Social partners agree framework for individualising terms of employment

Download article in original language : NL9906144FNL.DOC

In April 1999, the Dutch social partners reached agreement within the Labour Foundation on a framework for the further individualisation of terms of employment. Whilst the essential lines of collective agreements will be retained under the Foundation's recommendations, certain conditions of employment may be swapped within a company on a "multiple-choice" basis.

On 28 April 1999, representatives of employers and employees reached agreement within the bipartite Labour Foundation (Stichting van de Arbeid, STAR) on a policy document, entitled Moving towards customised conditions of employment (Naar arbeidsvoorwaarden op maat), increasing the options available to individual employees within collective agreements. STAR policy documents should be seen as letters of recommendation, which trade unions and employers within the various sectors and companies are not legally bound to adopt.

Starting in the early 1980s, STAR identified a trend towards the decentralisation of conditions of employment. Sector-level agreements have increasingly taken on a framework agreement character, in which leeway exists for individual companies to flesh out certain conditions of employment (NL9905139F). The decentralisation process is now also gaining momentum within companies. The introduction of a "multiple-choice" system offers individual employees more opportunity to put together a package of conditions of employment best suited to their personal needs. The STAR policy document is intended to facilitate this development.

Main lines of collective agreements unscathed

The policy document stresses that the collective agreement must continue to fulfil its primary role in determining conditions, promoting equal rights between employees, offering security with respect to terms of employment and preventing competition amongst employers regarding conditions of employment in the same sector. Therefore, according to the policy document, it is important to define the boundaries for further individualisation of conditions of employment. The goal is to find the right balance between responsible "individualisation" and the collective organisation of conditions of employment.

Standard package and multiple-choice model

Under STAR's recommended scheme, collective agreements will set out a standard package of conditions of employment. Certain components of the standard package may be marked in advance for "interchange", with employees then having the option of swapping one condition of employment (known as the "source") for another (the "target"). This is referred to as a "multiple-choice" model (meerkeuzemodel). Essentially, time can be swapped for money and vice versa. Examples of benefits which can be swapped include participation in savings schemes, premium payments for flexible pension plans, extra days off, end-of-year bonuses and study leave. Time "purchased" or "sold" can be accrued and need not be used straightaway. Employees would select an option with a short minimum period of validity (mostly one year), after which they would be able to explore another option.

Involvement of employee representatives

The policy document lays down a number of conditions for implementing the multiple-choice model. If a business has a company collective agreement, trade unions must be involved. Regarding sector-level agreements, the agreement must include a passage that spells out the framework within which the business may individualise the multiple-choice model. For businesses not covered by a collective agreement, the model must clearly be implemented in cooperation with the works council or the group acting on behalf of staff. On a more general note, the policy document assumes that application of a multiple-choice system is based on stable labour relations. The starting point is and will remain that the decision to explore the options is entirely voluntary.

Anticipated effects

Based on experiences at companies using the multiple-choice model over a longer period of time, STAR anticipates the following effects:

  • employees in higher-level function groups will be more inclined to sell their time, and employees in lower-level function groups will be more likely to buy time;
  • single employees will be more likely to sell time while the opposite will be true for those with partners; and
  • employees with small children will be more likely to buy time while parents of older children will sooner opt to sell theirs.

Existing multiple-choice system: the arrangement at KBB

The policy document lists several companies currently using the multiple-choice system, including Akzo (chemicals) Heineken (brewing), Hoogovens (steel), KBB (retail) and the information technology companies Roccade and Origin. At KBB, the following conditions of employment have been designated as possible sources: extra non-working days (partially due to the move to the 35-hour working week); days of holiday (generally a maximum of five a year, though possibly more in line with length of service); holiday bonus; Christmas bonus; and variable remuneration. Designated targets include: days of holiday (maximum five); phased retirement days; sabbatical leave; study leave; parental leave; money (a maximum of four days may be paid out); pension supplements; employee savings schemes; and financing the balance not paid by the employer for children's daycare.

Commentary

Once again, employers and workers have come to terms within the STAR framework on a subject that traditionally results in a stand-off between them. Whilst on the one hand the agreement endorses what has already become common practice at various companies, it also attempts to establish boundaries for a wide-ranging individualisation of conditions of employment. For good reason, emphasis is placed on ensuring that implementation of the multiple-choice system may not detrimentally affect the main provisions of the collective agreement. In practice, multiple-choice systems will be mainly implemented by businesses with a company agreement. Each of the companies named in the policy document has such an agreement. In sectors with industry-level agreements, decentralisation will continue to be achieved on the basis of concluding framework agreements.

The policy document assumes trade union primacy over the works councils or groups representing employee interests. Nevertheless, even at companies that have a collective agreement, works councils will become increasingly involved in shaping conditions of employment (NL9703106F), as evidenced by the important role they played in drafting the agreement for Roccade (NL9712149F) and Origin. (Robbert van het Kaar, HSI)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Lisa kommentaar