The Government insisted last night that the Central Bank "must continue to operate" under the rules of the Fempi legislation that limits public sector pay, amid suggestions the bank will seek an exit from the public pay constraints to give rises to some staff to prevent them being headhunted.

The bank confirmed it has held "informal discussions " with the Department of Public Expenditure and Reform (DPER) about "future pay models" and that it has held internal discussions about its pay model "in the context of Fempi".

It denied, however, that it has yet made any application to DPER for an exemption to the Fempi rules or has held discussions about an exemption. It would not clarify whether this applied to both external and internal discussions.

When asked if it wanted an exemption or planned to apply for one, as has been suggested, the Central Bank also would not comment.

The bank this week confirmed that about 30 of its staff are receiving “retention payments” worth 21 per cent of their salary.

The trade union Unite, which represents many staff at the bank who have had their pay cut and get no such payments, says the payments are bonuses. Unite has sought legal advice about whether the payments breach Fempi.

The crisis-era Fempi legislation, which the Government has promised to unwind gradually, bans bonuses. The bank said last night it took legal advice prior to implementing the extra payments, which cost €500,000 annually.

It said they were not for senior managers, but for specific staff in two departments of the bank.

“The Central Bank faces challenges in retaining and attracting staff in the competitive market in which it operates,” it said.

“In some areas and for certain skills, these challenges can be acute. This is why, in very limited circumstances, it has become necessary to take action to address this risk.”

Unlike other arms of the State, the bank does not need sanction from DPER on pay matters as it is independently governed as part of the network of central banks in the Eurozone under the Masstricht Treaty. It is expected to adhere to Fempi, however.

“The Central Bank is subject to the operation of [Fempi] and must continue to operate within the constraints of those Acts while these are in force,” said DPER.

Robert Watt, secretary general of the department, yesterday suggested to the Public Accounts Committee that Fempi could not be unwound quickly.