Supreme Court of Justice judges bank’s agreement hopping as lawful

In a decision of December 2005, the Supreme Court of Justice (OGH) ruled that a move of Austria’s BA-CA bank corporation from the savings banks employers’ association to the commercial banks association was lawful. The main aim of this move was to change over from the savings banks collective agreement to the - from the bank’s point of view - cheaper commercial banks agreement. The union side expressed its disappointment over this decision and warns of copying such practices of 'agreement hopping' by other employers.

On 7 December 2005, the Supreme Court of Justice (Oberster Gerichtshof, OGH) formally terminated a pending conflict over the service regulations of Austria’s largest bank institute, the Bank Austria-Creditanstalt (BA-CA), by pronouncing its decision in favour of the employer’s side.

The conflict emerged when, in October 2004, the BA-CA’s management unexpectedly announced its immediate withdrawal from the savings banks employers’ association (Sparkassenverband) and its simultaneous joining of the commercial banks association (Bankenverband). This move, which was formally realised on 13 October 2004, signified a change of service regulations for the BA-CA workforce according to the collective agreement for the commercial banks subsector, which since then covered the around 11,000 employees (AT0411201N).

The management’s argument for this unusual step of leaving its employers’ organisation was that the central works council has for a long time shown no willingness to enter substantial negotiations over new, innovative and less expensive service regulations. As a consequence of this change, the traditional, very favourable terms and conditions of the bank’s employees (in particular with respect to working hours, pay and job security) were replaced by less favourable ones. This means an extension of weekly working hours from 37 to 38, a reduction of holidays, the abolishment of tenure for long-serving employees and the introduction of a less favourable pay increment scheme.

In response, the works council and the Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA), which perceived this 'agreement hopping' as a deception to the employees and unlawful, initiated legal proceedings in order to reverse this practice of 'fleeing' binding collective agreements and works agreements.

However, in its decision pronounced in December 2005, the OGH stated that the BA-CA’s move from the savings banks employers’ association to the commercial banks association and thus the change of the applicable collective agreement was lawful. Likewise, the management’s withdrawal from the 'old' works agreement (which complemented the subsector’s collective agreement) was judged as lawful. However, according to the decision, that employees who were already employed prior to the move of October 2004 are to be paid higher wages in a way proportional to their working hours extension.

Whereas the BA-CA management showed its satisfaction with the judgement, both the works council and GPA expressed their disappointment and fear that this ruling may open the door wide for employers to copy such practices of changing over to another, more favourable collective agreement.

This information is made available through the European Industrial Relations Observatory (EIRO), as a service to users of the EIROnline database. EIRO is a project of the European Foundation for the Improvement of Living and Working Conditions. However, this information has been neither edited nor approved by the Foundation, which means that it is not responsible for its content and accuracy. This is the responsibility of the EIRO national centre that originated/provided the information. For details see the "About this record" information in this record.

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