Ulster Bank's proposed restructuring plan has suffered a reverse with an independent tribunal ruling against compulsory job and pay cuts at its Northern Ireland-based operations.

The ruling immediately removes the threat of industrial action in Northern Ireland. Ulster Bank staff in the Republic will have to wait until the end of January for a ruling from a separate tribunal on their grievances.

The tribunal in the North recommended that there should be no compulsory redundancies until at least the end of June 2003. It has also ruled that staff salaries should be protected until December 31st 2004 and should include any annual cost of living rises and annual increments due.

Under the so-called Horizon Programme, Ulster Bank had proposed salary cuts of up to 30 per cent for certain staff. The tribunal has also curbed the roll-out of this plan, stating that it would be reasonable that the pilot exercise - which effectively restructures branches into more streamlined, sales-focused units - should only be extended by a further three branches in the next three months in Northern Ireland.

And all staff who have applied for voluntary redundancy should be allowed to leave the bank.

The tribunal does acknowledge the lack of full consultation between Ulster Bank and the Irish Bank Officials' Association throughout the dispute and has requested that contentious issues should be resolved through negotiation. If this fails then the matter should be referred back to the tribunal.

Reacting to the outcome yesterday, IBOA assistant general secretary Mr Larry Broderick said the recommendations provided a basis for further negotiations on the bank's restructuring plan. "The fact that the tribunal has effectively recognised the difficulties that our members in Ulster Bank would face in the context of the proposals in the Horizon Programme relating to compulsory redundancies and dramatic salary reductions is to be welcomed," he said.

Ulster Bank chief executive Mr Martin Wilson said the bank had now indicated a series of dates when it was willing to discuss the ruling with the IBOA and move forward.

He rejected the suggestion that the ruling would have any significant effect on the Horizon Programme, which was due to be fully rolled out over two years. "Once the information technology platform is in place, there shouldn't be any ultimate slippage in the roll-out.

"The most important outcome of the tribunal is that it fully accepts the principle of change, allowing Ulster Bank to get on with the business of delivering an innovative new bank dedicated to meeting changing customer needs," he said.

Ulster Bank was taken over by Royal Bank of Scotland last year and ahead of that takeover it issued an undertaking to the IBOA that there would be no compulsory redundancies until 2002. Mr Wilson said yesterday that Royal Bank of Scotland was supportive of Ulster Bank management's plans.