Construction sector agreement extended to protect foreign workers

In November 2006, the national Tariff Board decided to make parts of the Construction Sector Agreement generally applicable to all employees in Norway’s building and construction sector. This decision will protect non-national workers experiencing inferior wages and working conditions to their Norwegian colleagues. The extension of the agreement was due to come into force from 1 January 2007.

On 21 November 2006, the Tariff Board (Tariffnemnda), under the auspices of the Ministry of Labour and Social Inclusion (Arbeids- og Inkluderingsdepartementet), took the decision to make parts of the Construction Agreement (Fellesoverenskomsten for byggfag) generally applicable to all employees in the building and construction sector of Norway (see press release of 22 November 2006). This is the first time that a collective agreement, or rather parts of a collective agreement, has been made generally applicable at national level in Norwegian working life.

However, important provisions in the agreement were not subject to extension, among others the provision regulating standard weekly working time, despite the fact that it constituted an important demand from the employee side. Nevertheless, in general, the trade unions seem to be largely satisfied with the result. The extension, which takes the form of an administrative provision, was set to come into force on 1 January 2007.

Background

The recent decision by the Tariff Board, which includes representatives from each major social partner organisation as well as three independent representatives, marks the first instance of a collective agreement being made universally applicable to an entire sector in the Norwegian economy. The potential extension of collective agreements in Norway was introduced into the legal framework in 1993, through the Act relating to the General Application of Wage Agreements (Lov om allmenngjøring av tariffavtaler mv (in Norwegian)). This act does not, in practice, provide for an ‘erga omnes’ extension as such, which would make a collective agreement generally binding within its field of application, by covering all those employees and employers who are not members of the parties to the agreement. Instead, the act enables a hybrid form of extension, which includes the extension of collectively agreed individual provisions, reference to existing legal provisions in relevant areas, as well as the establishment of new forms of provisions in other regulatory areas.

Nevertheless, the act has existing collective agreement(s) as its basis and is put into practice, for example, when it is proven that foreign employees are paid considerably less than indigenous employees. Previous extensions have only been invoked in selected geographical areas of Norway, and in cases where the wages and working conditions of foreign workers are proven to be considerably inferior to those of Norwegian workers (NO0411103F, NO0509103F).

Trade union petition

The most recent extension follows a petition filed in June 2006 by the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), on behalf of its member union the Norwegian United Federation of Trade Unions (Fellesforbundet). The request concerned the partial extension of the Construction Sector Agreement between LO and Fellesforbundet, on the one hand, and the Confederation of Norwegian Enterprise (Næringslivets Hovedorganisasjon, NHO) and its member association, the Federation of Norwegian Construction Industries (Byggenæringens Landsforning, BNL), on the other. The call for an extension has come in the context of increasing numbers of foreign workers, particularly workers from Poland and the Baltic states, being employed in the construction sector in Norway.

In its petition, LO presented evidence of foreign employees being subjected to wages and working conditions that are considerably lower than the standard wages and working conditions in the Norwegian construction sector, and lower than the minimum standards stipulated under the sector’s collective agreement. The situation is confirmed in reports from recent inspections carried out by the Norwegian Labour Inspection Authority (Arbeidstilsynet) (NO0609039I). LO provided evidence of around 40 companies in different building sites around Norway engaging in such practices. All of the companies were given the opportunity to respond to the accusations to the Tariff Board before a decision on the extension was made. In the majority of cases, no documentation was presented to counter the claims. Thus, on the basis of the evidence put forward, the Tariff Board found sufficient grounds to allow for a partial extension of the construction sector agreement.

Extension of construction sector agreement

In accordance with the Tariff Board’s decision, the minimum wage provisions of the collective agreement have been extended. In effect, a skilled worker employed on a building site in Norway must receive a minimum of NOK 132.25 (approximately €15.80 as of 22 January 2007) per hour, while an unskilled worker may be paid no less than NOK 118 (about €14) per hour, or NOK 123 (about €14.70) if the unskilled worker has at least one year’s experience in construction work.

The most controversial issue that arose was in relation to working time. Despite the dissent on the part of its employee representative and leader, the Tariff Board in this instance stated that the ordinary weekly working time to be made generally applicable was 40 hours per week, in accordance with the Act of 17 June 2005 (136Kb PDF) relating to working environment, working hours and employment protection, known as the Working Environment Act (Arbeidsmiljøloven, AML). In the petition put forward by LO, the number of weekly working hours stipulated was 37.5 hours, which is the standard working week in most collective agreements in Norway, including in the construction sector agreement.

In relation to the issue of overtime and compensation for overtime work, the provisions of the collective agreement were made applicable. However, in line with the aforementioned discussion on working time rules, overtime compensation takes effect from 40 hours and onwards, and not from 37.5 hours.

Unlike previous extensions, conditions on wage compensation and working time arrangements in connection with shift and rotation work were not included in the most recent administrative provisions. The new administrative provision will replace the existing stipulations, extending the building sector agreement already in force in selected geographical areas of Norway.

Håvard Lismoen, Fafo Institute for Labour and Social Research

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