IAG has defended a proposed enterprise pay and conditions agreement, saying the company is “not immune” from the impacts of COVID-19 and the offer achieves the right balance between the needs of employees and the business.

“We have proposed a solid package of benefits that is competitive, provides us with flexibility and stability and is reflective of our current business performance and the challenging operating environment,” a spokesman told insuranceNEWS.com.au.

“Importantly, we believe this agreement will see IAG better placed to be able to maintain high levels of employment as we manage through the recession.”

The Financial Services Union (FSU) says the company agreed in March to a 2% salary increase over three years, with the deal about to be finalised as Australia was placed into lockdown. IAG is now offering 1% for the first two years and 1.5% for a third.

FSU National Assistant Secretary Nathan Rees told insuranceNEWS.com.au the dispute could lead to industrial action, with union members advising that the deal “is simply not good enough”.

Mr Rees says about 8000 employees at IAG are covered by the agreement and a “substantial proportion” of those are union members.

The FSU says the proposed agreement also fails to include “job security” and “working from home” clauses, and pay increases will be related to performance and targets that are considered unreasonable given changed circumstances.

IAG has provided financial assistance for employees setting up at home, including a $400 initial payment. A further $40 a month has been provided as an additional allowance, as well as safety and wellbeing support.

The new enterprise agreement also includes enhanced entitlements around supporting diversity, equity and inclusion.

The FSU warned last month of industrial action against IAG competitor Suncorp due to a lack of consultation on job cuts, with members not given enough information to make decisions.

FSU Queensland Local Executive Secretary Wendy Streets says the company has since provided the information the union was seeking, and industrial action has been averted.