Lloyds could have found a UK manufacturer to produce those bottles. That would have been really ‘Helping Britain Prosper’.

Members with any questions on this Newsletter can contact the Union’s Advice Team on 01234 262868.

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