The future of work No 'New Work' Without 'New Pay'

Employment lawyer Britta Redmann.

Employment lawyer Britta Redmann is a specialist for agile working in companies. 'New Work' is not really thought through without 'New Pay', she says. What is the New Pay debate about?

Markt&Technik: Ms Redmann, what is 'New Pay' to you?

Britta Redmann: It's not a fixed term, but comes from the New Work movement, in which cooperation is rethought: Agility, collaborative platforms, compatibility of work, and family, personal responsibility and self-determination of the individual employee in the company. It is a matter of shaping cooperation constructively. The questions in this context are: Are the current remuneration systems actually suitable for ‘New Work’? What (new) incentives or bonuses do I need if we have a different cooperation? What is ‘fair’ in this sense? But to talk about this is still a taboo in this country. Since New Work is about togetherness, transparency, and communication, the topic of salary cannot be ignored here. For me as an employment lawyer, it is important that we have clear rules. Firstly, that new design lines are within the legal framework, and secondly that they are set up in such a way that they avoid conflict, without endless interpretation and discussion.

Has New Pay even reached the companies yet?

This varies. In startups, new rules are easier to implement because you can practically start from the green field and think about them from the ground up: What should our remuneration system look like? This is part of the founding process. But I have also noticed the discussions in established IT and other agile companies because I conducted interviews for my book ‘Das agile Unternehmen’ (The Agile Company). Agility has a lot to do with cooperation. The team is in the foreground and responsible for things like further training, personnel development, selection processes, and, within this framework, actually also for the salary. Some have already developed and tried out operating systems according to their own criteria and set up new bonus systems. And not all were start-ups.

But in traditional industry?

Look at the latest results of collective bargaining in the metal and electrical industry: IG Metall and the employers' associations are very interested in the topic of ‘New Work’ and have created innovative collective bargaining law. And New Pay also has to do with how the value of money and time has changed in relation to each other. It is about simultaneously achieving what is actually important to people (and employees) in their respective phases of life and to companies in their respective market positions and competitive situations. It is also about having more self-determined time and at the same time achieving greater competitiveness for companies. That was the new thing about the metalworkers' contracts in February. Because New Work requires satisfied employees, but also strong companies. The aim was to create a framework that companies could design for themselves in their individual situation and not only for the classic standard tariff increase. ‘What's right for us operationally’ is always the core question - even in larger companies and groups.

So, in your opinion, the collective wage agreement of the metalworkers in Baden-Württemberg was a considerable success?

Yes, that was new! It is impressive that this framework now exists and that the parties have a more versatile framework to work with. Otherwise it was always more a matter of pay increases and one-off payments. In contrast, this time we have a context of time and money.

Who changes a compensation system? If you ask HR managers in our industry about the willingness of engineers to change, they always say that the overall package must be right. Has money lost a part of its value and issues such as agile working, home office, and compatibility have moved up?

I think so, yes. Pay is still an important factor, but the key question today is to what extent candidates get their very subjective needs satisfied. The need for more self-determination is there: When do I work, where do I work? It is about individual working time models that enable flexible home office or short breaks and that can be mapped with agile work. Responsibility is shared by both the team and the individual. In traditional companies, this is still the responsibility of the boss or the individual manager.

A company is not just made up of engineers. What about the receptionist? What salary is fair for this position and how is that measured? In friendliness, in efficiency?

I would like to answer this question with a counter-question: What is important for the company and what does it want to achieve? How does an employee contribute to the company's success and what is this performance worth to me? I believe that our previous, number-driven understanding of performance no longer quite fits current and even more so future requirements. Performance is still largely evaluated by ‘counting, measuring, weighing’ and by a specific integration of activities into pay grades. The fact is that companies must be able to change quickly and adapt to new things. This applies in particular to the employees who work in these companies. Everything that helps to promote this change competence has a competitive component and is good!

Who is changing a compensation system towards New Pay, a common round table with employees?

It's not one-sided. A contractual entitlement to remuneration can only be changed by mutual agreement and contractually by both parties of the employment contract. And if company or collective wage systems apply to the company, e.g., works agreements or collective bargaining agreements, these can also only be changed by the contracting parties - works council and employer and/or trade union and employers' associations - or rather only they have the right to conclude contracts. So yes, it can only be done together. And turning an existing remuneration system from right to left is also a big task. This usually doesn't even work that way.

Do you have a few examples of companies that are already tackling this?

I have described some of them in my book, but in established companies change is a very gradual proceess. Yet, the topic is an emotional trigger. Many people are worried about this, even if it is not yet being tackled openly everywhere. Recently we organized a barcamp for customers about #NewPay: There were a lot of traditional companies there. Why? Because candidates ask for it and work models and collaboration are changing.

The 5-hour day with full wage compensation from the company Digital Enabler from Paderborn went through the press like a wave: also a form of New Pay?

Yes, absolutely. The basis was an agreement, they considered together and looked for and tried out an individual entrepreneurial solution. Successful.

Overall, time is valuable and an important commodity for both entrepreneurs and employees. They're both vying for it. But it has to fit in operationally, all groups have to be included. The flexibility I want to offer cannot solely be cushioned by the company, but must be balanced in a team. And when we talk about more personal responsibility for employees, this includes self-organizing teams and corresponding processes and structures. Because the work volume has to be done!

Now salary is a hygiene factor. Is New Pay therefore more relevant for the highly paid above a certain income limit?

Very important: New Pay has to be within the legal framework, there is no minimum wage shortfall, also no New Pay only for a certain group in a company. If I want to establish this, I must respect the principle of equal treatment. In other words, equal pay for all those who are subject to the same jointly defined remuneration principles.

Is the unconditional basic income also a kind of New Pay?

That would be more of a state story, New Pay at the social level with an impact on taxes and the welfare state. New Pay on a large scale, so to speak.

I would also like to raise the subject of holidays: There are already over 100 companies in Germany offering unlimited paid holidays. Inconceivable? What does this have to do with New Pay and how does it actually look legally?

Just as different, individual working time models can be agreed on, individual holiday periods can also be agreed on. The Federal Holidays Act only stipulates a minimum framework that must not be undershot. An extension of the vacation days beyond the legal requirement is quite permissible and is lived already by the often usual 30 vacation days instead of the legal 20-day rule with a 5-day week. And of course this can be expanded even further. As with working hours based on trust, trust leave can also be agreed here, which in principle is no different. It is just that this contractually agreed leave of trust cannot be unilaterally changed again. In principle, the same applies here as to the remuneration agreement: it is only possible together. 

And even if I have not made a clear contractual arrangement for vacation and simply tolerate an unpaid, unlimited vacation as an employer at least three times in a row, then a corresponding commitment may have been created, which can no longer be changed unilaterally.

So: if you want to grant unpaid leave or tolerate it in silence, you take the flexibility of a different holiday arrangement in the future, should it be necessary for your company to do so.

(Interview: Corinne Schindlbeck)

An ideal solution for Britta Redmann takes people with her: Together with companies, the lawyer and organizational developer develops their creative scope and potential and supports them in the development and expansion of corporate change.