Packages of collective agreements signed for temporary agency workers

In May 2003, representatives of all trade unions affiliated to the Confederation of German Trade Unions (DGB) signed separate packages of collective agreements with two major employers' associations in the temporary work sector. The agreements cover pay, working time, paid leave and bonus payments. The negotiations followed new legislation on temporary agency work which came into force at the beginning of 2003.

On 27 May 2003, representatives of all trade unions affiliated to the the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) signed a package ofnational cross-sector collective agreements for temporary agency workers with the Federal Association of Temporary Employment Agencies (Bundesverband Zeitarbeit Personal-Dienstleistungen, BZA), whose members include some of the major companies in the sector. Thepackage consists of a general framework collective agreement on employment conditions (Manteltarifvertrag) - the final version of which was signed on 11 June 2003 - a framework collective agreement on pay grades (Entgeltrahmentarifvertrag) and a collective agreement on pay (Entgelttarifvertrag). Two days later, on 29 May 2003, a similarpackage of collective agreements was agreed by the DGB affiliates and a second employers' association, the Association of German Temporary Employment Agencies (Interessengemeinschaft Deutscher Zeitarbeitsunternehmen, iGZ), representing a number of small and medium-sized temporary agencies.

Course of negotiations

The negotiations over the new agreements started after parliament passed new legislation on temporary agency work in November 2002 (DE0212203N). Trade unions had demanded that any new legislation should contain the principle of equal pay - ie agency workers should not be paid less favourably than'permanent' workers in the user company - a demand that was strictly opposed by employers. The new legislation was ambiguous. On the one hand it established the principles of equal pay and equal treatment for agency workers, but on the other hand it allowed deviations from these principles by way of collective agreement, and the government made clear that it expected the bargaining parties in the sector to conclude collective agreements. The incentive for the employers' associations to enter into collective bargaining for the temporary agency work sector was to use this possibility of circumventing the principle of equal pay, which they feared would make agency work less attractive for user companies. Two major employers' associations, BZA and iGZ, therefore agreed to negotiate a national cross-sector collective agreement with DGB.

On the trade union side, for the first time ever the DGB unions united in a common cross-sector'bargaining association'. They sought to reach an outcome which would be as near as possible to the principle of equal pay.

A first framework agreement designed to lay the'cornerstones' for a package of collective agreements was agreed by the DGB bargaining association and BZA on 20 February 2003 (DE0303202N). Standard rates of pay for temporary agency workers were set in the accord and, in order to observe the principle of equal pay, the bargaining parties agreed that agency workers who were sent to user companies where the collectively agreed pay rate for permanent workers was above the standard rate for temporary workers were to receive a supplementary allowance. The specific amount of these allowances was to be negotiated separately between BZA and the trade unions organising in the sectors concerned. The remaining details of the collective agreements were to be finalised by 31 May 2003.

Complications arose on on 24 February 2003, only days after the DGB-BZA framework agreement, when the Association of Northern Bavarian Temporary Employment Agencies (Interessengemeinschaft Nordbayerischer Zeitarbeitunternehmen, INZ), a small regional employers' association, signed a number of national cross-sector collective agreements with a collective bargaining association of trade unions affiliated to the small Christian Federation of Trade Unions (Christlicher Gewerkschaftsbund, CGB), which had previously not succeeded in concluding collective agreements of major relevance in the main economic sectors. The provisions in this package of collective agreements fell well below the February DGB-BZA agreement and were seen as completely ignoring the principle of equal treatment. Furthermore the CGB bargaining association agreed to a provision which allows the provisions of the cross-sector agreements to be undercut at individual agency level, either by way of an agreement between employer and works council or if the employer gains the consent of 75% of the workforce of the agency in question to such deviations. DGB heavily criticised this'opening clause' and also the fact that pay rates were considerably lower than agreed in the DGB-BZA'cornerstones'. Furthermore, DGB raised a question of principle about the legal ability of the CGB unions to sign collective agreements and pointed to pending legal cases in which the DGB-affiliated German Metalworkers' Union (Industriegewerkschaft Metall, IG Metall) is challenging whether some CGB affiliates can be considered trade unions in the legal sense and thus be legally entitled to conclude collective agreements (DE9901195N).

Nevertheless, the collective agreements on temporary agency work signed by CGB had a strong influence on the further negotiations between DGB and the employers in the sector. BZA now demanded that the'cornerstones' for pay and conditions had to be renegotiated, taking into account the lower standards of pay and conditions agreed by the CGB affiliates. iGZ, which had left the bargaining table because it did not agree with the accord between BZA and DGB and also because it rejected the supplementary allowance (see above), received encouragement in its resistance to any implementation of the principle of equal pay in collective agreements.

The agreements in detail

The provisions of the two packages of collective agreements concluded in May 2003 between DGB and BZA and iGZ respectively share some common provisions but differ in detail. They deviate in many aspects from what had been laid down in the framework agreement in February 2003.

Pay

A grading system comprising nine scales will be established, ranging from simple repetitive work which does not require much training (scale 1) to work which requires a university degree and several years of professional experience (scale 9). Scale 4 covers skilled work requiring three years' formal training. The precise definitions differ in detail between the BZA and the iGZ agreements. Employees will be grouped in the different grades according to the main requirements of the work they are expected to do in the user company. If they perform work requiring a higher qualification for a specified time, they will be paid a bonus for this time, equal to the difference between the standard pay of the employee and the higher wage scale concerned. Under the terms of the collective agreement with BZA, this bonus need be paid only if the work requiring a higher qualification is performed for more than six weeks.

The pay rates differ slightly between the two pay agreements - see the table below. In both cases, the bargaining parties agreed that employees in eastern Germany will receive 13.5% less on all scales than employees in western Germany.

Pay rates for temporary agency workers laid down in 2003 collective agreements between DGB and BZA and iGZ (EUR per hour)
. Western Germany Eastern Germany
Scale BZA iGZ basic scheme* BZA iGZ basic scheme*
1 6.85 6.85 5.93 5.93
2 7.25 7.25 6.27 6.27
3 8.70 7.95 7.53 6.88
4 9.20 8.85 7.96 7.66
5 10.40 9.83 9.00 8.50
6 11.50 10.81 9.95 9.35
7 12.50 11.89 10.81 10.28
8 13.50 12.98 11.68 11.23
9 15.50 15.43 13.41 13.35

NB: Wages are not strictly comparable because the scales differ in detail. * The basic scheme (Eingangsstufe) applies during the first 12 months of employment with the temporary work agency.

By way of comparison, the CGB/INZ collective agreement provides for hourly pay rates of EUR 6.70 in scale 1 and EUR 7.80 in scale 3 (skilled workers) in western Germany, while workers receive lower rates of pay during the time when they are not hired out to a user company. Even lower rates have been agreed in a further package of collective agreements signed in June 2003 between CGB and another minor employers' association for small and medium-sized enterprises in the sector - theMittelstandsvereinigung Zeitarbeit (MVZ).

The collective agreements between DGB and BZA provide for a bonus on top of the abovementioned rates of pay, which depends on the time worked in the user company:

  • after three months of service in the same user company, the bonus is 2.0%;
  • after six months of service in the same user company, the bonus is 3.5%;
  • after nine months of service in the same user company, the bonus is 5.0%; and
  • after 12 months of service in the same user company, the bonus is 7.5%.

The DGB-iGZ agreements provide that, after 12 months of employment at the temporary work agency, workers are entitled to move from the'basic scheme' (Eingangsstufe) to the'main scheme' (Hauptstufe). The remuneration in this latter scheme is on all scales 3% higher than in the basic scheme.

For overtime work, night work, work on Sundays and work on bank holidays, various bonuses have been agreed in both packages of collective agreements signed by DGB. The DGB-iGZ agreement provides for specific (lower) bonuses for the healthcare sector and the hotels and catering sector, where no night bonus need be paid'for work which is typically done at night (eg security services)'.

Whereas the duration of the DGB-iGZ pay agreement is from 1 January 2004 to 31 December 2004, the DGB-BZA agreement runs until 31 December 2007. The latter agreement provides for annual pay increases of about 2.5% during its term, while the gap between rates paid in western and eastern Germany will decrease from 13.5% in 2004 to 10.5% in 2005 and 8.5% in 2006. Furthermore, DGB and BZA agreed to enter into talks in 2004 over the introduction of a supplementary allowance for agency workers who work in user companies where the comparable pay rate for permanent workers is higher than their standard rate, in order to observe the principle of equal pay. iGZ did not sign such a commitment.

Working time

Both DGB collective agreements provide for a 35-hour week, which results in a standard working time of 151.67 hours a month. The actual working time for employees will be regulated according to the actual weekly working time at the user company. Differences between the standard working time and the hours actually worked will be saved in the form of time credits in an individual working time account (Arbeitszeitkonto). Whereas the DGB-BZA agreement allows for a maximum of 230 hours to be saved, the limit in the DGB-iGZ agreement is 150 hours. Employees will have the right to take time off in lieu for such hours. The DGB-BZA agreement additionally allows for a certain amount of saved working time credits to be paid in cash.

Paid leave and holiday bonuses

According to both DGB collective agreements, employees are entitled to 24 working days (from Monday to Friday) of paid leave in their first year of employment. If employees leave the temporary work agency within the first six months of employment, the entitlement is reduced to the legal minimum of 24 days (from Monday to Saturday) per year, pro rata. The entitlement to paid leave increases with employment and reaches a maximum of 30 working days (from Monday to Friday) after five years of employment in the temporary work agency.

Under both agreements, no holiday bonus is to be paid to employees in the first year of employment. In the second year of employment, a holiday bonus of EUR 150 is to be paid. In the third and fourth year, this bonus increases to EUR 200 and from the fifth year of employment the entitlement is EUR 300. Part-timers receive a payment reduced accordingly. The same regulations and payments apply to the annual Christmas bonus.

According to the DGB-BZA agreement, the service requirement for entitlement to holiday and Christmas bonuses will be reduced to six months of employment from 1 January 2006 onwards. This reduction of this service requirement is of particular importance given the fact that, according tostatistics on temporary agency work (for June 2002), about two-thirds of agency workers are employed for a duration of less than three months.

Hardship and opening clauses

Both packages of collective agreements include'hardship clauses'- ie in the event of economic difficulties with the potential threat of bankruptcy, employers can apply for temporary deviations from the collectively agreed provisions in order to prevent insolvency. The DGB-BZA collective agreement furthermore contains an'opening clause' which allows'tripartite' agreements on pay - ie between unions, temporary agencies and user companies - if these are more favourable to the temporary workers who are sent to those companies.

The DGB-BZA pay agreement explicitly states that the minimum wages for posted workers (DE0306207T), which are higher than the agreed rates for temporary agency workers, are not affected by the collective agreement.

Reactions of the bargaining parties

DGB states that, for the first time in German collective bargaining history, national cross-sector collective agreements for temporary agency workers have been concluded between all DGB affiliates and the major employers' associations. When the DGB-BZA package was presented, the DGB's chief negotiator, Reinhard Dombre,said that he was satisfied with the outcome of the bargaining . He added that the interests of the employees had been safeguarded and the industry could develop into a normal economic sector like any other. DGBstresses that, compared with present standards, both packages of collective agreements improve working conditions in the sector.

At a conference organised by BZA, its chief negotiator, Jürgen Uhlemann,said that employers would have liked to have avoided regulation of the sector by collective agreements, but that the new legislation on temporary agency work left them little choice other than to enter into collective bargaining if they wanted to prevent equal treatment with user company employees. BZAexpressed satisfaction that it had effectively prevented the implementation of the principle of equal treatment for temporary agency workers. This view is shared by iGZ.

Prospects

The fact that temporary agency work is now regulated by collective agreements is not only of relevance for the traditional temporary agency work sector, but also for temporary workers in the'personnel service agencies' (Personal-Service-Agenturen, PSAs) which are to be established on the basis of public tenders by the local offices of the Federal Employment Service (Bundesanstalt für Arbeit, BA) in order to employ unemployed people temporarily and hire them out on a short-term basis (DE0212203N). One condition for a temporary work agency to be able to obtain a contract to run a PSA is to abide by a collective agreement.

As long as the legal status of some CGB affiliates and their legal entitlement to conclude collective agreements is challenged in the courts, it is unlikely that the collective agreements they have concluded will gain major acceptance in the agency work sector. The most important employers' associations have opted for bargaining with DGB so far, but it remains to be seen which of the different packages of collective agreements gains the widest bargaining coverage.

Commentary

The new collective agreements regulate one of the major economic sectors which had not previously been covered by multi-employer collective bargaining. Without the new legislation on temporary agency work, these agreements would certainly not have been signed. By entering into collective bargaining with DGB, employers saw themselves as opting for'the best of the worst'. BZA and iGZ regard it as a success that they prevented the implementation of equal treatment and equal pay for agency workers. For DGB, the national cross-sector agreements mark the end of a development which started years ago with a handful of collective agreements at individual agency level (DE0105222N andDE9907211N), accompanied by much scepticism in a number of trade unions about whether the temporary agency work sector should be accepted as a normal sector. It now remains to be seen how these agreements are perceived amongst temporary agency workers, and to what extent the DGB unions are able to organise temporary workers and to establish a strong trade union representation. (Heiner Dribbusch, Institute for Economic and Social Research, WSI)

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