Deviation from collective agreement provisions

Definition

Although the use of terms is not always consistent across different countries, deviation from collective bargaining provisions can take different forms, such as opening clauses, hardship clauses, opt‑out clauses for parts of or the whole of the collective agreement, or ‘inability to pay’ clauses in crisis situations. The aim is still the same: to increase flexibility at company level or to allow companies to overcome temporary economic difficulties.

Background and status

The introduction of deviations within collective bargaining systems that devolve the regulation of lower-level agreements (opening clauses) or that allow lower levels of bargaining to derogate from the regulations set by higher-level agreements in situations of economic hardship (derogation, opt-out or hardship clauses) is not a new trend.

Different kinds of company‑level deviations from national or sectoral collective agreements have received growing attention in academic and policy debates in Europe, particularly since the economic crisis of 2008 put many companies and jobs under pressure. There are various forms of deviations from higher‑level collective agreements and possibilities for companies to do so. The reasoning behind deviations is that they are an instrument that may permit companies to overcome temporary economic difficulties without resorting to (mass) layoffs. This may help prevent workers from becoming unemployed, avoid costly layoff procedures and preserve human capital for the company.

Overview

Controlled forms of deviation

Controlled forms of deviation (opening, derogation and deviation clauses) and less controlled forms (such as general opt-out clauses) have been interpreted as major aspects of the trend towards more decentralised bargaining and strengthening of the flexibility of collective agreements that began in the early 1990s in western Europe. Perhaps more important than the concrete forms of deviations is whether or not the possibility of deviating from collective bargaining norms is linked to certain rules, procedures and clauses that are defined in the respective intersectoral or sectoral agreements, or if an opt‑out or deviation clause can be decided unilaterally by the employers. Eurofound has explored derogation clauses on wages in sectoral collective agreements in seven European countries, and in its flagship report of 2015 gives an overview on deviation mechanisms set up in different Member States.

• Eurofound: Derogation clauses on wages in sectoral collective agreements in seven European countries
• Eurofound: Collective bargaining in Europe in the 21st century

Perspective of the OECD

More recently, in 2019, the Organisation for Economic Co-operation and Development (OECD) classified deviation clauses into two categories.

1. Organised decentralisation that occurs within the framework of sectoral agreements, while explicitly allowing elements of working conditions and work organisation to be negotiated or determined at the company or even worker level under certain conditions through specific procedures. In principle, the sectoral framework should preserve collective bargaining coverage and give firms and workers more freedom to set working conditions, which is a major concern for trade unions.
2. Organised decentralisation that applies to companies experiencing serious economic problems for a temporary period under pre-defined conditions. This form of deviation is notably present in Austria and Germany, where sectoral agreements set the standard terms of employment and allow for exceptions to the favourability principle through opt-out or derogation clauses. These clauses allow company-level agreements to deviate from wages and working conditions set in a sectoral agreement. In Germany, since 2004, opening clauses have been used more generally by companies to reduce labour costs. Some clauses allow companies to postpone or cancel parts of the sectoral agreement, notably wage increases, depending on the type or economic situation of the company.

The OECD warns that:

Special attention should be paid in the coming years to a careful evaluation of the introduction of opening clauses in countries which did not have them and their possible interaction with other elements of the collective bargaining system. The absence of strong worker representation at the local level in the form of unions or works councils limits the scope of such reforms and may increase incentives for firms to leave an employer association in the absence of extensions or to opt for less organised forms of collective bargaining.

• OECD: The role of collective bargaining systems for labour market performance

Related dictionary terms

Collective bargaining ; collective industrial relations ; coordination of collective bargaining ; extension of collective agreements ; favourability principle ; right of collective bargaining ; social dialogue