Collective bargaining legislation examined

Slovenia's legislation on collective bargaining - which regulates matters such as the parties to collective agreements, negotiating procedures, the content of agreements and dispute resolution - is undergoing a major shake-up in early 2003. We examine the development of the relevant legislation, the current provisions and the reforms which are expected to be adopted in the first half of 2003.

In this feature, we trace the development of the legislation governing collective bargaining in Slovenia, from its origins up until the present day, and examine the current situation and changes in the pipeline in 2003.

History

Before the First World War

The first collective agreements, as an instrument for the regulation of employment relationships, were concluded on the territory of Slovenia at the end of the 19th century when it was part of the Austro-Hungarian empire. These agreements were concluded between trade unions and individual employers, and the printing workers' unions were the pioneers in this area.

After the First World War

The practice of concluding collective agreements continued after the First World War and the collapse of the Austro-Hungarian empire, when Slovenia became part of the Kingdom of Serbs, Croats and Slovenes (later the Kingdom of Yugoslavia), and the first regulations on the conclusion and enforcement of collective agreement were adopted in the period immediately after the war (see 'The collective agreements in our legislation and practice'[in Slovene], I Jurancic, in Trade union law, M Novak M et al, Official gazette of the Republic of Slovenia, Ljubljana, 1992). In the Law on the Protection of Workers of this time, collective agreements are mentioned among the tasks of the 'workers' chambers' (bodies set up to represent employees' interests - SI0210102F). One of the Law's provisions determined that the labour relationship was regulated by the individual employment contract and the relevant collective agreement, which could not be contrary to this Law.

The conclusion of collective agreements was regulated in more detail by the 1931 Law on Crafts. This law determined that a collective agreement could be concluded only by free associations of workers and of employers, and explicitly prevented associations of which membership was compulsory (ie chambers) from concluding such agreements. The further development of collective agreements was secured by the 1937 Ordinance on Determination of Minimum Pay, Conclusion of Collective Agreements and Arbitration. This measure envisaged the conclusion of company collective agreements (which was then the prevailing practice) and of branch agreements. Even before this ordinance came into force, a branch-level collective agreement for the textiles industry had been concluded in 1936 as a result of a general strike by Slovenian textile workers.

After the Second World War

After the Second World War, Slovenia became part of the Federal People's Republic of Yugoslavia, and employment relationships were initially regulated solely by the state and collective bargaining was limited to the private sector (made up of small crafts workers), which was economically less important. Collective agreements were initially introduced by legislation in 1971 and the first agreement was concluded in 1972.

Collective agreements were reintroduced in the former Yugoslavia by the adoption of constitutional amendments in 1988. On the basis of these amendments, the federal Law on Basic Rights from the Labour Relationship (the federal LBRLR), adopted on 28 September 1989, introduced collective agreements into the legal system. This was one of several laws which were adopted in order to introduce a market economy and a new socio-economic system. In this period of constitutional and legislative transition, the LBRLR put labour relations on a contractual basis for the first time.

The intention of the LBRLR was to regulate basic rights relating to the labour relationship, leaving the individual republics which made up the Yugoslav federation to regulate other rights and in more detail. However, the LBRLR was regarded as being too extensive and as regulating labour relationships in too much detail, thus restricting the republics' regulatory autonomy. Slovene experts were of the opinion that the republics should regulate all but the basic rights, because the regulation of labour relationships depends to a great extent on issues such as the level of technological development, the qualification structure of the workforce, the employment level, or the ratio between the number of active persons and pensioners. These factors differed very much between the republics, with Slovenia the most developed of them (see Introduction to the commentary on the Law on Basic Rights from the Labour Relationship[in Slovene], N Belopavlovic, Business Gazette, Institute for Labour at the Faculty of Law, Ljubljana, 1990).

Existing legislation

Slovenia held its first democratic elections in 1990 and officially declared its independence from Yugoslavia in 1991. In 1990, the Slovene Law on Labour Relationships (referred to below as the 'old' LLR) was passed, which is still substantially in force at the beginning of 2003, as is the federal LBRLR dating from the Yugoslav period (see above). The old LLR has stronger legal validity than the LBRLR and the former federal regulations are used only when this is reasonable and if they are not contrary to the legal order of the Republic of Slovenia.

Both laws regulate the conclusion of collective agreement and each contains a special chapter on this topic (articles 85-88 of the LBRLR and articles 112-119 of the old LLR). They do not, however, conform with International Labour Organisation (ILO) Conventions and Recommendations and various EU documents, among other reasons because they make the conclusion of collective agreements an obligation for the parties. A new Law on Labour Relations, which does not regulate collective bargaining and other collective labour relations but only individual labour relations (SI0206101N) came into force on 1 January 2003. It substitutes for the old LLR and the LBRLR, but articles 86 and 87 of the LBRLR and articles 112-119 of the old LLR will remain in force until the passing of the new Slovene Law on Collective Agreements (which is in preparation), most probably in the first half of the 2003.

Numerous provisions in both the LBRLR and the old LLR, which concern the 'normative' part of the collective agreements (ie employees' rights such as pay and working time) and are not part of the laws' special chapters on collective agreements, provide for collective agreements to be competent for a range of issues on which it was impossible to agree during the shaping of these laws. These provisions require more concrete or detailed regulation in a collective agreement. The effect is that certain matters must be in regulated by collective agreements and that such agreements must be concluded - otherwise the labour market cannot function properly. Labour legislation is so incomplete and inadequate that without collective agreements it is not possible to implement it. This is one of the reasons why collective agreements are obligatory in Slovenia.

Thus, at least at the beginning of the 1990s, Slovene collective agreements had predominantly an 'executive' character. Both laws and agreements were a part of a unified legal system. Labour legislation could not function without collective agreements, while, without the obligatory and voluntary provisions contained in both the LBRLR and the old LLR calling for more concrete or detailed regulation of various matters through collective bargaining, collective agreements would have lacked content. The first general collective agreement for the private sector, concluded in 1990, represented a form of prolongation of the 'social compact' dating from the previous 'self-management' era. It followed practically all the obligatory instructions on the content of collective agreements laid down in the LBRLR and the old LLR. However, these provisions of the general agreement were mostly shaped in such a way that they represented only a framework, leaving detailed implementing provisions to branch-level collective agreements.

The legislation concerning the key issue of collective agreements has been changing gradually as Slovene society has changed during the transition period. At the beginning, it was not possible to prepare and implement the legislation suitable for a fully developed market economy. The first legal regulations were not completely based on voluntary action by the parties. They were the result of a compromise between the need to establish a system of collective bargaining and the need to protect social and state property (SI0210102F). As the circumstances have changed in the direction of a market economy (privatisation, the development of the employers' organisations and trade unions etc) the legislation has been changed too. Now that the transition to the market economy is coming to an end, the legislation must finally be changed to conform with ILO and EU requirements and be comparable with the labour legislation of the other EU Member States, when Slovenia joins the Union.

Federal Law on Basic Rights from the Labour Relationship

The federal LBRLR deals with a number of aspect of collective agreements, and here we consider some of the most important.

Regarding the content of collective agreements, article 85 of the LBRLR provides, though in an unclear way, that an agreement should consist of a part dealing with 'obligations'- ie the rights and obligations of the parties to the agreement, including dispute resolution, peace obligations etc - and a 'normative' part - ie the provisions which workers and employers must consider when shaping the formers' rights, duties and responsibilities in terms of pay, working time, shift and night work, notice periods etc. However, the LBRLR does not draw a clear distinction between these two parts.

The LBRLR does not contain provisions which direct the shaping of the obligations part of collective agreements. Article 87 states only that a collective agreement should determine the method, procedure and cases whereby a change in the agreement may be demanded, and the conditions, terms and method of its cancellation. Experts disagree as to whether article 86 of the LBRLR provides that collective agreements should include the method and the procedure for resolution of (collective) labour disputes of 'interest' (see below), or of legal disputes.

Article 85 concerns the normative part of collective agreements and provides that agreements should regulate the rights and duties of workers in accordance with the law and with other regulations. Because the content of agreements must thus be in accordance with the law and other regulations, the parties to the agreements have no autonomy in this respect. Therefore, some experts interpret the LBRLR as being rigid, allowing very little freedom for further autonomous regulation of workers' rights, because collective agreements can only elaborate on the possibilities of exercising the rights determined by law - they cannot establish new rights which are not already contained in the law (see 'Tripartism and industrial relations in Slovenia', Z Vodovnik, in Social dialogue in Central and Eastern Europe, G Casale (ed}, ILO Central and Eastern European Team, Budapest, 1999).

As mentioned above, another important issue is that many provisions of the LBRLR require more concrete or detailed regulation through: the law of an individual republic (of the former Yugoslavia); a collective agreement; or a general legal instrument (statute, rules etc). Certain matters must thus be subject to additional regulation by collective agreements. Therefore, as we have seen, collective agreements must be concluded if the labour market is to function properly. In this way, collective agreements may therefore be regarded as obligatory. An example of the way in which the LBRLR contains 'instructions' (which may be voluntary or obligatory) on the content of collective agreements is provided by its article 17, which states that it is allowed in exceptional circumstances to move a worker to another post which requires a lower level of education, but only in cases and under conditions determined by a general act or by a collective agreement concluded in accordance with the law. Another example is article 24, which provides that workers who perform work which is especially difficult, onerous and harmful to health should have their working time reduced (in proportion to the harmful influence on their health and ability to work) in accordance with the law and relevant collective agreement.

The LBRLR provides for collective bargaining to be conducted at particular levels: general and branch/sectoral agreements may be concluded at the level of individual republics (now the Slovenian national level); and agreements may be concluded at the level of individual organisations (ie company agreements etc). However, some experts argue that, because ILO Conventions provide that collective bargaining should be voluntary, such regulation of the permissible levels of bargaining is not reasonable.

Article 86 of the LBRLR provides that collective agreements may not grant workers a lower level of rights or less favourable working conditions than those determined by the law. If they do so, the relevant provisions of the law instead apply directly.

According to the LBRLR, the parties to general and branch collective agreements for the private sector are: on the workers' side, a competent trade union body; and, on the employers' side, a competent body of the Chamber of Industry and Commerce (Gospodarska zbornica, GZ). The parties to the general and branch agreements for public services, public companies and the public administration are: on the workers' side, a competent trade union body; and, on the employers' side, a competent body of the 'sociopolitical community' (now the Slovenian state etc). According to experts, the law did not take into account any pluralism of employers' organisations and trade unions and therefore neglected: the problem of the representativeness of both types of organisation; the fact that it is contrary to ILO Conventions that GZ, as an organisation with obligatory membership among employers, should designated as a party to collective agreements; and possible problems when a private company is owned by a foreign legal or physical person.

The old Slovene Law on Labour Relationships

Regarding the content of collective agreements, article 112 of the chapter on collective agreements in the 'old' Slovene LLR, dating from 1991, which is still in force, provides that such agreements should consist of a part dealing with obligations and a normative part (see above). In its specific chapter on collective agreements, the old LLR sets out numerous provisions on the 'obligations' part of agreements, while the majority of provisions concerning the normative part are contained in other chapters of the old LLR.

Article 112 of the old LLR concerns the obligations part of agreements and provides that by concluding a collective agreement the parties thereby determine mutual rights and obligations. Article 115 provides that these rights and obligations concern in particular: the agreement's implementation; the respect of 'social peace'; the agreement's validity; and the procedure for the agreement's conclusion and modification. In addition, article 116 states that the parties are obliged to inform each other on the implementation of the collective agreement and to assess whether certain controversial questions might lead to circumstances which will threaten the agreement's implementation and lead to a strike or other form of dispute. In order to prevent such controversial circumstances arising, the parties should agree on prior conclusion of a new collective agreement or on other measures for the resolution of controversial situations.

Article 117 determines that if an agreement is not possible, an arbitration council will decide on the contentious matters. The initiative to set up an arbitration council may be taken by any of the parties to a collective agreement. As a rule, the arbitration council has three members and the same number of deputy members. Each party nominates one member and one deputy, with the chair and deputy chair appointed from among recognised labour law experts by agreement between the parties. Up until 1994, article 117 provided that, if the parties could not agree on the appointment of the arbitration council's chair and deputy chair, they were appointed by the government. Arbitration council decisions become a constituent part of a collective agreement, or replace the agreement if none is concluded. The use of such compulsory arbitration in collective bargaining is one of the most controversial issues relating to the extent of state intervention in the settlement of collective labour disputes, because the state thereby replaces the contractual freedom of the parties with the power of a third party to determine the terms of their relationship. In addition, such a system will, in the view of many commentators, tend to discourage collective bargaining (see Conciliation and arbitration procedures in labour disputes. A comparative study, International Labour Office, Geneva, 1980). The procedure determined in article 117 is a logical consequence of the fact that, under the present legislation, collective agreements must be concluded and must regulate certain questions determined by law. Therefore the negotiating parties are obliged to be active in the negotiating process and, in the event that negotiations fail, the arbitration council must intervene.

As mentioned above, the majority of provisions which concern the normative part of agreements are not contained in the chapter on collective agreements but in other chapters of the old LLR. However, article 112 (part of the specific chapter on collective agreements) does concern the normative part of agreements, providing that collective agreements should regulate in greater detail the rights, duties and responsibilities of workers and the rights and duties of employers (this regulation is thus obligatory), in accordance with the relevant law and other regulations. As with the LBRLR, the old LLR thus provides that the content of collective agreements must be in accordance with the law and with other regulations, and the parties to agreements have no autonomy in this respect. Therefore, some experts interpret the old LLR - like the the LBRLR - as being rigid and not in accordance with ILO Conventions.

Regarding the normative part of collective agreements, many provisions of the old LLR (like the LBRLR) require more concrete or detailed regulation in a collective agreement. Certain matters must thus be additionally regulated by such agreements. Again, this means that collective agreements must be concluded if the labour market is to function properly, and such agreements are in this way obligatory.

The new LLR (SI0206101N), which regulates individual labour relations only and came into force on 1 January 2003, requires the regulation of certain matters in branch (or 'activity') collective agreements. Articles 128 and 129 of the new law require that the amounts of certain pay allowances (bonuses) must be determined in the relevant branch-level collective agreement (see 'Institute for Labour Relations: Questions from the seminar on the new LLR'[in Slovene], in Legal practice - the journal for legal questions, No 21/571, 28 November 2002), although the legislator had been of the opinion that the new LLR should determine a minimum of rights. Article 128 states that the amount of the bonuses for night work, overtime work, work on Sunday and work on holidays and days off, which are paid in accordance with the law, is to be determined by a branch-level collective agreement. Furthermore, Article 129 provides that the amount of the service-related bonus is to be determined by a branch-level agreement. In this way, according to some experts, branch-level collective agreements are again made obligatory and this is contrary to ILO conventions.

Article 114 of the old LLR determines the parties to collective agreements. It states that an agreement for the territory of the republic (ie general agreements for the territory of Slovenia) or for an individual branch is to be concluded by the trade unions and by the Chamber of Commerce and Industry of Slovenia (Gospodarska zbornica Slovenije, GZS) or other general associations or organisations of employers (SI0211102F). This means that the highest level of collective bargaining is the national level and the next highest is the branch level (although branch agreements are concluded at national level and there is thus an argument for the terminology to be changed) and that both general and branch agreements are obligatory. Again, experts believe that this is contrary to ILO Conventions which Slovenia has ratified. Here the wording of article 114 is important: it states that both general and branch agreements 'are to be concluded'. On the other hand, article 113 provides that collective agreements for a single organisation or employer (company level etc) and for the territory of one or more municipalities (regional level) 'may be concluded'- they are therefore not obligatory.

Other questions which remain to be resolved in this area are the representativeness of employers' organisations (SI0211102F) and the fact that, contrary to ILO Conventions, GZS- membership of which is obligatory for employers - is a party to the collective agreements. Furthermore, commentators argue that because, according to ILO Conventions, collective bargaining is voluntary, the regulation of the levels of collective bargaining is not reasonable.

The parties to a single-employer collective agreement are, according to the old LLR, the management body of the organisation or the employer, and the trade union. Here again, trade union pluralism is neglected, though this issue was to a great extent resolved by the 1993 Law on the Representativeness of Trade Unions (SI0210102F). Agreements for public sector workers (public services, public administration etc) are to be concluded by the trade unions and by the competent bodies of the 'sociopolitical communities' or their organisations/associations.

Regarding the validity of collective agreements, article 112 of the old LLR provides that they are valid for all workers who work in organisations and for employers in the Republic of Slovenia, and can be 'directly used'.

At present, no legally-based extension procedures exist in Slovenia to extend the provisions of collective agreements beyond the members of the signatory organisations (TN0212102S). However, there are currently two 'functional equivalents' to an extension procedure:

  • membership of GZS and the Chamber of Crafts of Slovenia (Obrtna Zbornica Slovenije, OZS), which still act as employers' organisations and conclude collective agreements, is obligatory (SI0207103F). All companies in Slovenia are thus members of these bodies. Slovenia has retained a system whereby all enterprises and craftspeople (small companies) are organised in chambers (parastatal organisations) with compulsory membership. Since the change in the country's socio-economic system, the mandates of these chambers have been extended and they still function as employers' organisations, alongside 'authentic' employers' organisations. In this way practically all employees in Slovenia are covered twice by collective agreements, because GZS and OZS conclude intersectoral and sectoral agreements. Given the existence of company agreements, and of occupational agreements in the public sector, certain employees are covered three times by collective agreements; and
  • as seen above, the old LLR dating from 1990, some parts of which are still in force, requires compulsory supplementary regulation of certain issues in collective agreements, thus making such agreements obligatory. The agreements which regulate these issues in the required supplementary fashion are the general collective agreement for the private sector (the literal translation is 'for the economy', which is the old term and not in use today) and the general collective agreement for the public sector (the literal translation is 'for the non-economy', which is also an old term and not in use today) - both of which are national intersectoral collective agreements.

Because of these two 'functional equivalents' to an extension procedure, at present collective bargaining coverage in Slovenia is almost total among employees (though no institution or organisation currently collects data on bargaining coverage). Because of the existence of intersectoral, sectoral, occupational and company agreements, employees are generally covered by two, and sometimes by three, different agreements.

The only two categories of employees who are not covered by collective agreements in Slovenia are managers (who have individual contracts) and higher administrative employees in the state administration and the administration of municipalities. These two categories are not of significant size.

Article 134 of the old LLR's chapter on 'transitional and final provisions' provided that collective agreements should be concluded within three months of the law coming into force (on 24 April 1990). This provision, besides being regarded as contrary to ILO Conventions, was unrealistic. By the end of the 1991, practically all collective agreements for the private sector had been concluded but only a few for the public sector.

1995 draft Law on Collective Agreements

A draft Law on Collective Agreements (LCA) was submitted to the Slovene parliament in 1995 (Gazette of the National Assembly of the Republic of Slovenia, No. 8, Ljubljana, 8 March 1995) and was then 'locked in a time capsule' because it was to be passed simultaneously with the new Law on Labour Relations (LLR). When parliament passed the new LLR in 2002, the draft LCA was taken out of the time capsule and a commission for its further elaboration was formed in the summer, consisting of representatives of the government, the employers and the trade unions. The new LCA should provide for a voluntary system of collective bargaining based on autonomous employers' organisations and trade unions with voluntary membership.

The draft LCA regulates: the parties to collective agreements; the content, the procedure for conclusion; the shape of agreements; their validity and cessation; the peaceful resolution of collective labour disputes; and the recording and publication of agreements. Here we focus only on some of the key issues.

Regarding the parties to a collective agreement, the draft LCA provides that agreements are concluded by trade unions and their federations or confederations, and by individual employers and their associations. However, it does not regulate the representativeness of employers' organisations in the same way as this issue is is regulated for unions by the 1993 Law on the Representativeness of Trade Unions (SI0210102F). Article 38 of the draft LCA, under 'transitional and final provisions', states that until the law regulating the association (legal personality) and representativeness of employers comes into force, the representative associations of employers are:

  • the Chamber of Industry and Commerce of Slovenia (GZS) and its branch associations;
  • Chamber of Crafts of Slovenia (OZS);
  • the Association of Employers of Slovenia (Zdruzenje delodajalcev Slovenije, ZDS); and
  • employers' organisations which are authorised by law to conclude collective agreements, or are signatories of valid collective agreements concluded for the territory of the Republic of Slovenia, when the relevant law comes into force.

On the employers' side, the draft LCA provides that the government or competent ministry or other body concludes collective agreements covering employees in state administration, and together with the relevant employers' associations for agreements covering employees in activities where a part of the activity is performed as a public service.

Under the draft LCA, the obligations part of collective agreements regulates the rights and duties of the parties and the method for the peaceful resolution of collective labour disputes. In their normative part, collective agreements may contain provisions regulating the content, the conclusion and cessation of labour relations, pay and remuneration, safety at work, the conditions for trade union activity etc. Collective agreements may only contain provisions which are more favourable for employees than those laid down in laws and related regulations. Lower-level agreements - branch/activity and single-employer - may determine in greater detail the rights and duties laid down in higher-level agreements, in a more favourable or different way, but may not restrict these rights in any way.

The highest-level collective agreement is concluded for more than one activity/branch. In order to establish the scope of other agreements, the standard classification of economic activities is used. A collective agreement can be applied directly.

The procedure for the conclusion of a collective agreement set out in the draft LCA begins with a written proposal from trade unions or their associations, or from employers or their associations. Regarding the conclusion of a national agreement for one or more branches/activities, the procedure begins with a written proposal from the representative trade unions or their associations, or from representative employers' associations. The party which proposes the conclusion of a collective agreement must define in its proposal its demands for the content of the agreement. The other party must send a written answer within 30 days of receiving the proposal. When two or more trade unions or their associations, or two or more employers or their associations, make up a bargaining party, they must determine their negotiating group for the talks, and each of them must sign the eventual agreement.

A collective agreement expires at the end of the period for which it was concluded, on the agreement of both parties, or if it is renounced by either party. After the expiry of a collective agreement and up until to the conclusion of a new agreement, its normative provisions continue to apply for up to six months.

As seen above, there are at present no legally-based extension procedures in Slovenia which allow for a collective agreement to have general validity for all employers and employees in its potential field of application. However, article 14 of the draft LCA provides that a collective agreement for one or more sectors, concluded for the territory of Republic of Slovenia, is valid for all employees and all employers in the sector or sectors (ie has 'general validity') if:

  • it was signed by representative associations of employers which employ at least 50% of the employees in the sector or sectors; and
  • it was signed by a majority of representative trade unions, to which at least 50% of employees in the sector or sectors are affiliated.

If these conditions are met, the general validity of a collective agreement is established by the minister responsible for labour through a decree, which is published in the Official Gazette of the Republic of Slovenia. This procedure takes effect 'ex lege' (ie it is automatic) and applies to both the private and the public sector.

The draft LCA draws a distinction between:

  • an dispute of interest- a collective labour dispute which is a consequence of the parties' different interests when they cannot agree on the conclusion or completion of a collective agreement, or on a change to an agreement; and
  • a dispute of rights- a collective labour dispute which occurs when the parties do not agree on the implementation of the provisions of a collective agreement, or when one of the parties believes that the agreement has been breached.

With regard to the peaceful resolution of a dispute of interest, the draft LCA provides for a procedure which begins when one of the parties issues a written statement that that negotiations have been unsuccessful. Such a statement can be issued no sooner than six days, and no later than 30 days, after a proposal has been made for the conclusion or completion of a collective agreement, or for a change to an agreement. In these circumstances, either party, alone or in agreement with the other party, may propose mediation by an expert nominated by the minister responsible for labour. If there is no agreement between the parties that mediation should be used, or if the dispute is not resolved after mediation, the parties may agree to seek resolution by arbitration. If so, the arbitration decision is binding on the parties.

The draft LCA's procedure for the resolution of a dispute of rights begins with one of the parties sending a written proposal for negotiations, if it believes that the agreement has been breached or implemented incorrectly. When this occurs, either party, alone or in agreement with the other party, may propose mediation by an expert nominated by the minister responsible for labour. If there is no agreement between the parties that mediation should be used, or if the dispute is not resolved after mediation, the party which initiated the procedure may refer the dispute to arbitration.

The mediation and arbitration procedures mentioned above will be described more fully in a future EIRO article.

Commentary

It is obvious that Slovenia needs, as quickly as possible, to adopt the new legislation on collective agreements and collective bargaining. It is possible that the new system of voluntary collective bargaining will involve a more difficult job for both the trade unions and the employers' organisations. Among other matters, both social partners will be forced to develop more expert bargaining resources at lower levels (branch and company levels). However, this can no longer be an excuse to postpone the introduction of voluntary collective bargaining. (Stefan Skledar, on behalf of the Institute for Labour Law, University of Ljublana)

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