Winning Bizness Desk

Bank unions threaten indefinite strike from October 26 over five-day week and performance incentive scheme

Banking services across India could face disruption in September and October as bank employees and officers prepare for a nationwide strike over the long-pending five-day workweek and the new performance-linked incentive (PLI) scheme. The United Forum of Bank Unions (UFBU) has announced a series of protests and warned that if the government and bank management fail to address its demands, an indefinite strike could begin from October 26.

The unions’ main demands are the implementation of a five-day banking week and withdrawal of the new PLI scheme introduced by the government. The five-day banking proposal has been pending for more than two years despite an agreement between the Indian Banks’ Association (IBA) and employee unions. The dispute over PLI, meanwhile, has widened into a disagreement over what unions call unequal treatment of employees.

Five-day banking proposal awaits government clearance

The five-day workweek was agreed upon as part of the 12th Bipartite Settlement and the 9th Joint Note signed between the IBA and bank unions on March 8, 2024. Under the proposal, employees would work longer from Monday to Friday to compensate for the additional weekly holiday.

The arrangement would involve:

• A holiday on every Saturday instead of only the second and fourth Saturdays.
• An additional 40 minutes of work each day from Monday to Friday.
• Continuation of the existing Sunday holiday.
• No reduction in the total weekly working hours.

The IBA had approved the proposal and forwarded it to the Central Government, but the Finance Ministry has not yet given the required approval, leaving the issue unresolved for more than two years.

Unions challenge new performance-linked incentive scheme

The second major flashpoint is the PLI scheme issued by the Department of Financial Services under the Finance Ministry. Bank unions have objected to the structure of the scheme, arguing that it creates a wide gap between senior officers and employees at lower levels.

Under the guidelines, officers in Scale IV and above can receive PLI linked to individual performance, equivalent to up to 365 days of basic pay. In contrast, workmen and employees from Scale I to III can receive a maximum incentive equivalent to only 15 days of basic pay plus dearness allowance.

Employees seek uniform incentive structure across banks

The UFBU has argued that the incentive should be linked primarily to the overall performance of the bank rather than individual performance. It has also demanded that employees up to Scale VII should receive an incentive calculated on the same number of days.

The unions contend that the new arrangement goes against the understanding reached during the bipartite negotiations with the IBA. Their objection is not only about the amount of incentive but also about what they see as unequal treatment within the banking workforce.

PLI dispute reaches labour authorities and court

The disagreement over the incentive scheme has now moved beyond negotiations between banks and unions. The matter is pending before the Chief Labour Commissioner as part of the conciliation process.

The unions have also challenged the PLI guidelines before the Delhi High Court. They want the incentive framework to be reconsidered through bilateral negotiations rather than being implemented in its current form.

Pension demands add to pressure on government

Alongside the two main demands, bank unions have revived several long-standing issues concerning retired and serving employees. These demands are expected to form part of the broader agenda behind the proposed industrial action.

Their additional demands include:

• Pension updation and revision for all pensioners.
• A uniform dearness allowance formula for all retired bank employees.
• An option for employees covered under the National Pension System (NPS) to shift to the Old Pension Scheme (OPS).

Indefinite strike threat raises service concerns

If negotiations fail, the proposed action could affect banking operations across the country. An indefinite strike from October 26 would have implications for branch services and other routine banking activities, particularly if the action receives widespread participation from employees and officers.

For now, the unions are pressing for a resolution through negotiations, but the October 26 deadline signals that the dispute could turn into a major industrial confrontation unless the government and bank management move to break the deadlock.

Two-year wait now reaches a critical point

The five-day banking demand has already remained pending for more than two years after being formally included in the 2024 bipartite agreement. The unions believe the prolonged delay has exhausted their patience, while the PLI dispute has added a fresh point of friction.

The immediate challenge for the government and banks is therefore to settle both issues before the proposed strike gathers momentum. If no agreement is reached, October 26 could mark the beginning of an indefinite shutdown of banking services, making the dispute one of the most significant labour confrontations in the sector in recent years.