How, if at all, are collective agreements relevant to the termination of employment?
Employment & Labour Law (2nd Edition)
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 will be relevant to the termination of employment if they contain terms which relate to procedures for the termination of employment, including in relation to redundancy selection and/or sums payable on the termination of employment. Outside of the public sector and certain traditional industries, collective bargaining is relatively uncommon in the UK.
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.
Collective Bargaining Agreements (“CBAs”) are relevant in terminations since the refusal of an employee to comply with a union security clause embodied in a CBA is recognized as a ground for termination. CBAs also allow employees to dispute terminations in organized establishments through the grievance machinery provided in the CBA.
Employers who are subject to collective agreements are required to comply with the terms of the applicable collective agreement, including with respect to any provisions related to termination of employment. In the event of collective relations in the workplace without a collective agreement or in the event the applicable collective agreement does not refer to the issue of termination of employment, then the employer will be subject to the regular information and consultation obligation before termination of employment.
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 be a decisive factor for whether the employer is obligated to call for consultations 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 agreement may set out other terms, such as, inter alia, severance pay.
Collective agreements are not pervasive across the Irish labour market. Nevertheless any collective agreement that has agreed terms regarding termination of employment should be adhered to by an employer in order to avoid an application for an injunction restraining the termination and indeed to avoid any potential industrial action.
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 (cf. 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.
Essentially with respect to the definition of notice periods (see question 4) and severance indemnities (see question 15).
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.
Collective contracts may agree on remuneration, working time, rest and vacations, conditions for termination and other matters. Such conditions are reached by employees and their employer via a process of mutual negotiation in accordance with legal procedure. 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 the employer is at risk of being liable 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 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.
Before 1 January 2014, the notice period to be respected for the blue-collar workers were most of the time determined at sectoral level. Therefore, these sectoral CBA’s remain important for the calculation of the first part of the notice period as described under question 4.
Some sectors also foresee a kind of job security, which implicates having to follow a procedure before dismissing an employee. If this procedure is not respected, most of the time, an extra indemnity is foreseen.
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.
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.
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). If this is the case, respective provisions must be observed.
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.
A collective agreement must comply with certain statutory requirements, including by being in writing, being executed by the employer(s) and union(s) that are parties to the collective agreement, and have a ‘coverage clause’ stating the work that the collective agreement covers. Other than the statutory requirements, the parties decide what is included in the collective agreement (unless the Employment Relations Authority is requested to, and agrees to fix the terms of collective agreement). A collective agreement will usually contain a provision which includes the process to be followed prior to the termination of employment.
There are no additional statutory protections or statutory requirements relevant to collective agreements.
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.
n 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.
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 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 bargaining means the negotiations on working conditions and terms of employment between employers, group of employers or one or more employers’ organisation on one hand and one or more representative workers organisation on the other hand, with a view to reaching an agreement. In India, negotiations under collective bargaining agreements are usually limited to issues relating to wages, bonuses, working hours, benefits, allowances, terms of employment, holidays, etc. Such collective bargaining agreements are not relevant to the termination of employment.