New works agreement on partial retirement at Daimler-Benz

A January 1998 works agreement on partial retirement at Daimler Benz, Germany, provides better conditions for the employees than the analogous collective agreements in metalworking.

Against the background of increasing mass unemployment, and following legislation in 1996, partial retirement (Altersteilzeit) has become a very prominent bargaining issue between the German social partners (DE9708224F). According to a recent study by the Institute for Economics and Social Science (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) there are now 15 branch-level collective agreements and several company agreements on partial retirement covering altogether about 5 million employees.

In September 1997, the most notable collective agreement was concluded in the metalworking industry in the region of Baden-Württemberg between the regional organisation of the IG Metall metalworkers' union and the regional metalworking employers' association Verband der Metallindustrie Baden-Würtemberg (DE9710133F). This collective agreement foresees the introduction of partial retirement by a voluntary works agreement at company level.

On 12 January 1998 the management and company works council (Gesamtbetriebsrat) of Daimler-Benz AG agreed a new works agreement (Betriebsvereinbarung) on partial retirement which is based on the metalworking collective agreement. According to the leader of the company works council, Alfons Görgemanns, from an employee perspective the new works agreement provides even better conditions than those collectively agreed at branch level. In detail, the works agreements includes the following provisions:

  • employees from the age of 55 to 60 can participate in a partial retirement scheme, which follows the so-called "block model". This means that, over a certain period (usually five years), older employees continue to work full time in the first half of the period and then stop working in the second half;
  • during the whole period of partial retirement, the employees receive 85% of their previous net full-time monthly income. This is an improvement on the Partial Retirement Law (Altersteilzeitgesetz) which prescribes 70%, and also on the metalworking collective agreement, which prescribes 82%;
  • in the first, working half of the partial retirement period, the employees will receive 85% of yearly bonuses instead of the 50% provided for in the metalworking collective agreement. In the second, non-working half of partial retirement the employees will receive a flat-rate payment of DEM 450 per year. Furthermore, employees in the partial retirement scheme will participate fully in the company's profit-sharing system; and
  • to compensate for losses in pension entitlement, the company will give every employee after partial retirement a severance payment of 4.5 months' full-time gross pay, instead of the three months agreed at sectoral level. Together with other special payments and profit-sharing bonuses, employees could receive up to 8.5 months' pay at the end of their employment which, according to the company works council, could compensate for up to 60% of the losses in pension entitlement.

While the company works council said that the new works agreement provides "acceptable conditions" for partial retirement, the head of the Daimler-Benz personnel management department, Heiner Tropitzsch, called the agreement a "convincing compromise". Daimler-Benz now accepts that in 1998 about 1% of its 150,000 employees in Germany will start working under a partial retirement scheme.

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