Function contracts and flexible pay are bargaining bottlenecks

Download article in original language : NL9803166NNL.DOC

In the 1998 Dutch collective bargaining round, progress has been difficult in some companies over employers's wishes for separate contracts for specific categories of employee - which trade unions believe will increase working hours - and for flexible pay schemes.

Philips, the electronics group, has proposed the introduction of flexible remuneration for all its employees in its forthcoming 1998 collective agreement (NL9710142N). A company spokesperson has pointed to agreements which have been concluded for the information technology (IT) firms Getronics and Roccade as examples of the approach sought (NL9712149F). At present, higher-grade personnel at Philips are covered by a collective agreement (collectieve arbeidsovereenkomst, or CAO) called the "CAO-B", while other employees are covered by the "CAO-A". These higher-grade staff members already have options for flexible pay.

The new collective agreement at the Unilever chemicals concern has also expanded its flexible pay component: the performance bonus has been increased from 3% to 5% of pay while the increase in basic pay is 3.2% per year. This agreement is valid from 1 March 1998 until 1 June 1999.

Akzo Nobel, another chemicals firm, has offered its employees a 7% pay increase for the coming two-year period. The unions have remained neutral on this subject, and have submitted the offer to their members without any advice. The unions had demanded a 3.75% increase for 1998, but Akzo did not want to go higher than 3.5%. On the other hand, the unions are pleased that Akzo has retracted its proposal to introduce "function contracts" or "position-based contracts" (functiecontracten) for higher-grade field organisation staff. These contracts (NL9801155N) assess employees in terms of their performance, and, unlike normal employment contracts, set performance levels. Such contracts have already been introduced at several IT companies (such as Cap Gemini) and, as an experiment, for 1,200 top staff at the post and telecommunications giant KPN.

Trade unions oppose these kinds of contracts, mainly because they signal a clear break with the ideal of a shorter working week. Position-based contracts stimulate employees to work extra hours for higher pay. In addition, negotiations at Debis, another IT company, have recently come to a standstill on the subject of flexible pay.