Why do executives have higher salaries

Non-tariff contracts

A non-tariff employment contract (AT contract) is an individually negotiated contract between employer and employee. As a rule, it is used for employees whose qualifications or tasks justify higher remuneration than the maximum salary level specified in the collective agreement.

An AT contract refers to an existing tariff contract. This is the basis for every non-tariff contract. The collective agreement also stipulates the conditions under which an employee can switch to an AT contract. In principle, employees receive an AT contract if their tasks include significantly higher requirements than those defined in the highest collectively agreed salary group. In addition, the salary must be above the highest collective wage group. The provisions are regulated by the currently valid tariff agreement. Different regulations apply in every industry. In some industries there is no collective agreement and consequently there is no "non-tariff" employment. In principle, the overall assessment of the new AT contract must be better than a classification of the activity in the highest salary group of the collective agreement.

Mainly executives and specialists receive offers for an AT contract. This is often associated with big steps on the career ladder and the new, responsible tasks justify an above-standard pay. At the same time, the weekly workload expected by the employer increases. A collective agreement regulates aspects such as working time compensation or financial compensation for overtime. Such passages are often not found in the AT contract.

In non-tariff employment relationships, overtime is often compensated with the salary. For this reason, it is advisable to pay attention to the wording in the AT contract. Employers often abuse AT contracts in order to circumvent the collective bargaining regulations on working hours and overtime regulations. An employee with an AT contract cannot insist on collectively agreed working hours. Likewise, there is no entitlement to payment from the principle of equal treatment for individually negotiated wages and salaries. The Federal Labor Court has confirmed both provisions. It is a decision of conscience whether status gain and the next step on the career ladder as well as the higher salary justify the additional effort. It is important to weigh up to what extent it is worthwhile to swap the collectively regulated employment relationship.

Tariff increases are not automatically applied to AT contracts. Instead, these influence AT contracts, as a tariff increase increases the assessment basis for the AT contract, the highest remuneration group. If there is no automatic adjustment in the AT contract, there is scope for negotiations. It is advisable to know the formulations and the basis of the calculation of the collective agreement before switching to an AT contract. The basic salary of the AT contract may be higher than that of the collective agreement. Due to collectively determined future increases in wages, various allowances and special payments, such as Christmas money, there is a risk that the collectively agreed remuneration will be higher than the salary agreed in the AT contract.

Legal regulations under labor law remain unaffected by an AT contract. The right to strike is retained. It is not forbidden for an employee in a non-tariff employment relationship to take part in a strike. Non-tariff employees have the right to show solidarity with other striking workers. An AT contract cannot override these legal regulations. An AT employee is allowed to run for the works council and is entitled to vote in the works council election. The principles and methods of remuneration specified by the works council also apply to employees with AT contracts. According to the Works Council Constitution Act, the works council has the right to co-determination in aspects of the company's wages. This right is retained with an AT contract.

A basic distinction must be made here between ordinary employees and managerial employees. These provisions do not apply to the latter, as they have the competencies and powers of an employer. Executives are not subject to the Works Constitution Act. An AT employee is not automatically a manager. It must be checked in each individual case which statutory and collective bargaining provisions apply to an employee.

If there are operating agreements in the company, it should be noted whether these are valid for non-tariff employees. In some companies there are regulations specifically for AT employees. Unless otherwise agreed, company agreements apply to non-tariff employees. These regulate salary developments, bonus payments, working time models or company pension schemes. These regulations can be found in the non-tariff employment contract or do not contradict it. Non-collectively paid employees are entitled to work part-time. The law is fundamental and has no exception for AT employees. The right to part-time work remains unaffected in the non-tariff contract.

Advantages are associated with the choice of a non-tariff employment relationship for the employee, as well as disadvantages compared to employees employed according to the collective agreement. A higher salary, more responsibility and new, interesting tasks are important and good reasons to opt for an AT contract. It is advisable to make sure that the salary or other benefits, such as the higher working hours often demanded by the employer, justify. In terms of remuneration and working hours in particular, it is worthwhile to compare the wording in the new AT contract with those in the collective bargaining agreement. Here employers try to circumvent collective bargaining regulations on working hours and overtime.

Further information on the topic:

Fixed-term employment contract: how often can it be extended?

These are the strangest clauses in the employment contract

4 ways to get out of the employment contract early

Written extension for a fixed-term employment contract