Tariff Board votes to extend collective agreements to petroleum installations

In October 2004, Norway's Tariff Board ruled in favour of a partial extension of three collective agreements at seven onshore petroleum installations - the first such move to extend agreements to non-signatories in recent years. The case was brought by trade unions on the grounds that foreign workers at the seven sites were subject to substandard pay and employment conditions. The decision comes very much as a response to EU enlargement and the prospect of increasing labour migration to Norway from the new Member States.

On 11 October 2004, the Tariff Board (Tariffnemnda) ruled in favour of a partial extension of three collective agreements at seven onshore petroleum installations. On the basis of documentation provided by trade unions and oral statements made by the relevant trade union representatives and representatives from the foreign-based companies concerned and the Norwegian Statoil, the board found that it had sufficient evidence to make a decision in favour of a geographically confined extension of the three agreements. The extension will take effect from 1 December 2004.

Background

The ruling follows almost 10 months of deliberation by the Tariff Board, which is vested with the authority to make decisions about extending collective agreements to non-signatory employers, according to the Act relating to General Application of Wage Agreements (Allmenngjøringsloven). The Board consist of five members appointed for three years, three of whom are independent, plus one representing the trade union side and another representing the employer side - in this case one representative from the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and one from the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO).

In December 2003, LO filed a petition for an extension of three collective agreements at seven onshore oil installations on behalf of three of its member unions (NO0407101N). It did so on the grounds that there were reasons to believe that foreign workers at the seven sites were subject to substandard pay and employment conditions, and the situation thus constituted 'social dumping'. In early 2004, a first hearing was held at which the social partners presented their evidence. In the course of the second written hearing in June 2004, in connection with the Board's proposal to issue an extension regulation, a majority on the Board regarded the evidence provided by LO as insufficient to make a decision about extension. NHO was particularly critical. Thus the Board, recognising the insufficiency of the evidence already presented but also the difficulties with which such evidence is obtained, decided on a postponement of its decision, awaiting further documentation in the form of a third oral hearing of the trade union representatives and companies that own the seven installations. The additional evidence derived from this hearing very much tilted the balance within the Board in favour of extension. Only the representative of the employer side voted against.

The difficulty of proving 'social dumping'

The prospect of acquiring a favourable ruling for an extension rested ultimately on the evidential requirement of the Act relating to General Application of Wage Agreements, and the Board's interpretation of this Act. The Act states that an extension may take place only in such cases where the pay and employment conditions of foreign workers are verifiably inferior to those of Norwegian workers. The Tariff Board initially interpreted this to mean that the burden of proof rested with party filing a petition for extension, in this case LO, but that it had to prove only that there was a substantial probability that foreign workers were subject to substandard pay and conditions in a particular agreement area. However, recognising the difficulties with which evidence regarding individual pay and conditions is obtained by trade unions and their representatives, the employer side was also given a particular responsibility for submitting to the board sufficient documentation and evidence on the conditions under which foreign workers were employed. The Board found that the employer side had not provided adequate documentation, and this lack of documentation served to strengthen the case of the trade union side by awarding the petitioner the benefit of the doubt. Thus, the Board very much reversed the burden of proof against the employer side, and stated that on the basis of a comprehensive evaluation of all the evidence provided, there was a high probability that the pay and employment conditions of foreign workers at the seven sites considered were substandard vis-à-vis national standards. On this basis, the Board ruled in favour of a partial extension of the three agreements.

Partial extension of collective agreements

The Board's decision takes the form of a regulation pursuant to the Public Administration Act, ie not a formal legislative act but an administrative regulation outlining in detail which parts of the collective agreements in question to be extended. A decision on an extension, according to the Act relating to General Application of Wage Agreements, may only apply to those parts of the collective agreement that regulates the pay and employment conditions of individual employees. This partial extension, or extension of selected provisions, of the agreements makes this particular regulation unique. The regulation has been made applicable to both the foreign companies involved as well as Norwegian companies not subject to collective agreements. Although the extension is compressed into a single regulation, it is emphasised that, in the case of disputes over the interpretation of the regulation, one must look to the three agreements underpinning the regulation.

On the issue of wage levels, the regulation takes as its point of departure the minimum wage levels stipulated in the three collective agreements. In doing so it provides a list of different types of minimum wage levels among the different occupations covered by the three agreements. It is important to note in this regard that there is no statutory minimum wage in Norway. Provisions on the compensation for different types of shiftwork, and compensation for the inconvenience caused by work carried away from the home, are also included in the new regulation. It also involves provisions on working time, overtime compensation, and rules relating to holiday work. Among other points, the regulation states that normal working hours should not exceed 37.5 hours per week, as established in most collective agreements in Norway. The legal framework on the other hand stipulates a normal working week of 40 hours.

A significant feature of the regulation is that it also includes new provisions not found in the original agreements. Instead of incorporating provisions on the employers' duty to compensate for the expenses of employees in case of relation to travel, food and accommodation, it states that such remuneration may be agreed upon on the basis of an agreement between the employer and the individual employees, according to ordinary procedures within the given site. Thus, it not only includes existing provisions but also creates new ones. Finally, the regulation also provides provisions regarding the standard and conditions of the accommodation facilities used by the employees at the work sites. The regulation explicitly emphasises that it does not apply in cases where the pay and employment conditions of employees already go beyond the minimum requirements of the extended provisions.

The Act relating to General Application of Wage Agreements allows trade unions to resort to boycotts in cases where extended provisions are not adhered to by companies, while the Labour Inspectorate (Arbeidstilsynet) may call in the police and penalise the employer. The regulation will remain in force until one month after the termination of the three agreements in question, ie until 31 March 2006.

Commentary

Taking into consideration the fact that extension of collective agreements is a novelty in Norwegian working life, it is difficult to predict what the potential effects of the new regulation relating to the petroleum installations will be. However, it is clear that in light of this success for the unions, one may expect that further petitions will be made for extensions in the future. This first case was very much regarded as a test case by LO. Thus, one may see further cases being brought before the Tariff Board in different branches and regions. There are concerns that the practice of extending agreements, at least in the way it has been carried out through the recent decision, may alter wage formation by establishing a minimum wage threshold or level in Norway.

The decision made by the Board does not represent an 'erga omnes' extension, since it is only a partial extension of selected provisions in the agreements concerned, and because it is only made applicable to seven separate and geographically limited areas (ie installations).

Recent EU enlargement made the issue of extension more imminent for the trade unions, because of a fear that the migration of foreign workers from the accession states would lead to an increase in social dumping practices, particularly in certain branches in Norway (NO0312103F). In the face of enlargement, transitional rules on the free movement of labour from the new Member States were introduced in May 2004 (NO0405105F), but on the whole they are seen only to a limited degree to prevent social dumping, in particular given the fact that providers of services are not covered. Thus, LO pressed for further measures in the form of the above-mentioned extension.

The main challenge, it seems, will be to monitor compliance with the new regulation. This responsibility is vested in the Labour Inspectorate and the Petroleum Safety Authority Norway (Petroleumstilsynet, PSA) (NO0405105F). There are concerns that these bodies are not sufficiently equipped to this end, not least because of the workload already placed on them in relation to the monitoring of health and safety conditions. The trade unions have also called for a strengthening of the monitoring role of trade union representatives, and health and safety officials in companies. Unions wants to see their own monitoring capabilities greatly enhanced by allowing them insight into the pay and conditions laid down by individual employment contracts, as well as into tenders and contracts, in order to reveal social dumping practices. The employers totally oppose such a move, regarding it as an infringement on management’s ordinary scope of action, and it has, so far, also been rejected by the government (NO0405105F). (Håvard Lismoen , Fafo Institute of Applied Social Sciences)

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