Collective agreements in 2004 examined

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Information published by the State Labour Inspection indicates that the number of collective agreements registered in Poland in 2004 was lower than in 2003, a year which saw an upsurge in agreements. Remuneration remains the key issue regulated by collective agreements. It is increasingly rare for collective agreements to include provisions more favourable to employees than the statutory minima laid down in the Labour Code.

The State Labour Inspection (Państwowa Inspekcja Pracy, PIP) annual report for 2004 finds that, compared with 2003 (PL0411105F), there was a decrease in the number of registered collective agreements (PL0210108F) and of additional protocols to agreements. In 2003, 441 collective agreements were registered; in 2004, this number dropped to 328. The number of registered agreements in which entities not party to the original agreement undertake to be bound by all or some of its provisions also decreased, from 25 in 2003 to 21 in 2004.

Of the 328 collective agreements registered in 2004, the vast majority (76%) were concluded following termination of a previous agreement. The number of first-time agreements signed by employing entities not previously party to a collective agreement fell sharply, from 123 in 2003 to 78 in 2004. The greatest number of collective agreements concluded in 2004 covered industrial processing employees - 144 agreements covering a total of approximately 60,000 employees. The industry with the greatest number of employees covered by agreements concluded in 2004 was the various transport sectors (overland haulage, pipelines, and air transport), with a total of 77,000 workers covered . The PIP report indicates that only two collective agreements were signed in state-owned and government-financed entities.

Much as in 2003, the registered collective agreements tended to cover all employees of the employing entity signing the agreement. The typical pattern of collective agreement exemptions also remained unchanged; it was a general tendency for employees managing the employing entity on behalf of the employer, juveniles recruited for training purposes and people retained on the basis of management contracts not to be covered by collective agreements.

Content of agreements

The PIP report contains substantial information about the contents of collective agreements. The agreements subject to analysis regulated, first and foremost, the remuneration terms offered to employees (remuneration systems, the various elements of the remuneration package and their value). The second most important issue regulated in collective agreements was that of additional employee benefits - bonuses, awards, severance benefits and various 'extras'.

On a more limited scale, collective agreements addressed working hours, defining working time norms and permissible overtime limits. As for detailed working time schedules, these are generally left to be set out in work rules.

Even less frequently, collective agreements signed in 2004 regulated health and safety at work.

The content of collective agreements signed in 2004 did not differ greatly from previous years. As well as the issues mentioned above, the same holds true for provisions concerning principles and conditions governing further training, the rules governing hiring and the execution of employment contracts, and cooperation between the employer and trade unions.

The authors of the PIP report state that it is increasingly rare for a collective agreement to incorporate provisions more favourable to employees than the statutory minimum defined in the Labour Code. For example, of all the collective agreements registered in 2004, only 12% provided for more generous remuneration for overtime work than the Labour Code minimum, while only 16% guaranteed employees higher payments than the statutory minimum for work on Sundays and public holidays.

The PIP data point to a general tendency of limiting the scope of collectively agreed provisions that are more favourable to employees, especially in the case of collective agreements concluded following the dissolution of previous ones. In many cases, the provisions of a new collective agreement replacing a previous one have left the employees worse off, especially with respect to bonuses in recognition of length of service, 'anniversary awards', severance benefits for employees retiring due to age or on health grounds, and the value of individual components of the remuneration package.

Effectiveness of regulation by collective agreement

The number of collective agreements incorporating provisions in contravention of the law increased from 24% in 2003 to 26% in 2004.

A more positive development is a decrease in the number of agreements that suspend all or some of the provisions of a collective agreement. Polish law provides that, where the employing enterprise faces financial difficulties, the employer and the employees may agree to suspend application of their collective agreement in whole or in part. When this possibility was first instituted in 2002 (PL0212108F), many union activists expressed disquiet that employers would abuse this legal avenue, effectively robbing employees of the safeguards afforded by a collective agreement. Practice over the subsequent two years seemed to corroborate these fears; 239 agreements for suspension of a collective agreement were registered in 2002, with the figure rising to over 300 in 2003. However, the number of collective agreement suspensions in 2004 was only 176. It appears that the parties to collective agreements, rather than suspending their application, often find it preferable to incorporate amendments into the agreement and to continue applying it. Such amendments, usually dealing with adjustments to employee benefits, are effected by signing an additional protocol. Analysis of these protocols indicates that, for the most part, the provisions implemented by them are less favourable to employees than those of the original collective agreement. Many such amendments reduce employee remuneration, including basic wage rates as well as various extras. Other amendments to previously concluded collective agreements deal with:

• lower severance benefits for retiring employees;

• abolition of the in-house social benefits fund; and

• holiday benefits.

Some changes effected by way of additional protocols have been geared at bringing the collective agreement into line with recent amendments to the Labour Code and with the Act on the minimum wage (PL0211109F).

An important phenomenon observed by the authors of the PIP report is a tendency for the simplification of remuneration schemes laid down in collective agreements, through the elimination of extra benefits recognising length of service, work in hazardous conditions or official function. In this way, the incentive function falls to the remuneration proper, and various bonuses or awards depend on whether or not the employer manages to turn a profit.

Commentary

Does the situation outlined above mean that the social partners - and especially the employers - have lost interest in regulating employment relations by way of collective agreements? Experts maintain that this is not so. They regard the increase in collective agreements registered in 2003 as a consequence of a 2002 decision by the Constitutional Tribunal (Trybunał Konstytucyjny, TK) that waived the duty to apply the terms of a dissolved collective agreement until a new one is adopted. Many employers - this reasoning goes - came forward to take advantage of this opportunity to rid themselves of older collective agreements in favour of new ones that offer fewer benefits to the employees. Hence, the upsurge in the number of executed collective agreements observed in 2003 should be viewed as a one-off occurrence.

This 'collective agreement boom' is now over, and stagnation is setting in. Yet interest in collective agreements continues unabated. PIP data indicate that more than 20,000 legal queries concerning collective agreement issues were fielded in 2004. But will this interest be translated into an actual increase in the number of registered collective agreements? While any answer to this question at this point must involve guesswork, the most likely scenario is that conclusion of collective agreements will remain at the present level. (Rafał Towalski, Institute of Public Affairs [Instytut Spraw Publicznych, ISP] and Warsaw School of Economics [Szkoła Główna Handlowa, SGH])