Staff at Bank of Ireland look set to receive a 7.5% pay increase over the next two years.

Employees will get a 4% rise this year and 3.5% next year if the proposed deal is accepted.

The increases have been agreed during negotiations with unions and are the largest pay award granted by the bank in over a decade.

The bank said the deal is supported by improved and sustainable performance by the lender.

Staff will now ballot on the plans, put forward in a recommendation from the Workplace Relations Commission, and if approved will be backdated to January 1.

The Financial Services Union said it would be recommending acceptance.

"This deal is the most significant pay award we've made in over a decade," said Matt Elliott, the bank’s Chief People Officer.

"Following the exceptional challenges of the last two years, we are pleased to be able to provide our colleagues with clarity on pay to the end of 2023."

The company is also to increase entry level salaries here by 6% or €1,500 to €26,500 and in the UK by £1,000 to £18,500.

This will keep salaries in line with the living wage.

Staff who enhance their professional qualification are also to be entitled to enhanced financial awards.

However, the bank has also once again highlighted the ban on performance related variable pay that continues to apply to the main Irish banks.

"These restrictions are unique to Ireland and place Irish banks at a serious competitive disadvantage to other employers," said Mr Elliott.

"We will continue to press for the normalisation of pay for workers in Irish banks to ensure we attract and retain talent at all levels."

The union thanked the Workplace Relations for their assistance and recommendation.

"The negotiations with Bank of Ireland have been challenging but constructive, and FSU are satisfied that we have negotiated the best deal possible for our members in the current circumstances," said Maeve Brehony, Senior Industrial Relations Officer with the FSU.

Late last year, the FSU said it would be seeking a 6% increase for its members working in the main retail banks here, as well as an increase in the entry point pay scale.

"Our position in November has been vindicated by the recent readjustment by ICTU of their advice to Unions to seek pay increases in the range of 2.5% and 5.5%," said general secretary of the FSU, John O'Connell.

"The deal negotiated with Bank of Ireland meets this criteria."

Pressure is growing across a range of sectors for wage increases to keep pace with the soaring cost of living.

In December the annual rate of inflation rose by 5.5%, the highest annual rate since April 2001.