Austria: Free time option in collective agreements

In 2013, a new, innovative element was introduced in collective bargaining in Austria – the so-called free time option. Two sectoral-level collective agreements concluded in 2013, in the electronics and mining and steel sectors, included for the first time the option of converting pay rises into extra time off work.

How the free time option works

The so-called ‘free time option’, first introduced in 2013, is based on a trade union initiative in two sectors, the electronics sector and the mining and steel industry. It is intended to improve the work–life balance of workers by allowing them to reduce their working hours instead of receiving pay increases. The employers were open-minded about the idea and therefore a settlement was laid down in the collective agreements.

Workers may convert the annual pay increases awarded in the collective bargaining rounds into additional free time or choose a reduction in working time instead of receiving a pay rise. Even though this is a choice for the individual worker, the preconditions for the implementation of this option in a given company have to be set collectively. Therefore, an agreement has to be reached between the works council and employer/management and neither party can implement the option on its own. Where there is no works council in the company, the agreement has to be concluded between the employer and trade union. This means that individual workers can choose the free time option only if a works agreement exists, and the employer must also consent. The free time option is not available to  workers who, by accepting no annual pay increase, would as a result earn less than the minimum wage for the sector.

Workers can use their additional free time in several ways.

  • They can use it to reduce their weekly working time or use it variably by the hour.
  • They can opt to accrue their additional free time to take several days or a whole week off.
  • They can theoretically accrue additional free time over several years to obtain longer periods of leave (weeks or even months).

Even though free time can be accrued over time, the collective agreement states that workers must first use up any accumulated overtime or leave, before availing of the additional free time. This is to prevent that accumulated leave or remaining holidays exprie. Workers also cannot use additional free time in advance. The free time has to be registered on a separate time account and the time credit has to be disclosed to the worker each month.

Extent of free time option

As the additional free time is regarded as compensation for pay increases, how much free time can be earned depends directly on the outcomes of the annual wage bargaining process at sector level. However, such agreements do not fix the amount of time that must be awarded in lieu of a pay increase. The additional free time granted is, on average, about 10% higher than its direct monetary equivalent, so free time is weighted a little bit higher than pay.

In 2013 the pay increase in the sectors ranged between 2.8% and 3%. A 3% wage increase would translate into additional free time of about five to six hours per month. Accumulated over one year, this amounted to a reduction in the annual working time of 60 hours or an increase in annual leave of one and a half weeks. In 2014 the electronics sector collective agreement set a pay increase of 2.35% which translates into additional free time of four hours per month.

However, a clause added to the collective agreement of the electronics industry in 2014 shows that how the free time option operates is evolving. The new clause states that workers who already opted for additional free time in 2013 could not choose it again in 2014. This is in contrast to the 2013 agreement, which permitted workers to accrue additional free time over several years to obtain longer periods of leave.

Use of the free time option

There is little information about the use of the free time option in the two sectors concerned, not least because the option is relatively new. One small study conducted by the Chamber of Labour in 2014 sheds some light on how the agreement has been working (in German, 724 KB PDF). The study is based on a small survey among blue-collar works councils in 84 companies in the electronics sector employing 13,463 workers. In 16 companies, the free time option was implemented and a total of  5,733 workers were eligible to apply for the option and about 8%, around 440 workers, made use of it. Younger workers were particularly interested in choosing the free time option.

Commentary

The trade unions initiated the ‘free time option’ and had high hopes that it would contribute to a better work–life balance for workers and help compensate for job losses. In this respect it has been seen as one of the most remarkable social innovations of recent years. However, initial insights suggest that there has been limited use of the option, and the collective agreements of 2014 have restricted its potential use. Time will tell whether employees' high expectations have been met.

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