AIB said it will provide healthcare benefits for all of its employees in Ireland and Northern Ireland, becoming the first bank here to do so.
The bank also said it plans to introduce a measured variable remuneration scheme subject to the achievement of a range of performance targets across the business.
Variable pay includes bonuses, shares and other annual or short time incentives.
It said these new initiatives will help the bank retain and attract employees.
The bank said that from January 1, it will provide all its employees with access to a plan with a wide range of health benefits and access to treatments and treatment centres from Vhi and Bupa.
It also said that while variable pay for Irish banks is still restricted by the Government to a maximum of €20,000, variable pay in AIB will amount to no more than 5% of the employee's salary, up to a maximum of €12,700 per employee.
The payment will be subject to group performance conditions being met, including its group financial performance, customer satisfaction levels, green lending targets and employee gender balance.
Meanwhile, AIB has also agreed with the Financial Services Union for the payment of a €1,000 voucher for staff in November this year.
AIB's Chief People Officer David McCormack said that the health and wellbeing of the bank's employees continues to be a key priority for the group.
"The introduction of healthcare is a very significant step forward and a demonstration of our continued commitment to providing a supportive workplace in AIB," he added.
Commenting on today's announcement, John O'Connell, General Secretary of the FSU, said the union had campaigned hard for the introduction of a health insurance scheme and for the reinstatement of variable pay for ordinary bank staff.
"This agreement is a culmination of an enormous amount of work and is just reward for the professionalism and loyalty of Bank staff," Mr O'Connell said.
He said that ordinary Bank staff, who are at the forefront of delivering change in the banking sector, have suffered like others through the significant increases in the cost-of-living and through austerity measures introduced after the bank crash.
"The FSU campaigned for those austerity measures to be changed so ordinary bank staff could be rewarded. The change made by the Minister for Finance last year has enabled these pay and benefits to be introduced," he added.
He said the union wants to make the retail banking sector attractive to new graduates and this is certainly a step in the right direction.
Billy Barrett, Senior Industrial Relations Officer with the FSU, said that an ordinary bank worker on a starting salary of €30,000 can receive health insurance worth up to €1,450 and a variable pay amount up to €1,500.
"AIB are the first bank to introduce health insurance for staff and this can be viewed as a positive start, but the FSU will continue to monitor the two schemes over the coming months to access how effective they are and to see how they can be improved over the coming years," Mr Barrett added.
