Farm equipment manufacturer CNH Industrial and carmarker Fiat Chrysler Automobiles (FCA) signed a 4-year labor dealer with workers in Italy on Tuesday, which will likely improve relations with unions, according to a report by Reuters. 

The agreement applies to all 85,000 employees of the two companies in Italy and includes a performance-based compensation scheme linked to the achievement of certain efficiency and profitability targets. If those targets are met, employees will be entitled to a bonus of 7,000-10,7000 Euros ($7,670-$11,730) over the 4 years, according to the companies. 

Sergio Marchionne, chairman of CNHI and chief executive of FCA, has clashed with unions in the past while seeking to get them to accept tougher rules on working hours, sick pay and strikes, which he said was necessary to allow Italian plants to compete with their rivals abroad.

Marchionne also took Fiat out of Italian employers' confederation Confindustria so that it was no longer bound by the collective labor rules negotiated between the confederation and unions.

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