BEIRUT: Negotiations over renewal of a collective contact that expired in 2010 could strain relations between Lebanese banks and employees after the suspension of talks prompted workers to lodge an official request for intervention by the Labor Ministry last Friday.

Head of the Union of Bank Employees Assad Khoury told The Daily Star that the decision to suspend talks, taken by the Association of Banks in Lebanon last week, had been the chief reason behind the union’s decision to seek arbitration by the ministry.

The Labor Ministry is empowered by law to intervene in labor disputes through its labor mediation councils.

“The association [of banks] took a very surprising decision to suspend their talks with us after more than a year of deliberations and several meetings,” Khoury said in a talk Monday, adding: “Suddenly in their last meeting on Dec. 31, they announced the suspension of the talks.

“This led to our decision to lodge an application with the Labor Ministry last Friday and we will now wait for the ministry’s response,” he added.

Khoury’s proposition was denied by Makram Sader, the secretary-general of ABL, who said an end of January deadline set by the employees association had caused the suspension of the talks by his group.

While refusing to go into the details of the conflict, Sader said it was not possible to reach a settlement suitable for the two sides.

But Sader agreed the employees association’s step followed the legal procedure that applies in similar cases.

The Labor Ministry, he said, would now assign an arbitrator to hold meetings with both sides and assist them in reaching an agreement.

“This could be resolved very quickly if the two sides agree, but it could also take a very long time if the two sides put forward unrealistic demands,” Sader said when asked the duration he expects the mediation to take.

According to a source close to the banks association, the negotiations between the two groups were doomed to failure after the recent wage increase decision taken by Cabinet in January.

The collective contract stipulates bank employees should get a 25 percent increase on the third salary bracket, above what had been given to employees in a recent wage increase decision.

The Cabinet had decided to give all employees a wage increase, ranging from LL175,000 for those earning the minimum monthly wage up to LL299,000 for those on salaries above LL1.5 million. It did not increase the third bracket above LL1.5 million.

According to the source, banks out-right reject the implementation of the increase on the third bracket saying it would greatly cut into their profits.

Sader denied in his speech that the failure of the talks had anything to do with the wage increase issue.

The employees’ union had negotiating various demands including a hike on the education allowance, increasing yearly wage hikes from 3 percent to 7 percent and boosting employees’ health care benefits.

According to Khoury the union he heads gathers wide representation across the sector with membership totaling 10,000, roughly 50 percent of those employed in Lebanon’s large banking industry.

When asked if the union was headed toward instigating a strike or taking other escalatory steps soon, Khoury said that all options were being considered by the group.

“We will work on two paths: a legal one and a unionist one. But let us be clear that the [suspension of the talks] creates tension affecting our stable sector,” he said, adding that the union is waiting for a legal consultation over whether the expired collective contract is still considered to be in effect by law.

The collective agreement governs the relationship between the banks’ administrations and employees. The agreement was the first of its kind in Lebanon. The execution of the contract started in 1972 after the signature of its first version in1971.