Bank of Ireland employees will receive average pay rises of 2.2% this year and 2.61% next year after voting to accept a new pay deal.

0.9% of the rise is based on the cost of living.

However, the remaining element of the pay rise is linked to performance, so could vary upwards or downwards.

The vast majority who receive the average performance rating will receive the 2.2% and 2.61% increases.

However, those who meet higher performance levels will receive more, while those who fail to perform will receive less.

The deal follows lengthy negotiations of a career and reward structure, which included a major streamlining of pay grades within Bank of Ireland.

General Secretary of the Irish Bank Officials Association Larry Broderick welcomed the fact that the recommendation differentiated between the need to provide compensation for cost-of-living changes and to reward performance improvements.

He said there was now an onus on the bank to implement the full career and reward structure so that staff would have the best opportunities for career progression.

He said it was important that as Bank of Ireland returns to profitability, the key role played by staff should be recognised.

Mr Broderick noted that the union is also balloting members in Ulster Bank in both the Republic of Ireland and Northern Ireland on a new pay offer, with an increase averaging 2% for 2016.

He urged other financial institutions, including State-owned AIB and Permanent TSB, as well as the government and the Department of Finance to recognise that staff members are entitled to reasonable pay increases for their substantial contribution to the recovery of the financial services sector.