Break-down of negotiations in financial services sector

Some 91 days after negotiations began between employers and trade unions about the renewal of the collective agreement concerning financial services employees, the trade unions have decided to leave the negotiating table. As talks between the parties have been heated since the beginning, the trade unions have now unanimously decided to suspend negotiations at least until the Luxembourg Bankers’ Association withdraws its recommendation to the banks to freeze the seniority benefits of their employees.

Opposing positions of social partners

Since 17 October 2006, the social partners of the financial services sector have been taking part in negotiations in an effort to renew the collective agreement concerning the sector’s employees; the previous agreement covered the period from 1 January 2004 to 31 December 2006. The parties involved on the trade union side included the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschaftsbond Lëtzebuerg, OGB-L), the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB) and the Luxembourg Association of Banking and Insurance Staff (Association Luxembourgeoise des employés de banque et d’assurance, ALEBA), while the employers were represented by the Luxembourg Bankers’ Association (Association des Banques et Banquiers Luxembourg, ABBL). From the start of the negotiations, however, their positions turned out to be diametrically opposed, which is a situation unparalleled in the sector.

Focus of negotiations

Topics raised for discussion during the final weeks of negotiations included the termination of contracts, working hours, the organisation of working time and performance-related pay.

Termination of contracts

ABBL agreed to lower the minimum workforce size required to activate a preliminary termination meeting procedure from 150 to 100 people; in principle, employment legislation only requires companies with 150 or more employees to apply this procedure of holding a meeting with workers who have been made redundant, during which the employer is required to explain the reasons for the redundancy. Moreover, the organisation agreed to increase the time period between the invitation to such a meeting and the date of the meeting to four days instead of the two days required by legislation. In exchange for introducing these measures, the employer organisation demanded a change in the way compensation is allocated in the case of collective redundancies. However, the trade unions are opposed to the employer proposals, which they consider are geared towards deciding the terms of redundancy packages in a collective agreement.

Working hours

As far as working hours are concerned, the employers wish to see the working week extended to six working days, including Saturday. Not all banks would be affected by Saturday work, but those wishing to impose such working hours would be free to have their employees work at the normal rate of pay (100%), whereas the current agreement stipulates that a rate of 125% should be applied for Saturday work.

Organisation of working time

In terms of working time organisation, ABBL would also like to see the half-yearly reference period changed to an annual period in order to increase the flexibility of workers.

Performance-based remuneration

The most sensitive issue up for negotiation was centred around staff remuneration. On this point, the current collective agreement rewards seniority rather than performance of workers in terms of pay. The employers would like to see this system replaced by one which they believe to be better adapted to businesses’ needs, such as a system of performance-related pay. They propose ending the scale of seniority grades and redistributing the salary budget to employees on the basis of their performance at work. The trade unions object to a pay system that is entirely based on performance and wish to receive guarantees of promotion for their members.

Trade unions walk out of negotiations

In January 2007, 91 days after negotiations began, the trade unions decided to walk out of the negotiations as a result of so many divergent views, and particularly because of ABBL’s recommendation to banks to award pay rises on a merit basis and freeze seniority-based payments until the collective agreement is renewed. All three trade unions have stated they are willing to resume negotiations as soon as ABBL retracts its pay recommendation to banks. Moreover, they have shown their determination to exhaust all legal means available in order to ensure that the terms of the current agreement are adhered to until it ceases to be valid, in other words until a new agreement is signed.

Employers dismayed by trade union attitude

ABBL believes that the three trade unions, ALEBA, OGB-L and LCGB, have refused to make any concessions during the negotiations and, for its part, it feels that the pay recommendation made to the banks is neither disrespectful nor illegal. According to ABBL’s opinion, the seniority benefits are not due for 2007. From the employer’s perspective, such a pay recommendation does not harm the interests of employees, given that ABBL has declared its willingness to reach an agreement which would be backdated to 1 January 2007. In order to demonstrate its sincerity, ABBL has decided to submit a request to the employment tribunal for a revised interpretation of the agreement and the recommendations put forward for renewal.

Odette Wlodarski, Prevent