Trade union penalised for undercutting collective agreement

In late 1997, the Danish Labour Court ruled that a trade union must pay a substantial fine for breaching its own sectoral collective agreement. The restaurant workers' union, RBF, had signed a company deal which undercut the terms and conditions of the industry agreement.

In 1993, the Restaurants and Brewery Workers Union in Denmark (Restaurations- og Bryggeriarbejder Forbund i Danmark, RBF) signed a collective agreement with a nationwide restaurant chain. RBF was able to come to terms with the restaurant chain, which was not a member of an employers' organisation, only by agreeing to less favourable terms and conditions (in terms of flexible working hours and overtime premia) than those specified in its main agreement with the sectoral employers' association, the Association of the Hotel, Restaurant, and Leisure Industry in Denmark (Hotel, Restaurations- og Turisterhvervets Arbejdsgiverforening, HORESTA).

HORESTA believed that the company agreement was in conflict with the sectoral agreement and brought a case before theIndustrial Arbitration Tribunal on 22 February 1995. The Tribunal ruled that RBF's agreement with the restaurant chain was indeed in conflict with the main collective agreement between HORESTA and RBF: the main agreement prohibited unions from concluding agreements with unorganised employers providing for less favourable terms and conditions than those set out in the main agreement.

On the basis of the ruling from the Tribunal, the case was brought before the Labour Court, where HORESTA made two claims: that RBF should pay a penalty for breaching its main collective agreement with the employers; and that RBF should terminate the agreement with the restaurant chain. During the hearing HORESTA argued that RBF's agreement with the restaurant chain had exposed restaurants throughout Denmark to unfair competition. Furthermore, the behaviour of RBF was unacceptable and undermined the role of the HORESTA as an employers' association.

In late 1997, the Labour Court ruled that RBF had deliberately ignored the provisions of the main collective agreement with HORESTA in order to conclude an agreement with the restaurant, and had not taken any steps to terminate the agreement despite the verdict of the Industrial Arbitration Tribunal back in 1995. RBF must pay DKK 250,000 as a penalty for breaching the main collective agreement with HORESTA, and must terminate the agreement with the restaurant chain.

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