Federal Labour Court endorses union’s rights

In March 2006, the Federal Labour Court finally approved the trade union rights of a small metalworking union, CGM. A dispute arose between the German Metalworkers’ Union, IG Metall, and CGM after the latter had concluded several collective agreements on pay and working hours with corresponding employer organisations. After a decade of litigation, IG Metall must now accept its competitor’s collective agreements and its fully approved status as a trade union.

On 28 March 2006, the Federal Labour Court (Bundesarbeitsgericht, BAG) finally approved the right of the Christian Metalworkers’ Union (Christliche Gewerkschaft Metall, CGM) to conclude collective agreements (BAG press release (in German)). Disputes over CGM’s trade union rights arose after it had concluded several collective agreements on pay and working hours with employer organisations in the metalworking industry. As these agreements competed with those negotiated by the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall), the latter appealed to the labour court. The BAG judgement brought a 10-year period of litigation to an end.

Background

In 1996, CGM concluded a collective agreement with the employer organisation for the metalworking and electrical sectors in Saxony (Verband der Sächsischen Metall- und Elektroindustrie e.V., VSME) to ensure continued production in the relevant sites and to promote employment in Saxony. The agreement stated that flexible working time arrangements allowing deviations of up to three hours from the weekly 39-hour working time were permissible if they complied with the employee’s wishes or with negotiated working time agreements.

In 1998, CGM and the employer organisation for the metalworking industry in east Germany (Ostmetall) concluded a collective agreement called ‘Phoenix’ (in German). Phoenix stipulated the introduction of working time accounts that, due to seasonal and cyclical reasons, allow for deviations of up to 400 working hours per year from the annual average of 2,000 working hours. CGM and Ostmetall recently agreed an annual wage increase of 1.5% for 2006 and 2007; a lump-sum payment of €175 is also to be paid to employees. In addition, employers may reduce wages by €85 per employee if new jobs are created. Otherwise, the amount will be returned to the employees.

IG Metall tried to annul several such collective agreements. In court, IG Metall questioned the trade union rights of CGM, in general, and the validity of the concluded collective agreements, in particular. As CGM only represents a total of 97,500 employees, IG Metall maintained that its status, both organisationally and financially, is weak. Moreover, IG Metall has, up to now, doubted CGM’s ability to enforce collective agreements on its own. In these respects, the larger union argued, CGM should not be considered as a trade union with the right to collective bargaining.

There is no statutory requirement for a union, if it is to be classified as such, to be representative. Nevertheless, the BAG decided in 1989 that a trade union must be able to accomplish its duties as a union. It needs to be strong enough to enforce the rules and it must possess a certain organisational capability. Concerning the CGM case, the BAG declared that CGM fulfilled the necessary requirements of a union even though it represents only 2% of all employees in the German metalworking sector. The BAG also stated that CGM had proved its ability to settle and enforce collective agreements by concluding approximately 3,550 agreements in the past.

Reaction to the labour court decision

CGM welcomed the BAG’s decision; the union’s lawyer, Klaus Huemmerich, referred to it as a ‘historic decision’ in an article in the Stuttgarter Zeitung (in German) on 30 March 2006. He further stated that ‘the BAG clearly ruled against the attempt to monopolise trade union representation and against the curtailing of collective bargaining autonomy’.

The IG Metall strongly criticised the BAG’s decision. It announced in a press release on 30 March 2006 (in German) that ‘the CGM is not seriously able to bargain and implement its own agenda of collective agreements with employers because of its small membership base.’ In fact, IG Metall argued, CGM pursues policies of wage and social dumping out of deference to employers.

In a Frankfurter Allgemeine Zeitung article on 29 March 2006, Bodo Finger, President of the VSME, praised the BAG’s decision. He stated that ‘IG Metall should finally accept that competition could not be prevented by going to court’.

Sandra Vogel, Cologne Institute for Economic Research (IW Cologne)

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