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‘Future collective agreements’ and restructuring: a view from Germany and beyond

Written by
Kliemt.HR Lawyers, the first port of call in employment law for top-class and future-proof advice.
Authors
Burkard Göpfert
Partner - Germany
Kliemt.HR Lawyers
Germany
04.08.21
10
‘Future collective agreements’ between employers and unions to protect sites and jobs in the context of restructuring are increasingly popular in Germany. This article explains how they work, what alternatives exist and raises some outstanding questions. Ius Laboris lawyers in other jurisdictions give a local perspective on the issue.

A look at the German metalworkers’ union, IG Metall’s collective bargaining rounds reveals that demands for forward-looking collective-bargaining agreements (Zukunftstarifverträge, ‘future collective agreements’) are being treated as very high priority. If a future collective agreement gains acceptance in a business operation, then this success will be touted publicly.

As a rule, future collective agreements are company-specific collective bargaining agreements (Haustarifverträge) with special rules that are not included in, and could deviate from, industry-specific (territorial) collective bargaining agreements (Flächentarifverträgen).

A few points to note on future collective agreements are set out below.

Job site protection and employment security

Future collective agreements are intended above all to preserve operating locations (job sites) in the organisation and to secure staff members’ jobs.

Whereas job site protection seeks to commit to or establish a place of employment at least in a geographical area and does so generally using a minimum annual average number of employees, the often-parallel employment security arrangement either prohibits business-related dismissals or subjects them to a consent requirement (using an escalation provision).

Typical arrangements for preserving or protecting a job site are commitments to a job site or at least an established minimum perimeter. Both job site protection and employment security arrangements contain rules that address non-compliance with the agreed terms.

Additional restructuring options

Future collective agreements are not the only means for implementing restructuring. Even at the level below collective bargaining arrangements, there is a need and opportunities for implementing future or forward-looking agreements in a practical manner. In addition to individual intra-company alliances for promoting work (Bündnissen für Arbeit, s77 of the Works Constitution Act, which is abbreviated in German as ‘BetrVG‘), other measures including proposals from the works council (s92a of the Works Constitution Act) could be considered. Under these potential arrangements, however, there are a lot of specifics that must be taken into account. It begins with questions about whether an employer is bound by a collective bargaining agreement, whose rules or provisions are more favourable (the ‘favourability principle’) and whether a ‘collective agreement primacy caveat’ (Tarifvorrang or Tarifvorbehalt, s77 (3) of the Works Constitution Act) comes into play.

If an arrangement does not fall under a collective agreement primacy caveat, however, then formal company-works council agreements (Betriebsvereinbarungen) and informal company-works council arrangements (Regelungsabreden) offer more flexible structuring options. These agreements about the future do not limit permissible changes at the job site, but instead collectively shape the foundations of future development. Under future agreements, core statements about the company’s positioning with regard to future issues are made, a connection to the job site is created and opportunities and risks for employment are worked out. This process ultimately yields a ‘job site model’ (Standort-Leitbild).

Future agreements can also prescribe general requirements and guidelines. Future agreements may be structured for a longer period of time.

Another possibility involves operational proposals for protecting the job site and jobs (s92a of the Works Constitution Act). The process is divided into three phases. It begins with a call to consult on a proposal by the works council, to which the employer must respond (Phase I). It proceeds to a substantive consultation about the proposal (Phase II). Finally, it concludes with a statement by the employer, for example in the form of a substantiated rejection, a letter of intent or a form for concluding specific arrangements or a voluntary formal company works council agreement (Phase III).

Current issues

IG Metall often views future agreements merely as a reduction of working hours, a step that has never resolved structural problems. It remains to be seen whether IG Metall actually negotiates investments in job sites, sustainable future products and qualifications for employees.

In order to structure transformation at various operating sites, the collective bargaining parties have agreed to a binding procedure for future collective agreements. The parties to the formal company works council agreement must confer with one another about the challenges of the transformation at the operating (job) site, if one of the parties requests this.

According to IG Metall’s collective bargaining agreement in Bavaria, going forward, collective-bargaining parties must conduct discussions about future collective agreements if the work councils desire it after an attempt to create a future operational strategy fails. This development already signals that IG Metall is factoring in the employer’s willingness to cooperate in the event requests are made to deviate from the collective bargaining agreement. If a business operation nevertheless refuses to take such a cooperative approach, then it should expect IG Metall to be reluctant when it seeks to deviate from the collective bargaining agreement.

Once an arrangement is concluded in the metal industry, the playing field will shift again. Will future discussions really boil down to job cuts? What future demands will be placed on reliable job site and employment protection, and how will sanctions be imposed?

Conclusion

One thing is certain: future agreements will become increasingly popular in future and will displace previous arrangement models.

However, future collective agreements represent merely one restructuring option. These arrangements are merely deviations from the industry-specific collective bargaining agreements, which remain the standard. Future agreements, as they have been described, frequently offer greater flexibility and are fairer to differing interests within a company. It would, therefore, make sense to take the initiative for concluding future agreements before the desire for collective bargaining solutions becomes too great.

The view from other places.

Argentina:
Austria:
Brazil:
Chile:
Finland:
Greece:
Russia:
Slovakia: