Germany: Collective bargaining law declared largely constitutional

Following a court challenge by several unions, the Federal Constitutional Court ruled that the Collective Bargaining Unity Act is ‘by and large’ constitutional, though it did not include sufficient safeguards to protect the rights of certain occupational groups or sectors. The court called for the legislator to improve the rules by the end of 2018.

Background

The principle that only one collective agreement should apply in one establishment underpinned German industrial relations for decades. Only the most specific and relevant agreement (Tarifeinheit) could cover an establishment’s employees at any one time. This practice meant that, in companies with overlapping collective agreements, only the agreement concluded by the majority trade union applied. However, in 2010, the Federal Labour Court ruled that several agreements could apply in one establishment (Tarifpluralität).

After this ruling, employer associations and several unions called on the government to re-establish the former principle of ‘one establishment, one collective agreement’. Initially, the German Confederation of Employers’ Associations (BDA) and the Confederation of German Trade Unions (DGB) issued a joint position calling for reinstatement of this principle. However, following criticism from DGB’s second biggest member union, the United Services Union (ver.di), DGB withdrew from the joint position. Critics feared that a return to the old position would damage collective bargaining autonomy by affecting the right of smaller unions to conclude collective agreements.

Nonetheless, the Collective Bargaining Unity Act came into effect in 2015. Speaking in the Bundestag, the Federal Minister for Labour and Social Affairs, Andrea Nahles, argued that the law was needed to protect German collective bargaining autonomy. The law provided incentives for unions to cooperate with each other in collective bargaining rounds, in order to avoid inter-union clashes.

While employer associations, such as BDA, welcomed the new law in 2015, unions were divided on the issue. Several DGB members, such as the German Metalworkers’ Union (IG Metall), the Mining, Chemicals and Energy Industrial Unions (IG BCE), the Trade Union for Building, Forestry, Agriculture and the Environment (IG Bau) and the Railway and Transport Union (EVG) supported the legislation. Other unions, for example the Civil Servants Federation and Wage Union (dbb), its affiliate the German Engine Drivers’ Union (GDL) and the Hospital Doctors' Trade Union (Marburger Bund) went to court to oppose it.

Legal challenge

In July 2015, several unions filed a complaint at the Federal Constitutional Court ((BVerfG). GDL stated that the Collective Bargaining Unity Act was not constitutional as it allowed only bigger unions to conclude a collective agreement and infringed upon smaller unions’ freedom of coalition.

In Germany, the right to strike is directly linked to the freedom of coalition guaranteed by the Basic Law (Article 9, section 3). Based on this section, the Federal Labour Court has developed case law on industrial action. The fundamental principle is that unions and employers can use strikes and lock-outs only to achieve an aim that can be regulated by collective agreements. Political strikes, for example, are not legal in Germany. Against this background, critics feared that the new law put smaller unions’ right to strike at risk and interfered with their guaranteed right to organise collective bargaining independently.

Federal Constitutional Court’s decision

On 11 July 2017, the Federal Constitutional Court presented its ruling on the unions’ complaint. The court ruled that the Collective Agreement Unity Act was ‘by and large’ constitutional. The judges acknowledged the right of the Federal Republic to set a framework for fair collective bargaining, regulating the relationships among participants and trying to reduce frictions in the system. The judges explained that the Basic Law (in Article 9, section 3) protected the freedom of coalition and also the right to strike for a collective agreement. However, this fundamental right did not include the absolute right to use key positions and blockage power to pursue an organisation's own interests at all costs. Moreover, the Basic Law did not guarantee the status quo of existing coalitions.

However, the Federal Constitutional Court also deemed that the law did not include enough safeguards to protect the rights of certain occupational groups or sectors when it comes to the replacement of existing collective agreements. It made the following statements.

  • The current rule on replacing conflicting collective agreements infringed on the freedom of coalition of the minority union. All unions should have the right to decide which members to organise, to undertake organising activities and to decide independently on their strategies. Unions’ activities could be weakened if their collective agreement was threatened to be replaced by another, or if the union was judged to be the minority union in an establishment.
  • The legislator must improve the rules by the end of 2018. Until that time, a collective agreement can be replaced by another colliding agreement only if the majority union can prove it has seriously considered the interests of the minority union’s members.
  • All unions have the right to strike for a collective agreement and do not face liability issues if their agreement is in the end replaced by another or if majority ratios are unclear.
  • Claims and queries resulting from the Collective Bargaining Unity Act must be decided by the labour courts. If collective agreements clashed and the interests of conflicting parties are brought to court, the labour courts must make decisions that recognise the fundamental rights of minority unions and their members.
  • If collective agreements of minority unions are replaced, the labour courts must take care that certain collectively agreed benefits, such as pension rights or job guarantees, are replaced in a reasonable way.

Social partners’ reactions

Employer organisations, such as BDA and the Employers’ Associations for the Metal and Electrical Industry (Gesamtmetall), welcomed the latest decision by the Federal Constitutional Court.

Ingo Kramer, chair of BDA, stated that the court’s decision confirmed BDA’s position that a legal regulation of the issue had been necessary. In his view, collective bargaining unity remained a fundamental principle in Germany and a cornerstone for the successful German social partnership. He stated that the court’s ruling that the rights of minority unions’ members had to be taken into account by the majority union was ‘in the spirit’ of collective bargaining unity and that BDA was willing to participate in a constructive manner.

Gesamtmetall chair, Rainer Dulger, also welcomed the court's decision, stating that German sectoral collective bargaining was useless without collective bargaining unity. If the latter did not exist, unions could take up industrial action at any time, even where a collective agreement already existed, thereby paralysing establishments.

Unions’ reactions were not as unified. DGB stated that it respected the court’s decision. However, DGB chair, Reiner Hoffmann, also stressed that DGB has had its own dispute resolution mechanism in place for decades. He stated that parts of the court’s wishes for change were understandable and that, if the legislator did undertake changes in the future, DGB expected that new rules would not impair the rights of single players. DGB also welcomed the goal of the law – to strengthen voluntary inter-union cooperation – and expected employers to deal reasonably with the situation.

Specialist crafts unions also commented on the Federal Constitutional Court’s decision. The pilots’ union, Vereinigung Cockpit (VC), for example, stated that the court had partially declared the Collective Bargaining Unity Act as not constitutional, especially regarding the replacement of minority unions’ agreements. Nonetheless, VC was disappointed by the ruling as it had hoped the law would be suspended altogether. Ilja Schluz, chair of VC, stated that, in his view, employees could not choose their union freely. He also said that many aspects were still undecided and a fair compromise for all collective bargaining partners had not been reached. VC, however, welcomed the court’s decision on unions’ rights to strike and stated that it would continue to pursue the interests of its members in the future.

Claus Weselsky, chair of GDL, pointed out that the court’s ruling at least stopped the elimination of occupational unions, and that freedom of coalition and the right to strike remained untouched. He stated that employers should finally let go of their wishes to bargain only with weakly organised unions, and that GDL would continue with its collective bargaining course.

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