New rules for measuring representativeness of public service unions

A new law that came into force in Hungary in January 2005 changes the rules for the recognition of public employees’ trade unions at workplace, sectoral and national level. It represents a major shift from the 1992 Labour Code, which made the results of elections to works councils the criterion of representativeness for unions.

In Hungary, the recognition of representativeness is important for trade unions in terms of being granted participation, information and consultation rights as well as with regard to other issues. The right to conclude a legally binding collective agreement with employers to regulate the terms and conditions of employment is also connected to a union having representative status. Act CXXIV of 2004 amending Act XXXIII of 1992 on the status of public service employees came into force on 1 January 2005. It represents a break from the regulatory concept laid down by the 1992 Labour Code, which made the results of works council elections the criterion for assessing the representativeness of unions.

The 1992 Labour Code was criticised by trade unions for duplicating the representation of employees by establishing the institution of statutory works councils parallel with workplace-level union organisations, with somewhat overlapping responsibilities (HU0401106F). Some prominent leaders of public sector unions especially questioned the viability of such 'dual-channel' representation in the context of workplace presence of unions, and argued for repealing the institution of public 'employee councils' (HU0404101N). Furthermore, unions have increasingly criticised the Labour Code for connecting the status of representativeness to works council election results as a primary method. Under the new rules for the public services, representativeness is based on the unions' share of membership with public employee status, and representative unions are entitled to represent public service employees at all levels.

It is important to note that in Hungary each public service institution is an independent employer as far as employment relationships are concerned, and the employer’s rights are exercised by the head of the given organisation. Nonetheless, public service institutions are run by municipal or county local governments, or by a ministry or similar central agency with national coverage. These local and central governmental agencies set the budget for the public service institutions, and consequently limit the room for manoeuvre of the management of public institutions. Moreover, Act XXXIII of 1992 on the status of public service employees quite strictly specifies the duties and rights of public service employees, including a compulsory wage tariff scheme providing thresholds for salaries, which leaves a very small margin for individual decisions by directors of public service institutions as employers as far as wages are concerned.

Workplace-level rules

As far as representativeness is concerned at employer (workplace) level, the new legislative amendment provides that a trade union has to meet at least one of the following two thresholds at one employer to be deemed as representative:

  • its membership has to comprise at least 10% of the total number of public service employees at the given employer; or
  • at least two-thirds of a specific occupational group must be members of its workplace organisation, and this membership has to comprise at least 5% of the total number of public service employees at the given employer.

The same logic is applied in deciding whether a workplace union is entitled to conclude a collective agreement with the employer. According to the new regulations, if only one trade union is operating at an employer, it is entitled to conclude a collective agreement with the employer provided that at least 25% of the total of public service employees at the organisation are members.

If there is more than one union operating at an employer, the law specifies the criteria for unions to conclude an agreement either together or alone. Thus, in cases of 'multi-unionism', a coalition consisting of all unions present at the employer is entitled to conclude a collective agreement jointly, regardless whether they are representative or not, provided that the number of their members together make up at least 25% of all public service employees at the given employer. If the unions present at a workplace are unable to agree and conclude a collective agreement together, the representative trade unions are authorised jointly, provided that the number of their members make up at least 25% of the public service employees at the employer. Should, however, representative trade unions be unable to conclude a collective agreement jointly because of differences in views, a trade union with a membership comprising 50% of the public service employees at the organisation is authorised to conclude a collective agreement.

If the unions fail to build a coalition, or none of the unions alone is able to meet the abovementioned minimum threshold, the law provides a secondary rule in order to facilitate the prevalence of 'socially regulated' working conditions. According to this rule, introduced earlier by the Labour Code, once a union, or a union coalition has agreed with an employer on the text of a draft agreement, and public service employees endorse it via a vote, it can become a valid collective agreement. The quorum for the vote is 50% of the public service employees, and the agreement becomes valid by simple majority.

Municipal/regional-level rules

At the municipal/county level, a trade union is representative if:

  • at least 10% of public service employees at all institutions owned by the local government body are members; or
  • at least 10% of public service employees at employers owned by the local government body in one sector are members; or
  • it is representative in at least at 20% of the organisations owned by the local government body, in at least one sector.

According to the amendment, in relation to issues of regional and municipal importance, the local government body negotiates with the trade unions that are representative at the regional/municipal level in the relevant 'reconciliation forum'. The language of the law also suggests that only representative unions may be members of such fora.

Sectoral rules

At sector level in the public services, a trade union is representative if at least 10% of the employees in the given sector are members. The status of sectoral representativeness becomes important in the process of consultations with the relevant ministers concerning issues related to terms and conditions of employment in the public sector. According to the amendment, in relation to issues of sectoral importance the relevant minister negotiates with the representative trade unions of the sector or subsector in sectoral or subsectoral reconciliation fora. Again, the language of the law suggests that only representative unions may be members these fora. Unions are authorised to conclude sectoral collective agreements if they meet the same kind of threshold criteria that are specified for workplace-level agreements, ie the share of public employee union members among all employees of the sector.

National-level representativeness

The public services amendment defines what a national-level trade union confederation is: they have to be composed of sectoral trade unions and/or sectoral trade union associations from at least three sectors. The criterion of representativeness is, however, stricter: a national trade union confederation is to be deemed representative if it is composed of at least three representative sectoral trade unions and its member organisations represent at least 5% of public employees.

This regulation is important when it comes to participation in the work of the National Labour Council of Public Employees (Közalkalmazottak Országos Munkaügyi Tanácsa, KOMT). According to the new regulations, in this body the government negotiates with representative national trade union confederations, and with non-representative trade union confederations provided that the bylaws of KOMT so allows.

Measuring union membership

The amended Act authorises the Minister of Employment and Labour to define the methods for measuring union membership in a decree following consultations in KOMT. This decree has not yet been issued, but its draft is on the webpage of the Ministry of Employment and Labour (Foglalkoztatáspolitikai és Munkaügyi Minisztérium, FMM). The latter envisages two methods for measuring union membership. First, an easier solution is based on the general practice of the check-off system, in that at most workplaces union membership fee are deducted by employers. In this case, the employer will provide the number of trade union members. At places where there is no check-off system, the union will make a statement on the number of its members by using a form to be worked out by KOMT in the coming months.

At workplace level, the employer and local trade unions will work out and agree on a procedure for measuring representativeness. At municipal, sectoral and national level, it is the responsibility of FMM to provide statistics to decide whether a union confederation or a sectoral union qualifies as representative. Representativeness will be reviewed every three years, starting in March 2005.

Commentary

The new amendment completely breaks with the logic of the 1992 Labour Code by disconnecting the results of public employee council elections from union representativeness in the public service sector. None the less, trade unions failed to achieve the elimination of the institution of employee councils, which was the stated goal of some very influential public service unions.

This regulation may have serious implications for the status of unions in the context of the pluralist union structure in the public sector. The amendment reflects the success of a long-standing union demand, put forward mostly by the successor organisations of the former state-socialist trade unions that survived the political crisis and the lack of legitimacy of the transition period and then strengthened their status as major unions. In practice, most grass-roots unions that were established as 'counter-unions' at workplaces have been unsuccessful in building up mass membership. The new regulation is likely to have a major effect at workplace and sector level and, in practice, clearly favours unions with fairly large memberships. At the same time, the amendment allows a less strict application of representativeness criteria for the composition of KOMT and is likely to lead to a politicised process of allowing even non-representative unions to participate in the national-level social dialogue.

Nonetheless, the shift from the election result-based recognition process to a membership-based one might have a long-term, and certainly unwanted, negative consequence. The continuous decline in union membership might affect negatively the status of a fairly large number of workplace-level unions that represent only a small number of public service employees. Also, it makes unions vulnerable in higher-level consultative bodies; should the government’s policy change and no longer treat unions as 'respectable' social partners, it could easily reduce the influence of unions.

A further issue is whether the shift in the public services may have any repercussions on the criteria for union representativeness in the private sector, including state-owned companies, where the specifications of the Labour Code apply. Most unions are fairly hostile to the institution of works councils in this so-called competitive sphere of the economy, too. Nonetheless, this amendment could have a very questionable impact, given the relatively low density level of most unions in private undertakings. (András Tóth and László Neumann, Institute of Political Science, Hungarian Academy of Sciences, in cooperation with the ILO Subregional Office for Central and Eastern Europe)

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