New law passed on part-time work and fixed-term employment contracts

In November 2000, the German parliament passed a new Act on part-time work and fixed-term employment relationships. Among other provisions, the new law introduces a right for workers in companies with more than 15 employees to reduce their working time, as long as no internal company reasons prevent such a reduction, and restricts the possibilities for concluding fixed-term employment contracts.

On 16 November 2000, the German parliament (Bundestag) passed a new Act on part-time work and fixed-term employment relationships (Gesetz über Teilzeitarbeit und befristete Arbeitsverträge), with the ruling Social Democrat/Green coalition government, which had presented the draft bill on 27 September 2000, achieving a majority in favour. This Act, which will come into force on 1 January 2001, will succeed the 1985 Improvement of Employment Opportunities Act (Beschäftigungsförderungsgesetz), which will expire on 31 December 2000. Through the new Act, the government seeks to create a legal basis for part-time work and fixed-term employment relationships which is adequate to the needs of present-day employment. At the same time, the Act transposes two recent European Union Directives on part-time and fixed-term work.

EU Directives

Council Directive 97/81/EC of 15 December 1997 (EU9712175N) implements the framework agreement on part-time work concluded in June 1997 by the European Trade Union Confederation (ETUC), the Union of Industrial and Employers' Confederations of Europe (UNICE) and the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP) (EU9706131F). Its aim is "to provide for the removal of discrimination against part-time workers" and "to improve the quality of part-time work and to facilitate the development of part-time work on a voluntary basis and to contribute to the flexible organisation of working time in a manner which takes into account the needs of employers and workers". The Directive provides that Member States and social partners should identify and review obstacles which may limit the opportunities for part-time work and, where appropriate, eliminate them. A key provision in this regard is that a worker's refusal to transfer from full-time to part-time work or vice-versa should not in itself constitute a valid reason for termination of employment. Furthermore, employers should give consideration to:

1. ""requests by workers to transfer from full-time to part-time work that becomes available in the establishment;
2. requests by workers to transfer from part-time to full-time work or to increase their working time should the opportunity arise;
3. the provision of timely information on the availability of part-time and full-time positions in the establishment in order to facilitate transfers from full-time to part-time or vice versa;
4. measures to facilitate access to part-time work at all levels of the enterprise, including skilled and managerial positions, and where appropriate, to facilitate access by part-time workers to vocational training to enhance career opportunities and occupational mobility;
5. the provision of appropriate information to existing bodies representing workers about part-time working in the enterprise.""

Council Directive 1999/70/EC of 28 June 1999 (EU9907181F) implements the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP in March 1999 (EU9903162N). It aims to "improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination", and to "establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships". Fixed-term workers must not be treated in a less favourable manner than comparable permanent workers solely because they have a fixed-term contract or relationship, unless different treatment is justified on objective grounds. To prevent abuse arising from the use of successive fixed-term employment contracts or relationships, Member States and/or the social partners must introduce one or more of the following measures:

• objective reasons justifying the renewal of such contracts or relationships;
• the maximum total duration of successive fixed-term employment contracts or relationships; or
• the number of renewals of such contracts or relationships.

Employers must inform fixed-term workers about vacancies which become available in the undertaking or establishment to ensure that they have the same opportunity to secure permanent positions as other workers. As far as possible, employers should facilitate access by fixed-term workers to appropriate training opportunities. Fixed-term workers must be taken into consideration in calculating the threshold above which statutory workers' representative bodies may be constituted in undertakings. As far as possible, employers should give consideration to the provision of appropriate information to workers' representative bodies about fixed-term work in the undertaking.

Outlines of the 1985 Act

The Improvement of Employment Act, which came into force in 1985, made it easier to conclude fixed-term contracts. Until the adoption of this law, reasons had to be given for the conclusion of such contracts, but since 1985 a first fixed-term contract of up to 18 months has been possible without employers having to give special reasons. This regulation ran initially until 1990 and was extended first to 1995 and then to 2000. In 1996, the duration of fixed-term contracts was extended to 24 months, or shorter contracts could be renewed three times up to a total duration of two years. Employees over the age of 60 could be employed on fixed-term employment contracts without any restrictions. Employers must give technical reasons for concluding fixed-term contracts only if these legal opportunities have been exhausted. On part-time work, the Improvement of Employment Act provides that part-time and full-time workers are to be treated equally. In addition, employers are obliged to inform employees who want to change their working patterns as to whether there are jobs available that correspond to their request.

Part-time work in Germany

The government argues that both part-time work and fixed-term employment relationships not only have a long tradition in Germany but are also necessary in order to guarantee a flexible organisation of work in the future. In 1999, of a total of 32.5 million employees, about 6.3 million worked part time. Of these, 4.3 million worked sufficient hours to be covered by social security. Part-time work affects around 19.5% of employees (according to the 1999 Microcensus). A working time survey by the Cologne-based Institute for the Research of Social Prospects (Institut zur Erforschung sozialer Chancen, ISO) produces a similar figure and provides a detailed analysis of the gender structure of part-time work and of the differences between east and west Germany - see table 1 below.

* full-time work: working week of 35 hours or more; ** part-time work: working week of up to 34 hours.

Source: "Arbeitszeit '99. Arbeitszeitformen und -wünsche der Beschäftigten - mit Spezialteil zu Arbeitszeitkonten", Hermann Groß/Eva Munz, im Auftrag des Ministeriums für Arbeit, Soziales und Stadtentwicklung, Kultur und Sport des Landes Nordrhein-Westfalen, Düsseldorf .

Some 87% of all part-time workers are women. Especially in west Germany, part-time work is primarily performed by married women with children - see table 2 below.

Source: Hermann Groß/Eva Munz, see note to table 1.

The extension of part-time work though the new legislation is therefore seen as a means, not only to create jobs, but also to create equal opportunities for men and women, if both genders make use of their new legal right to reduce their working time. At the same time it is thus necessary that part-time work is no longer a form of employment which is subject to discrimination. Through the promotion of part-time work, its acceptance - especially among men - might be increased. Compared with many other European countries, Germany lags behind in terms of the extent of part-time work - for example, in the Netherlands 38.7% of employees work part time, in the UK 24.9%, in Sweden 23.2% and in Denmark 22.3% (according to Eurostat data for 1998).

The new regulations on part-time work

In broad terms, the main provisions of the new Act on part-time work are as follows:

• although the legal principle of equal treatment of part-time and full-time workers has already been in existence since 1985, the new act adapts the existing rules to the EU Directive;
• employers must enable employees - including those at managerial level - to switch from full-time to part-time work. Employees are entitled to reduce their working time, providing no agreement to the contrary has been made with employers. A reduction of working time is not allowed if "internal reasons" within the company are an obstacle to this request. These internal reasons could be, for example, that the reduction of working time would have a negative effect on the organisation, workflow or safety, or would lead to excessive costs. Acceptable reasons for refusal can be laid down in collective agreements;
• if full-time jobs are available, part-time workers who want to return to full-time work must be given preference by the employer; and
• employers are obliged to inform employees who want to change their working time, as well as employee representatives, about vacant full-time or part-time jobs within the company and about opportunities to participate in training measures.

In concrete terms, the Act makes the following provisions on the right for employees to reduce their working time:

• employees who have worked in the company for more than six months can ask for a reduction in their agreed weekly working time;
• employees who want to reduce their weekly working time must submit their request three months before the reduction is to come into force and give notice of the requested distribution of working time over the working day;
• employers and employees are to discuss the request in order to reach a common agreement.
• employers are to agree on a reduction of weekly working time and to lay down the distribution of working hours according to the employee's wishes, as long as no internal reasons stand in the way of such a change. Employees who want to reduce their working time must be given notice at least four weeks before the reduction will take effect; and
• only employees working in companies with more than 15 employees are entitled to reduce their weekly working time.

While the Act creates a legal right to reduce weekly working time, the findings of surveys differ on employees' wishes to reduce their hours. While the government refers to an analysis by the Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung, IAB), which indicates that employees are interested in a reduction of weekly working time of between five and nine hours, the results of the ISO survey (see above) indicate that the weekly hours reduction desired varies between 0.1 hour and 2.3 hours, depending on whether the collectively agreed or actual working time is used as a reference.

The government states that the new law is cost-neutral for employers and that the extension of part-time work and thereby the employment of new employees might lead only to extra administrative costs. The government expects that the new Act may improve the relationship between the flexible organisation of work on the one hand and security for employees on the other.

Fixed-term employment contracts

More than 2 million employees currently have fixed-term employment contracts: in April 1999 there were 1.64 million employees with fixed-term contracts in west Germany and 704,100 in east Germany. This is equivalent to 7.1% of all employees in west Germany and 13.1% in east Germany (according to the Microcensus), including employees in Federal Labour Office job-creation schemes. Excluding this group of employees, the proprotion is 6.8% for west Germany and 6.5% for east Germany. A study by IAB shows that between 1985 (when the Improvement of Employment Act came into force) and 1995 the number of employees with a fixed-term employment contract did not vary. Only since 1996 has the level of fixed-term employment increased by 1.5%.

The new Act contains the following regulations on fixed-term contracts:

• in principle, employees with fixed-term employment contracts are to be treated equally with permanently employed workers;
• with the exception of cases of employers taking on new labour (see next point), the duration of the employment contract or relationship must be set according to objective conditions such as reaching a specific date, completing a specific task, or the occurrence of a specific event;
• if an employee takes on a new job, the employment contract (or the maximum period of three renewals of a shorter contract) can be limited to two years, without special reasons being given.
• these restrictions do not apply to employees over the age of 58, in order to give this age group - which is most at risk of becoming unemployed - a chance to find work; and
• employers are obliged to inform employees with fixed-term employment contracts about vacant permanent jobs, allow them to participate in training measures and inform employee representatives about the proportion of fixed-term-employment relationships within the company.

Reactions from unions

In general, the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) welcomed the Act's provisions on the legal right to work part time, as this may help to fight unemployment. However, when the draft bill was presented in September 2000, Ursula Engelen-Kefer, vice-president of DGB, stated that it needed to be improved, especially the provision that employers can refuse a request for part-time work for "compelling internal reasons". She argued that the expression "internal reasons" might allow employers to refuse a request for part-time work if it is considered to be inconvenient. Moreover, she criticised the exclusion of employees in companies with less than 15 employees - of whom there are about 6.7 million - from the entitlement. Ms Engelen-Kefer argued that it might be especially easy in smaller companies to deal with reduced working time and coordinate work around employees' requests to work part time.

On fixed-term employment contracts, DGB considered that the draft bill needed urgently to be improved, claiming that the current Promotion of Employment Act has not increased the number of jobs and that experiences in companies show that the Act has been abused in order to use fixed-term contracts as an extension of probationary periods. Ms Engelen-Kefer stated that in some companies fixed-term employment contracts represent 10%-20% of permanent jobs. In her opinion, fixed-term contracts have a negative effect on democratic participation within companies as younger employees especially do make use of their rights and are more easily susceptible to their employer's opinions.

Reactions from employers' associations

The Confederation of German Employers' Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA) criticised the draft bill for being too restrictive. It argued that the provisions of the current Promotion of Employment Act on fixed-term employment contracts already restrict employers' capacities to act and lag behind the opportunities the EU Directive provides for employers. Therefore it was incomprehensible to BDA that the government was seeking a further restriction, which has now become law. Instead it proposed that the government extend the maximum duration of fixed-term employment contracts to five years and exclude employees aged over 50 from the legal restrictions. The legal right to work part time is also rejected by BDA and other employers' associations. In their view, the new Act creates additional barriers instead of promoting part-time work, as it makes the situation more complicated, more bureaucratic and over-regulated. They fear that the provision which allows employees to request a reduction of weekly working time might cause organisational problems within companies. Employers also expect an increasing number of legal actions because it is not clear what an "internal reason" for rejecting employees' request might be. Employers' associations state that they favour the promotion of part-time work in principle, but that they want more flexibility and deregulation.

Commentary

Up until now, part-time work in Germany has essentially involved women. Not only do women hold 87% of all part-time jobs, but the industrial and service sectors where part-time jobs are offered are mostly sectors with a high female employment rate. On the other hand, it is mostly women living in a partnership with children who work part time, as it is often the only opportunity to reconcile work and family life. It seems obvious that the whole concept of part-time work needs to be changed if the share of men among part-timers is to be increased and equal opportunities thereby improved. The new Act might be the first step in raising the social acceptance of part-time jobs and probably also the number of (male) part-timers. It remains to be seen whether the fact that companies with fewer than 15 employees are excluded from the right to work part time, and that employers can refer to "internal reasons" in order to reject employees' requests for a reduction of working time, will be an obstacle to realising the original intention of the law. The fact that employees and employers at company level are left to find a suitable regulation on this issue might make it problematic for individuals to realise their wish for shorter working time, although it is a legal right. On fixed-term employment contracts, the new Act represents a slight improvement on the old law, but it is doubtful whether it will restrict the current practice of using fixed-term contracts as an extension of probationary periods. (Alexandra Scheele, Institute for Economic and Social Research (WSI))