Social partners seek to regulate employment of call centre workers

About one third of Austria’s call centre workers are ‘economically dependent, self-employed workers’; in other words, they are formally self-employed, although the working situation of most of these workers resembles that of dependent employees. Due to increasing competition in the call centre industry, a number of employers are offering ‘free-service contracts’ rather than standard employment relationships, thus bypassing labour law commitments. In response, the relevant social partners commenced talks in June 2006 about the future regulation of employment relationships in the call centre industry.

On 29 May 2006, the Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) held a so-called ‘action day’ in front of a number of call centre premises throughout the country. The move was targeted at call centre workers, in an attempt to provide them with relevant information about their rights. At the same time, a special website for call centre agents and a free telephone hotline was set up by the union. The aim of both services is to provide general information and individual advice to call centre workers.

GPA’s measures were sparked by the widespread practice in call centres, and particularly among subcontractors (external call centres), of employing ‘economically dependent self-employed’ persons (AT0309201N) rather than ‘standard’ employees, thus bypassing existing collective agreements and labour law regulations. This group of ‘atypical’ workers is, in formal terms, regarded as being self-employed, even though their working situation often resembles that of dependent employees.

Rapid growth of call centres

Since official statistics do not treat call centres as a distinct sector, data on the development of call centres in Austria are relatively scarce. Nonetheless, a national study in this area, carried out by the Working Life Research Centre (Forschungs- und Beratungsstelle Arbeitswelt, FORBA) in 2005, has provided significant data in this respect (AT0601NU04). At present, between 400 and 500 call centres exist in Austria employing – according to GPA statistics – some 33,000 employees. The most important sectors concerned are retail, financial services, telecommunications and market research.

In comparison with Germany, France or the United Kingdom, the growth of the call centre industry has developed somewhat slowly in Austria. Up to 1998, the number of call centres was comparatively low: a few internal call centres in large companies co-existed independently along with a handful of direct marketing companies which later became the first subcontractors. However, since 1998, the call centre industry has experienced rapid growth. According to FORBA, over 50% of Austrian call centres were established after 1998. The rapid expansion of call centres in the late 1990s and early 2000s was driven by increased outsourcing in various sectors, such as retail, telecommunications and financial services.

Increased outsourcing took place in the context of a general shift in business strategies, with employers orienting their human resource strategies towards cost reduction and flexibility goals. As a consequence, cost-driven competition has characterised relations between in-house call centres and the growing number of subcontractors and relations among subcontractors. Thus, the initial period of fragmentation in the industry was followed by a period of more competitive relations in the late 1990s. Currently, the call centre sector is becoming more consolidated, with easing price competition between internal call centres and subcontractors, albeit continued price competition among subcontractors.

Prevalence of ‘free-service’ contracts

Unlike most European countries, including Germany, GPA has succeeded in negotiating a collective agreement for subcontracting call centres. Since 1998, subcontractors have been covered by the agreement for the general trade sector (Kollektivvertrag Allgemeines Gewerbe). Interestingly, this collective agreement preceded the expansion of the call centre industry and the rapid growth of subcontractors; only a few subcontractors existed when the agreement was concluded by GPA and its bargaining partner, the Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ). However, the subsequent expansion of the call centre industry has been accompanied by a wide range of employment practices among subcontractors, which have bypassed the collective agreement.

In Austria, the central aims of cost reduction and increased flexibility in the call centre industry have led to a common practice of employing atypical workers, mostly on the basis of ‘free-service contracts’ (freie Dienstverträge). Subcontractors, in particular, often make use of this type of contract. A study by the Chamber of Labour (Arbeiterkammer, AK) of Salzburg call centres revealed that 77% of all workers in subcontracting call centres in Salzburg held a free-service contract in 1999. Before subcontractors were covered by the collective agreement for the general trade sector, dependent self-employment hardly existed.

The recent FORBA study shows that employment practices of Austrian subcontractors have not changed since the late 1990s. In 2005, about 30% of all call centre agents were free-service contract workers. However, only 40% of the country’s call centres actually offer such contracts, which means that the proportion of free-service contract workers in these enterprises (most of which are subcontractors) amounts to almost 83%, on average.

For employers, the free-service contract is largely associated with lower labour costs, along with increased flexibility. Workers on these types of contracts are only partially covered by Austria’s social insurance system; health services and state pensions are included, but no sickness benefit is provided. Moreover, they have been denied unemployment insurance (AT0404202N) and any co-determination rights so far. The social insurance contributions that the employer is obliged to pay on behalf of these workers are much lower than those payable on behalf of standard employees. Furthermore, these atypical workers can be used flexibly and paid poorly, since they are not covered by any collective agreement, nor are they protected by any working time regulation.

As a result, many employers tend to offer free-service contracts rather than standard employment contracts. According to the trade unions, but also the social insurance institutions (which are interested in receiving higher social insurance contributions), such a practice is often unlawful. Despite these problems, GPA has not assigned high priority to combating such employment practices in call centres. In general, dependent self-employed workers were not considered a core clientele of the union. This situation changed, however, in 2005.

Social partner measures

Recently, GPA has begun to initiate proceedings in several cases on behalf of call centre agents against employers who intentionally bypass the labour law. In addition, social insurance institutions have started to intensify their monitoring of the lawfulness of employment contracts. Against this background, WKÖ, which represents most of the Austrian call centres, was forced to enter into negotiations with GPA in order to discuss uniform employment regulations needed to control the call centre industry.

Social partner talks were eventually initiated between WKÖ and GPA in June 2006, aimed at achieving legal certainty regarding the sector’s employment relationships for both employers and employees. Specifically, the social partners plan to jointly set up a regulatory framework, providing a clear-cut demarcation between standard employees and free-service contract workers.

Moreover, from GPA’s point of view, binding regulations on working hours and payment for atypical workers shall also be established. GPA aims to release call centres from the general trade agreement and to negotiate a specific industry agreement for call centres, which would include regulations for the use of free-service contracts.

Employers’ reactions to this initiative have been somewhat mixed. In August 2006, some employers organised themselves within WKÖ in response to the GPA initiative and prepared for collective bargaining; however, others threatened to relocate some 10,000 jobs of their enterprises to other countries if the sector is brought closer into line with standard, and thereby more expensive, employment relationships. They argue that increased labour costs would reduce their competitive position. The outcome of this debate remains unresolved.

Reference

Schönauer, A., Qualität der Arbeit in Callcentern. Fallstudie Österreich Global Call Centre Industry Project [Quality of work in call centres. Case study Austria within the Global Call Centre Industry Project] – in German, 912Kb PDF, Vienna, 2005.

Georg Adam, University of Vienna and Hajo Holst, University of Osnabrück

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