Extension of collective agreements to increase sectoral coverage

The amendment of the collective bargaining act in the Czech Republic (Act No. 255/2005 Coll.) which took effect on1July 2005 introduced new conditions for the extension of higher-level collective agreements to cover more employers and employees. So far, three higher-level collective agreements have been extended under this amendment: in the construction, glass and ceramics, and textiles sectors.

Context

Collective law in the Czech Republic only recognises two kinds of collective agreement: enterprise-level collective agreements (ELCAs), concluded between the appropriate trade union body and an employer; and higher-level collective agreements (HLCAs), concluded for a majority of employers between the appropriate higher-level trade union body and one or more employer organisations.

The law, therefore, does not recognise sectoral collective agreements covering an entire sector or field of economic activity. In fact, Czech law contains no definition of a sector. Where sectoral collective agreements are in practice referred to in the Czech Republic, these tend to be HLCAs, regardless of their actual scope of coverage.

The relationship between commitments contained in HLCAs and ELCAs is defined by law on the basis of the principle of partial invalidity of those ELCA provisions that would provide employees with less beneficial claims than those contained in an HLCA. In other words, the parts of each agreement that are more favourable to the employee prevail.

One consequence of the relationship between HLCAs and ELCAs is that HLCAs apply directly to employers (and their employees) who are affiliated to the employer organisation that negotiated the HLCA. This means that, if no ELCA has been concluded – for whatever reason, including the absence of a trade union partner – the provisions in the HLCA are binding for both the employers and employees concerned.

Typically, about 20 HLCAs and 4,000 ELCAs are signed in the Czech Republic every year.

Extension of collective agreements

The Ministry of Labour and Social Affairs of the Czech Republic (Ministerstvo práce a sociálních vecí Ceské republiky, MPSV) may issue a regulation stipulating that a HLCA is binding for employers who are not members of the employer organisation that signed this contract – this constitutes an extension of the HLCA. Such extensions have been the subject of debate between the social partners and are considered controversial in political circles and among experts.

Dissatisfaction with this application of the agreement led a group of parliamentary deputies to petition the Constitutional Court of the Czech Republic (Ústavní soud Ceské republiky) – which subsequently ruled to overturn this ruling from the end of March 2004 – concerning the then applicable legislation on the grounds of its divergence with the Czech constitution (for more information about HLCAs and their extension, see CZ0410103F).

Amendment of collective bargaining act

On 1 July 2005, an amendment of the collective bargaining act (Act No. 255/2005 Coll.) came into force, introducing new conditions for extensions. On the basis of the new conditions, the trade union that signed the original agreement must be, in terms of membership, the largest trade union in the sector for which the extension is proposed; similarly, the signatory employer organisation must be the largest employer federation in the sector. If the conditions stipulated by law are demonstrably adhered to, the HLCA will be extended on the basis of a joint proposal by the parties to the HLCA; the agreement will be extended to all employers whose principal business ranks them in the sector in question, as defined by the NACE classification codes for economic activities. A total of three higher-level collective agreements have been extended since the law took effect.

Three sectors involved

The first sector in which an HLCA was extended under the new legislation was the construction sector. Prior to extension, an agreement signed in December 2004 covered 847 companies with a total workforce of 35,100 employees. That agreement was concluded between, on the one hand, the Building Workers Trade Union of the Czech Republic (Odborový svaz Stavba CR) and the Trade Union of Transport, Road and Car Repair Services Workers of Bohemia and Moravia (Odborový svaz pracovníku dopravy, silnicního hospodárství a autoopravárenství Cech a Moravy) and, on the other hand, the Association of Entrepreneurs in Building Industries in the Czech Republic (Svaz podnikatelu ve stavebnictví v CR, SPS). Both of the abovementioned trade unions are members of the Czech-Moravian Confederation of Trade Unions (Ceskomoravská konfederace odborových svazu, CMKOS). After extension, as of 1 November 2005, the HLCA covers 3,977 companies with a combined total of 285,100 employees.

Another HLCA was extended, as of 1 March 2006, in the glass and ceramics industry. The agreement signed in January 2005 by the Trade Union of Workers in the Glass, Ceramics, Glass Jewellery and Porcelain Industry (Odborový svaz zamestnancu sklárského, keramického, bižuterního prumyslu a porcelánu, SKBP) and the Association of the Glass and Ceramic Industry of the Czech Republic (Asociace sklárského a keramického prumyslu CR) originally covered 37 employers with 9,500 employees. The trade union in question is not affiliated to any higher trade union structures, while the employer organisation is a member of the Confederation of Industry of the Czech Republic (Svaz prumyslu a dopravy CR, SP). Following extension, the agreement is binding for 169 employers with 29,500 employees.

A third HLCA was extended, in April 2006, in the textiles industry. The agreement signed in December 2005 between the Textile, Clothing and Leather Workers’ Union (Odborový svaz pracovníku textilního, odevního a kožedelného prumyslu Cech a Moravy, OS TOK, a member of CMKOS) and the Association of the Textile, Clothing, Leather Industry (Asociace textilního-odevního-kožedelného prumyslu, ATOK) covered 80 employers with 21,824 employees. It now covers 750 companies with approximately 75,800 employees (OS TOK estimate).

Commentary

The extension of the aforementioned HLCAs was partly the consequence of certain factors. In the construction and clothing sectors, the extension of HLCAs has a well-established tradition. The dominant social partners in these industries have managed to establish good preconditions for the development of social dialogue, by emphasising mutual cooperation and a responsible approach towards collective bargaining. In the glass and ceramics industry, where there is no such tradition, consent for the extension of an existing HLCA was only achieved after considerable negotiations between the social partners and as a result of the simplification of the rules governing extensions.

Aleš Kroupa, Research Institute for Labour and Social Affairs