After lengthy negotiations two new collective bargaining agreements in the Metal and Electronics Industry in Germany have been concluded in the last days. The content of these agreements directly applies to the employment relationships between employees and employers in Germany who are bound by them due to memberships in unions and employers’ associations or by means of reference clauses in individual agreements. Collective bargaining agreements’ rules are enforceable in court and employees regularly make use of this right. Therefore, any company that operates in the German Metal and Electronics Industry and is bound by the collective bargaining agreements that apply to this industry sector must quickly acquaint itself with the new additional requirements that have been agreed:

Collective Bargaining Agreement on Salary, Treatment of Lease Employees and Apprentices

On May 19, 2012, the German metal and electronics workers union IG Metall and the employers’ organization Südwestmetall have entered into a new collective bargaining agreement dealing with salary, apprentices and leased employees’ rights. While this new collective agreement originally applied to employers in the state of Baden-Wuerttemberg only, it has already been adopted in a number of other German states and it is expected that nearly all other tariff regions will take over this pilot agreement.

This new collective bargaining agreement’s core content can be summarized as follows:

  • Salary Raise
    Tariff salaries will be raised by 4.3 % as of May 2012.

  • New Rules for the Use of Leased Employees
    The new collective bargaining agreement forces employers to look into possibilities to take over a leased employee once such employee has worked for the leasing employer for a period of 18 months. If a leased employee has been used for two full years by the same company, an unlimited employment contract must be offered to such leased employee.

    The aforementioned obligations do not apply if the concrete job performed by the leased employee justifies a longer trial period. Furthermore, employers can agree on different rules for the treatment of leased employees with the competent works councils.

  • Taking Over Apprentices
    As of January 2013 and until at least December 2014 employers must offer unlimited employment contracts to their apprentices once they have finished their training, unless the employer does not have operational demand for additional employees.

    The employer itself may define its demand for first year employees until six months before the apprentices graduate. In this case, the employer will, however, be obliged to offer one year fixed term agreements to all those graduating apprentices for which the employer does not have demand.

    Alternatively, the employer can define its demand in an agreement with the competent works council. Such agreement must be entered into no later than six months before the beginning of the apprenticeship. If the demand is defined in such agreement with the works council, there is no need for employers to hire any additional former apprentices beyond the agreed demand figures.

    Exceptions to the aforementioned principles apply in case the employer is in economic difficulties.

New Collective Bargaining Agreement on Top-Up Payments for Leased Employees in the Metal and Electronics Industry

On May 22, 2012, IG Metall entered into a second collective bargaining agreement, running from November 2012 until the end of 2017. This collective bargaining agreement applies to companies leasing employees to Metal and Electronics Industry companies and covers all tariff regions of Germany.

This agreement establishes a step plan for the introduction of top-up payments to leased employees in the Metal and Electronics Industry. Said payments shall kick in if a leased employee has continuously worked for the same company within the Metal and Electronics Industry for more than six weeks. The existing salary level under the salary collective bargaining agreement is used as a calculation basis and will be topped-up in five steps by as much as 50% after the ninth month of continued work for the same company.

Companies leasing the employees can agree on deviating rules with their works councils.

It is to be expected that the additional personnel costs triggered by this collective bargaining agreement will be passed on from the lessors to the companies leasing employees. Also, given the political pressure in this area, we expect that similar agreements will soon be adopted in other industries in Germany as well.