RNS Number:3470T
Koninklijke KPN NV
16 December 2003


KPN and unions reach agreement on performance related pay

KPN and the unions representing the company's employees (ABVAKABO FNV, Bond van 
Telecom Personeel, CNV Publieke Zaak and CMHF/vhp KPN&TPG) have reached 
agreement on a new KPN collective labour agreement with a term of two years. The 
negotiations centred on modernising remuneration policy to support attainment of 
better results for the company. The talks were conducted against the background 
of the pay freeze for KPN employees over the past two years.

Remuneration policy at KPN will be modernised by introducing a system of 
performance-related pay, Depending on the results achieved at the part of the 
company concerned, the payout will range from 0 to 3.5% but may be as much as 
5.5% for exceptionally good results. KPN will make a pre-payment of 2% in March 
2004 on the ultimate payout. KPN is going to switch to a more individualised way 
of adjusting the basic salary of its employees. Individual rises and future 
workforce-wide rises will be combined into a single annual pay increase linked 
to the employee's performance. A workforce-wide pay rise of 1% will be included 
in pay increases awarded on 1 January 2005.

KPN and the unions have agreed a new Social Plan that will run for two years. 
The plan keeps in place the main elements of the current Social Plan. A new 
element is that KPN will not apply for formal permission to serve redundancy 
notices on employees with more than 10 years of service until four months after 
they have been notified of the shedding of their jobs. Salary guarantees for 
employees who do find new work at KPN but at a lower grade will be scaled down 
considerably.

KPN and the unions have agreed to conduct a study during the term of the 
collective labour agreement into the consequences of the Dutch government's 
plans concerning pensions, pre-pension facilities and early retirement. For its 
part, KPN will pursue an increase in the pensionable age from 62 to 65 and 
reintroduction of the payment of pension contributions by employees. From 1 
January 2004, however, the index-linking arrangements for pensions of active 
employees will be changed. Accrued pension rights will be index-linked only if 
the pension fund's financial position allows. Employees can no longer opt for 
voluntary redundancy.

Other arrangements that KPN and the unions have agreed are:

*    employees in their second year of sick leave will receive 70% of their 
     monthly income;
*    no extra allowance will be paid for working on Saturdays before 2:00 pm;
*    a discount scheme will be introduced to allow KPN employees to take 
     advantage of new fiscal provisions and obtain a 20% discount on KPN 
     products subject to a ceiling of EUR 200 per year.


Corporate Communication         Investor Relations
Press Office
Fax: +31 70 4466310             Fax:+31 70 44605993
E-mail: press@kpn.com           E-mail: ir@kpn.com


                      This information is provided by RNS
            The company news service from the London Stock Exchange

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