Federal Labour Court redefines rules for work stoppages

On 24 April 2007, the Federal Labour Court (BAG) issued a new judgement on collective bargaining. The court ruled that trade unions are allowed to call for work stoppages, even if such actions aim to enforce or modify areas that are usually dealt with within social plans. BAG’s latest decision was welcomed by union representatives, while employer organisations called for a fundamental revision of the collective bargaining system.

In 2003, the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) went on strike, protesting against the closure of a plant owned by Heidelberger Druckmaschinen GmbH, a manufacturer of printing machines. At the time, IG Metall went on strike for over five weeks and called for various provisions that would safeguard workers’ interests. In response, the north German regional metalworking sector employer organisation, Nordmetall, sued IG Metall for striking unlawfully. On 24 April 2007, the Federal Labour Court (Bundesarbeitsgericht, BAG) finally ruled in favour of IG Metall.

Dispute resolution between social partners

Until this latest BAG decision, many legal experts and employers firmly believed that strikes organised to protest against the closure or relocation of a plant or an establishment had to be considered as breaches of current labour law. Strikes were only considered to be legal if they aimed to enforce the conclusion of collective agreements. The decision to close a plant, on the other hand, was solely within the ambit of the company’s decision making and should therefore not be regulated by union demands.

From a legislative point of view, various acts have to be taken into consideration to evaluate the rights and obligations of the social partners, namely:

  • the German Basic Law (Grundgesetz, GG (in German, 127Kb PDF)) which stipulates the right to set up an association to protect and promote working and economic conditions (freedom of association);
  • the Collective Bargaining Act (Tarifvertragsgesetz, TVG (in German, 17Kb PDF)) which holds that unions and employer organisations have the right to conclude collective agreements.

National legislation envisages two main dispute resolution mechanisms to mediate between the social partners when they disagree (see the German contribution (75Kb MS Word doc) to the EIRO thematic feature on Collective dispute resolution in an enlarged European Union).

  1. At establishment level, the Works Constitutions Act (Betriebsverfassungsgesetz, BetrVG (in German, 180Kb PDF)) provides for the setting-up of a social plan (Sozialplan) by an arbitration board (Einigungsstelle) if management and the works council fail to reach a solution either by themselves or with the aid of a third party. Social plans typically comprise, for example, the regulation of compensation payments or training programmes.
  2. At sectoral level, trade unions enjoy the right to call a strike to enforce the conclusion of collective agreements. Employers, on the other hand, are allowed the right to lock their employees out. Collective agreements typically regulate wages and working conditions.

Due to a lack of prevailing case law, the views of the social partners differed greatly on the topic of the lawfulness of strikes called by trade unions to enforce issues that are usually regulated by a social plan. As mentioned above, this practice was deemed to be questionable by employers. Nonetheless, unions have used their capabilities to organise such strikes as in the aforementioned case or at AEG’s Electrolux site in Nuremberg in 2006 (DE0603039I).

In April 2007, the BAG clarified that trade unions were allowed to strike over issues covered by social plans (in German). The BAG stated that, based on the BetrVG, the works council and management have the right to set up a social plan at establishment level. However, the content of the social plan must also be considered as collective bargaining issues. Therefore, unions have the right to call strikes to enforce such issues.

Reactions of the social partners

On 25 April 2007, IG Metall welcomed the latest developments in a press statement (in German). The metalworkers’ union stated that the BAG’s ruling would make an important contribution to upholding the trade unions’ autonomy to represent employees’ interests, especially when many workplaces are endangered.

On the same day, the Chair of the German Confederation of Employers’ Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA), Dieter Hundt, called for a fundamental revision of the collective bargaining system in a statement to the press (in German, 19Kb PDF). In the view of BDA, strikes that try to circumvent or influence the setting up of a social plan at establishment level would threaten collective bargaining autonomy. Such action would interfere with inevitable enterprise-level restructuring programmes, which are intended to safeguard the competitiveness of German companies and, by doing so, also to protect jobs.

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

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