Labour Court ruling on collective agreements provokes social partner debate

In June 2010, Germany’s Federal Labour Court ruled that different collective agreements can exist in one company. This decision has provoked a heated debate among the country’s social partners. The German Confederation of Employers’ Associations and the Confederation of Trade Unions have jointly called for a return to the principle that only one collective agreement should apply at company level. Occupational unions, on the other hand, have welcomed the court’s decision.

In Germany, different wage agreements in one establishment have to date only been allowed in a few sectors. In the transportation and health care sectors, unions succeeded in organising highly homogeneous occupational groups. These groups have the economic power to take effective strike action. Examples of this situation include: the collective agreement negotiated between the airline Lufthansa and the Cockpit Association (VC), a pilots’ union, in 2001 (DE0106226F): the collective agreement concluded by university hospitals and the doctors’ union Marburger Bund (MB) in 2006 (DE0607019I); and the fight of the German Engine Drivers’ Union (GDL) for a separate agreement for engine drivers at the Deutsche Bahn railway company in 2007/2008 (DE0804049I).

In other sectors, collective bargaining was for decades determined by the principle that different wage agreements should not exist at the establishment level. Only one agreement, the most specific and relevant agreement in a particular case, was to be applied to employees in a single company (Tarifeinheit). This principle was derived from earlier decisions of the Federal Labour Court (BAG). However, on 23 June 2010, BAG made an announced in a press release (in German) that rules stipulated in collective agreements were to be applied directly to corresponding union members. While only one collective agreement was applicable for a given employee, several collective agreements could exist at the establishment level (Tarifpluralität). The latest decision stimulated a heated debate among the social partners on the consequences of the court’s ruling.

Debate among the social partners

On 23 June 2010, Dieter Hundt, President of the German Confederation of Employers’ Associations (BDA), commented on the new developments. In a press statement (in German), he emphasised the need for government action to reverse the moves. Mr Hundt called on politicians to restore the principle that only one collective agreement is applicable to a single establishment and to pass the relevant legislation. He voiced his concern that BAG’s decision will undermine the system of collective bargaining, divide workforces and lead to more and longer-lasting conflicts at the establishment level. In a similar vein, the Confederation of German Trade Unions (DGB) stated in a press article (in German) that the principle of ‘one establishment – one collective agreement’ had worked effectively in the past and should be reinstated.

While BDA and DGB voiced their fears that the collective bargaining autonomy enjoyed by the two sides of industry would be threatened by the latest developments, individual occupational unions, such as GDL, MB, VC, the Union of Air Traffic Controllers (GdF), the Independent Organisation of Flight Attendants (UFO) and the Association of Employed Academics and Executives in the Chemical Industry (VAA) made an announcement (in German) welcoming the court’s decision. From VAA’s point of view, BAG had ruled in favour of union plurality, which would strengthen employees’ interests and their representation at the establishment level.

Meanwhile, BDA and DGB issued a joint proposal (in German, 69Kb PDF) on how to deal with the new situation. They suggested amending the Collective Bargaining Act (Tarifvertragsgesetz (17Kb PDF)) in the following way: when several collective agreements apply in part to the same group of employees, the collective agreement which applies to most union members in the establishment is to take precedence. For the duration of this agreement, the collective bargaining parties are subject to a concomitant ban on industrial action (Friedenspflicht), regardless of other competing unions and their claims. In their joint proposal, BDA and DGB stressed that this solution is not intended to monopolise collective bargaining rights, but to create legal certainty in cases of conflicting collective agreements. The parallel existence of collective agreements covering different groups of employees was not questioned by the proposal.

Commentary

While occupational unions have succeeded in concluding separate collective wage agreements in the past, competition among different unions for members and for the right to represent certain groups of employees at the establishment level has not been entirely avoided.

In cases where the duration of collective agreements is not synchronised, the concomitant ban on industrial action can be devalued at the establishment level. Employers have to negotiate various collective agreements at different times. Finally, different kinds of union competition can induce a process of escalating wage claims – as the collective bargaining negotiations at Lufthansa and Deutsche Bahn show.

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

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