How, if at all, are collective agreements relevant to the termination of employment?
Employment & Labour Law
A collective agreement that covers the topic of termination and has agreed terms to that effect should be adhered to by an employer in order to avoid potential industrial action.
Collective agreements are governed by the Industrial Relations Act (Cap. 136). The Act sets out processes for recognising a trade union, and for the employer and recognised trade union to negotiate and adopt a collective agreement.
If the collective agreement was adopted in accordance with the Industrial Relations Act, any termination of a unionised employee’s services must comply with the collective agreement. In particular, collective agreements typically provide for termination and retrenchment benefits and procedures, and may require the trade union to be notified and/or consulted in advance.
Should a trade dispute arise in relation to termination or retrenchment benefits and procedures under a collective agreement, this may be resolved by conciliation by MOM. If the dispute cannot be resolved after conciliation and a deadlock has occurred in negotiations, the trade dispute may be referred to the Industrial Arbitration Court for arbitration. Tripartite mediation of trade disputes involving executive employees may also be available.
One of the distinctive characteristics of collective bargaining agreements in the US is that the employee, unlike in the customary “at will” employment relationship, is typically protected from termination without just cause, and may challenge a termination through an internal grievance process and arbitration.
In case of disciplinary dismissals, collective bargaining agreements usually establish labour misconducts and sanctions the employer may impose on the employee (including specific procedures), this being the reason why it is highly advisable to check it before proceeding with the employment termination.
On the other hand, and in spite of the fact that is not quite common, the applicable collective bargaining agreement may establish some provisions to consider when making employees redundant.
Termination of the employment relationship of an employee who is benefiting from collective labour agreement is subject to a process that is usually similar to the one applicable to the individual labour agreements (please see Question 7 and 8). However, parties may agree on terms that slightly differ from the principal regulations of the Labour Law and define termination grounds or extend notice periods in favour of the employee. If any additional procedural requirements are foreseen in the collective agreements, the employer will also be obliged to fulfill such procedures.
In some cases collective bargaining agreements refer to stability on employment (imposing additional procedures or burdens for the employer to exercise termination of unionized employees) and also may provide the granting of extra-legal benefits (i.e. golden parachutes) in case of termination of the employees.
Additionally, the employer has to consider that some of the unionized employees (i.e. union board members) have a special protection not to be dismissal without just cause and without a prior judicial procedure.
Collective agreements often contain provisions dealing with the termination of employment (eg restricting the freedom to dismiss by defining good cause as a requirement for every termination).
In the case where a collective agreement is entered into between an employer and a trade union regarding the termination of employment, the employer must follow the terms of such agreement.
A provision commonly seen in collective agreements regarding the termination of employment is one that requires the employer to consult with the trade union when the employer intends to dismiss an employee. If the employer fails to comply with this provision, the dismissal may be considered void as lacking reasonable grounds.
Collective agreements would be relevant to the termination of employment if the collective agreement sets out benefits or entitlements of employees upon the termination of employment of employee (for example, a specific amount of payment in lieu of advance notice which exceeds the legal requirement).
Collective agreements may contain clauses on the manner of termination and require consultation with the trade unions prior to effecting any termination.
Collective agreements would be relevant to the termination of employment if it sets out conditions, benefits or regulations for employers to comply when terminating the employment relationship. It can be seen in collective agreements a provision regarding the termination of employment which requires the employer to consult with the trade union when the employer plans to dismiss a unionized employee.
There is no provision for collective agreements in the UAE.
Collective contracts may agree on remuneration, working time, rest and vacations, conditions for terminating and other matters, and are reached by employees and their employer via a process of mutual negotiation in accordance with the legal procedures. In this way, the collective contract is binding on all the employees. To some extent, it will be relevant to the termination of employment. For example, if the employer fails to pay the remuneration stipulated by the collective contract and one employee resigns due to this fault of the employer, in that scenario there is a risk for the employer to pay economic compensations to the employees.
Additionally, the bargaining representatives on behalf of the employees are entitled to certain special protections in case the employment contracts which expire during the period of collective negotiation. Generally, the term of employment contracts between employers and representatives of employees must be continued until the expiration of the negotiation period.
The collective bargaining agreements may be relevant in a number of situations. It may set forth longer notice periods than those stipulated by law or the employment agreement. The occurrence of a collective bargaining agreement may also a decisive factor for whether the employer is obligated to call for negotiations prior to a termination. Additionally, a collective bargaining agreement also set out a particular order of negotiations or consultations applicable to the employer. Moreover, the collective bargaining agreement can permit exceptions from the rules regarding the order of terminations in redundancy situations through a special order of seniority agreement. Other than the areas mentioned above, a collective bargaining may set out other terms, such as, inter alia, severance pay.
If cause or procedures of dismissal is provided in the collective bargaining agreement, the dismissal must comply with the collective bargaining agreement when the dismissed employee is covered by the collective bargaining agreement. In general, the dismissal will be invalid if the employer fails to comply with the collective bargaining agreement.
Essentially with respect to the definition of notice periods (see question 4) and severance indemnities (see question 14).
In Austria, collective agreements are concluded, almost without exception at multi-employer sectoral level. Collective agreements govern the employer-employee relationship, including things like wages, benefits, working hours, and other terms and conditions of employment. Collective agreements contain a specific language that addresses termination of employment for just cause. This means that the employer must have a justifiable reason for terminating the employment relationship. Often, collective agreements also provide for mandatory termination dates at the end of a calendar quarter upon five years of employment.
Collective agreements covering an employer and union set out the terms and conditions of employment for employees in the relevant bargaining unit, including the terms related to termination of employment. In all jurisdictions, collective agreements are subject to the applicable employment standards legislation, including the provisions of such legislation related to notice of termination (or pay in lieu) and severance pay. The common law principle of ‘reasonable notice’ upon termination of employment does not apply to employees covered by collective agreements.
Typically, collective agreements provide that employees may be discharged for cause or as a result of permanent lay-off (subject to any applicable recall rights during the period of lay-off). Other non-disciplinary bases for discharge may be specified in collective agreements, including discharge for innocent absenteeism or due to an inability to do the job. Collective agreements may also contain obligations to pay additional severance (beyond that specified by the applicable employment standards legislation) and/or provide for other obligations or entitlements concerning termination of employment.
By law, collective agreements must contain a dispute resolution process for grievances that arise in a unionised workplace, including grievances related to termination of employment. The traditional grievance and arbitration process involves a grievance procedure, followed by a procedure for referral to arbitration. If an employee grieves his or her termination and the union refers it to arbitration, the arbitrator may award a broad range of remedies in favour of the employee, including reinstatement.
For blue collar workers, industry level collective labour agreements may determine the notice period applicable for the period up until 31 December 2013 (see question 4).
Furthermore, a number of industries, such as the banking and insurance sector, included job (and/or income) security provisions in their collective labour agreements. Even though their content vary, these provisions usually set out a specific procedure that has to be followed before the employer can lawfully terminate the employment. Failure to comply with the procedure may in particular result in the employer having to pay a compensation.
The collective agreements are relevant for:
- calculating the severance pay and the indemnity in lieu of notice period, if any;
- calculating the indemnity to be paid to executives (“Dirigenti”) in the event of unfair dismissal (so called “supplementary indemnity”);
- checking if the NCBA provides a specific sanction for the challenged misconduct (e.g. warning, fine, suspension or dismissal) and the timing of the disciplinary procedure.
According to the Labour Code, collective bargaining agreements are defined as contracts covering reciprocal relationships and general conditions of employment concluded between one or more trade union organisations on the one side, and one or more employers’ organisations, or a single business or a group of businesses in the same business sector, or all the businesses in the same sector, on the other. Such collective bargaining agreements may be declared generally binding on all employees and employers in the sector in which they have been concluded.
Any provisions of a collective bargaining agreement providing for supplementary payments or other benefits in case of termination of the employment relationship will supersede the legal provisions, to the extent that they provide for a higher degree of protection to employees.
Collective bargaining agreements can be relevant to the termination of employment in many cases. Collective bargaining agreements may e.g prolong or shorten the notice period (c.f answer to question 4). They are applicable if the following requirements are met: both employer and employee are members of the union or employer’s association respectively or a collective agreement has been declared to be generally binding or the application of the collective agreement has been agreed upon in the employment contract. Collective bargaining agreements sometimes stipulate a special protection for elderly employees with a certain seniority.
Apart from collective bargaining agreements, works council agreements can be relevant for the termination of employment. They may even set up a ban on dismissals for operational reasons for a certain time period. In cases of an operational change the social plan with the works council regularly contains severance pay for the employees.
Collective bargaining agreements are considered to be accords that go beyond the law, when beneficial to the employee. Many collective bargaining agreements contain clauses dealing with termination severances which are more generous than those established by law. Likewise, many collective bargaining agreements establish special procedures to sanction or even terminate employees, requesting the intervention and opinion of the union to go forward with it. In such cases, it complicates any unilateral decision by the company to terminate an employee.
Collective agreements usually contain provisions regarding notice periods. Some collective agreements also contain provisions on disciplinary procedures to be followed before termination. Further, collective agreements may also state rules regarding the protection of certain employee groups.