Collective bargaining

Collective bargaining is the process of negotiation between unions and employers regarding the terms and conditions of employment of employees, and about the rights and responsibilities of trade unions. It is a process of rule making, leading to joint regulation.

The central role of collective bargaining between workers and employers and their organisations in industrial relations in the Member States is recognised by the EU in Article 28 of the Charter of Fundamental Rights of the European Union of December 2000 (‘Right of Collective Bargaining and Action’) and in Article 12 of the Community Charter of the Fundamental Social Rights of Workers of 1989.

‘The Right to Bargain Collectively’ was also declared a fundamental right in the 1961 European Social Charter of the Council of Europe (Article 6). The interpretation by the European Court of Human Rights in Strasbourg of the right to freedom of association in Article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedoms has extended some protection also to collective bargaining (Wilson and the National Union of Journalists; Palmer, Wyeth and the National Union of Rail, Maritime and Transport Workers; Doolan and others v. United Kingdom, decided on 2 July 2002).

The Treaty on the Functioning of the European Union (TFEU, Article 156) states that the Commission shall encourage cooperation between the Member States and facilitate the coordination of their action in all social policy fields, particularly in matters relating to, among other things, collective bargaining between employers and workers.

This array of European legal guarantees provides the background for the EU’s recognition of the centrality of collective bargaining. The operation of collective bargaining in EU industrial relations is multi-faceted, as evident in the various functions attributed to collective agreements by EU Directives and the growing role of European collective agreements. At EU level, collective bargaining takes place at inter-confederal/inter-sectoral, multi-sectoral, industry/sectoral, enterprise and inter-regional level.

Collective bargaining is a means of implementing EU Directives in the field of employment and industrial relations. Therefore, one specific process of collective bargaining takes place when negotiations develop ‘in the shadow of the law.’ This is exemplified by Council Directive 94/45/EC, the European Works Councils (EWC) Directive. The Directive is characterised by the delegation to the social partners, management and labour, of the competence to negotiate the relevant European labour standards. The EWC is to be negotiated by the central management of the multinational enterprise and the representatives of the workforce; they must negotiate ‘in a spirit of cooperation with a view to reaching an agreement on the detailed arrangements for implementing the information and consultation of employees’ (Article 6). However, the Directive shapes the negotiating process by explicitly providing that, if agreement is not reached, minimum (subsidiary) requirements laid down in an Annex to the Directive will apply (Article 7(1)). In practice, therefore, the structure of negotiations between the parties is influenced by the subsidiary requirements. Also, in the case of the establishment of a European company or a European Cooperative Society, management has to negotiate at European level with a special negotiating body composed of representatives from various Member States. This approach also characterises the EU Directive establishing a general framework for informing and consulting employees (2002/14/EC), which sets out minimum principles, definitions and arrangements for information and consultation of employees at the enterprise level in Member States. Given the range of industrial relations practices across the Member States, there is substantial flexibility in applying the Directive's key concepts and implementing the arrangements for information and consultation. Management and labour play a key role in deciding those arrangements.

At European sectoral level, there have been collective agreements in a number of sectors, usually implementing the provisions of the working time Directive (Directive 2003/88/EC). However, sectoral collective bargaining at European level was recently a focus of controversy, following the European Commission’s decision in October 2013 not to grant legal underpinning to a sectoral collective agreement on health and safety in the European hairdressing sector.

Further, the increasing number of transnational enterprises undergoing restructuring represents another driver for collective bargaining at European level. There are now many cases in which European industry federations and/or European Works Councils have signed framework agreements concerning the social regulation of restructuring processes. Other framework agreements that were negotiated at European level deal with labour policies and labour standards. The European Commission notes in a 2012 staff working document on transnational company agreements that these have become more significant in the decade since the first initiatives in 2000. By early 2012, 224 such agreements had been recorded in 144 companies, mostly with European headquarters, covering over 10 million employees

See also: coordination of collective bargaining; derogation; European social dialogue; horizontal subsidiarity; multi-sector agreement; pacts for employment and competitiveness; right of collective bargaining; social dialogue; transnational company agreement.