Collective bargaining capacity and collective bargaining unity: a tense relationship

Tension

The question of the DHV's collective bargaining capacity has been raised anew due to an expansion of its statutory scope. Other unions are also showing expansion tendencies. These can be explained in particular by the general decline in the degree of organisation. At the same time, the Collective Bargaining Agreements Act (Tarifvertragsgesetz – "TVG") is exerting pressure on trade unions: The collective agreements concluded are only applicable if the union is the majority union in the respective company.

This puts unions in a stress ratio: on the one hand, they have to recruit as many members as possible because of sec. 4a Collective Bargaining Agreements Act and thus have an incentive to expand their area of responsibility in order to increase the pool of potential members. On the other hand, they risk their own collective bargaining ability through any expansion of their area of responsibility. The decisions from Erfurt and Karlsruhe have further accentuated this tension.

Of particular interest are the circumstances that prove the collective bargaining capacity on the one hand and the majority ratios within the framework of sec. 4a Collective Bargaining Agreements Act on the other. Only after evaluating these, the employer may determine whether it is promising to pursue proceedings for a decision on tariff eligibility. At the same time, the employer has to examine the majority situation within the framework of sec. 4a Collective Bargaining Agreements Act in order to be able to apply sec. 4a Collective Bargaining Agreements Act.

Tariff capacity

The term "tariff capacity" has not been defined by law, but is presumed in sec. 2a para. 4, sec. 97 para. 1,5 sentence 1 Labour Court Act (Arbeitsgerichtsgesetz – "ArbGG"), sec. 2 para. 1 Collective Bargaining Agreements Act. According to the case law of the Federal Labour Court, the collective bargaining capacity is the legal ability to regulate working conditions with normative effect with the social counterpart by means of collective agreements (Federal Labour Court dated 28 March 2006 - 1 ABR 58/04). To this end, certain minimum requirements must be met.

Assertiveness as a decisive criterion

An employee association must have made it their statutory mission to represent the interests of its members in their capacity as employees and must be willing to conclude collective agreements. It must be freely formed, free of opponents, independent and organised on an inter-company basis and recognise the applicable collective bargaining law as binding (Federal Labour Court dated 14 December 2004 - 1 ABR 51/03). In addition, the organisational structure of a trade union must enable it to perform the tasks assigned to it (Federal Labour Court dated 14 December 2004, loc. cit.).

The criterion of assertiveness is of decisive importance: What is required is an assertiveness in the sense of powerfulness towards the social opponent that ensures that the latter cannot ignore negotiation offers. In other words, a minimum degree of negotiating balance is required (Federal Constitutional Court dated 20 October 1981 - 1 BvR 404/78). A certain pressure potential is required (Federal Labour Court dated 22 June 2022 loc.cit.).

No partial collective bargaining capacity

There is no such thing as partial collective bargaining capacity: An employees' association has either full collective bargaining capacity for the claimed area of competence or none at all; it is therefore uniform and indivisible (Federal Labour Court dated 28 March 2006 loc.cit.).

Indications for the assertiveness

The following circumstances are decisive for sufficient assertiveness:

• Number of members in relation to the organisational area

The number of members is the decisive criterion. The assertiveness and efficiency of an employee association is regularly conveyed by the number of its members (Federal Labour Court dated 5 October 2010 loc. cit.).

In this respect, the absolute number of members does not matter. What is decisive is the number of members in relation to the area of organisation chosen by the employee coalition itself. In this, the association must be able to assert itself. This means that the larger the organisational area selected, the more members the employee association must have. There are no fixed thresholds.

However, if the number of members is small, the potential for pressure can also arise from the fact that these members hold key positions which means that they cannot be replaced or can only be replaced with difficulty in the event of an industrial dispute.

• Participation in previous collective bargaining?

Participation in the previous collective bargaining process has often been regarded as a criterion for assertiveness. Some of the previous decisions of the Federal Labour Court could partly be understood as if the criteria regarding the number of members on the one hand and the previous participation in collective bargaining on the other hand were alternative decisive criteria (e.g. Federal Labour Court dated 28 March 2006 loc. cit.).

In more recent decisions, the Federal Labour Court has worked out that participation in previous collective bargaining is at best of subsidiary relevance. The Federal Labour Court makes three restrictions. Firstly, participation in the previous collective bargaining process is only relevant "exceptionally" if there are doubts about the ability to enforce the agreement in accordance with the number of members. Secondly, this is only possible if the employee association has already concluded collective agreements to a significant extent. Thirdly, the decisive factor is whether the area of responsibility is "essentially" unchanged. If there is a significantly changed area of responsibility, the previously concluded collective agreements are "not decisive"; they then have "no decisive weight" (Federal Labour Court dated 22 June 2021 loc. cit.).

While the Federal Labour Court is speaking of a "relativization of the indicative effect" of past collective agreements, the Federal Constitutional Court goes even further in its decision dated 31 May 2022 (loc. cit.): According to this decision, past collective agreements lose “their significance completely" if the responsibility has undergone a comprehensive change. The Federal Constitutional Court thus denies any indicative effect to past collective bargaining agreements in the event of changes in responsibility.

As a result, past collective bargaining agreements are only significant if the membership figures leave room for doubt, the union has been participating in collective bargaining for a long time and its area of responsibility has not undergone any significant changes.

• No Indicative Effect of Works Council Mandates Obtained for Collective Bargaining Capacity

In France, the performance of a union in works council elections is of decisive relevance for collective bargaining capacity: According to the Loi El Khomri, collective bargaining capacity requires that the union has won 10% of the mandates in works council elections.

However, the Federal Labour Court has rejected the efforts sometimes made to infer collective bargaining capacity from the number of works council seats won. This conclusion cannot be drawn because the ability to enforce a collective agreement is not measured on a company-specific basis (Federal Labour Court dated 26 June 2018 - 1 ABR 37/16).

• Strike participation as an indication?

Whether a high or low strike participation can be taken into account as an indication for or against the collective bargaining capacity has not yet been clarified.

However, since the number of members is considered decisive precisely because of the pressure potential, strike participation should definitely be given importance: If strike participation is low, this speaks against the required pressure potential. It should also be noted that in case of key positions, a smaller number of members may also generate the required pressure potential (Federal Labour Court dated 22 June 2021 loc. cit.). The Federal Labour Court thus focuses on the labor dispute situation. If the decisive factor is the pressure potential in an industrial dispute, it follows that the strike participation must also be of decisive importance.

Unity of collective bargaining

Displacement of the minority collective agreement

Pursuant to sec. 4a Collective Bargaining Agreements Act, the following applies: In companies in which the collective agreements of various trade unions overlap in their scope of application, only the collective agreements of the trade union which organises the largest number of members in an employment relationship in the respective company (majority trade union) shall apply. The collective agreements of the minority union are superseded in accordance with sec. 4a para. 2 Collective Bargaining Agreements Act.

Sec. 4a Collective Bargaining Agreements Act puts pressure on trade unions to acquire as many members as possible in the respective company. The occupational group to which the members belong is irrelevant. Against this background, the tendencies of many (sectoral) trade unions to expand to occupational groups not previously covered by collective bargaining may be explained. This aims at expanding the pool of potential members.

Decisive: Relative majority in the respective company

In contrast to the assessment of collective bargaining capacity, the determination of the majority according to sec. 4a Collective Bargaining Agreements Act is based on the company, sec. 4a para. 2 sentence 2 Collective Bargaining Agreements Act. In this respect, a relative majority is sufficient.

Indications for a majority according to sec. 4a Collective Bargaining Agreements Act

Employers have to implement sec. 4a Collective Bargaining Agreements Act and therefore make an effort to evaluate the majority. The following circumstances may be used as evidence:

• Results of the last works council elections

The results of the last works council elections are an important indication of the majority situation (Labour Court Berlin dated 21 September 2021 - Case No. 30 Ca 5638/21; Labour Court Frankfurt dated 1 February 2022 - Case No. 24 Ca 3723/21). If the last works council elections took place several years ago, this will only invalidate the validity of the statement if weighty counter-indications are presented, such as a far above-average increase in the union's membership since then.

There is no contradiction to the case law of the Federal Labour Court on the inability to take into account works council mandates won for the purpose of tariff eligibility. In this respect, the Federal Labour Court relied on the fact that the ability to negotiate collective bargaining agreements is not determined on a company-specific basis. This is different in the case of sec. 4a Collective Bargaining Agreements Act: The decisive factor here are the company-related majority ratios.

• Notifications of collective bargaining agreements and analysis of the company situation

Insofar as the employer has notifications of collective bargaining agreements or further findings following an analysis of the operational situation with the personnel manager, these also must be taken into account in any case  (Labour Court Berlin dated 21 September 2021, loc. cit.; Labour Court Frankfurt dated 1 February 2022, loc. cit.).

• Results of notarial majority determination procedures

In part, employers determine the majority with the participation of a notary public in accordance with or based on sec. 58 para. 3 Labour Court Act. Sec. 58 para. 3 Labour Court Act is not limited in its scope of application to the proceedings under sec. 99 labour Court Act. The knowledge gained therefrom must also be taken into account (Labour Court Frankfurt dated 1 February 2022, loc. cit.).

• Refusal to participate in the majority determination process

If a trade union refuses to participate in the majority determination, this is to its detriment in terms of evidence. A denial with ignorance is inadmissible (Labour Court Berlin dated 21 September 2021, loc. cit.; Labour Court Frankfurt dated 1 February 2022, loc. cit.), since the union will in any case have knowledge of its own membership figures in the company.

Legal consequences of the loss of collective bargaining capacity

Collective agreements concluded prior to the occurrence of collective bargaining incapacity shall, in principle, continue to exist with full effect. However, the loss of the collective bargaining capacity leads to the invalidity of the collective agreements concluded thereafter ex tunc.

It is sometimes suggested that the collective agreements concluded should only be invalid ex nunc with a final court decision in order to avoid problems with reversals. This is not convincing. This would allow a trade union to temporarily establish effective collective bargaining standards despite its lack of collective bargaining capacity. This is unacceptable because of the privileges accorded to collective bargaining standards which have a social order and protection function as well as a guarantee of correctness. The latter is manifested, for example, in sec. 310 para. 4 sentence 1 of the German Civil Code (Bürgerliches Gesetzbuch – "BGB") and several laws that are exclusively dispositive of collective bargaining. These privileges are based precisely on the assumption of a negotiation equilibrium, which must logically exist when the collective agreement is concluded. If this is not the case when the collective bargaining agreement is concluded, the collective bargaining standards cannot be granted any - even temporary - right to be applied.

Justifiably high requirements for collective bargaining capacity

Although some voices in the literature consider the case law's requirements for collective bargaining capacity to be excessive, particularly with regard to sec. 4a Collective Bargaining Agreements Act, they deserve approval.

The high requirements are justified by the regulatory and protective function of collective bargaining norms already discussed, as well as the guarantee of their correctness.

It is true that, because of the importance of the relationship between the number of members and the scope of the organisation, a trade union risks losing its ability to negotiate collective bargaining agreements every time it expands its scope of responsibility. To the extent that this is criticised, it is overlooked that the union itself can decide not only on whether and the scope of an expansion of responsibility, but also on the timing of this expansion. For example, a union may expand its area of responsibility immediately after a collective bargaining round with regard to the previous organisational area and then recruit members in the new organisational area until the next collective bargaining round. The previous collective bargaining agreement is not affected by the extension of competence and the associated risks. The union is also not taking any excessive risks with regard to the next collective bargaining round: Since the union has precise figures on membership growth, it can - if membership recruitment is less successful than hoped - also narrow the scope of responsibility again before the new collective bargaining round. If it fails to do so, it is deliberately taking risks.

The reduced significance of past collective bargaining agreements is also justified: Collective bargaining agreements presuppose collective bargaining capability. If collective bargaining agreements were seen as an indication of collective bargaining capacity, this would lead to a circular argument. In addition, a union itself eliminates the remaining indicative effect of past collective bargaining agreements if it expands its competence.

The decisions of the Federal Labour Court and Federal Constitutional Court reject efforts to lower the requirements for collective bargaining capacity due to the validity of sec. 4a Collective Bargaining Agreements Act. This is also to be agreed with: The requirements for collective bargaining capacity relate to the relationship of forces to the social counterpart. Sec. 4a Collective Bargaining Agreements Act, on the other hand, defines the relationship between competing trade unions and thus concerns a different constellation. The two systems also have a different point of reference: Whereas collective bargaining capacity is based on the number of members in the entire organisational area, sec. 4a Collective Bargaining Agreements Act refers strictly to the company. This difference also explains the discrepancies with regard to the relevant criteria for "measuring" assertiveness on the one hand and the majority situation in the company on the other.

Without members, unions disappear. The requirements for collective bargaining capacity and sec. 4a of the Collective Bargaining Agreements Act create an incentive to become a member of a union and not merely to enjoy the benefits of collective bargaining by virtue of reference. As a result, the trade unions themselves benefit from this.

Finally, the requirements for collective bargaining capacity also benefit employee interests: They ensure that these may be enforced.