In the recent collective dispute The New General Federation of Labour v Alonial Ltd,(1) the court considered whether an employer can unilaterally bestow benefits resulting from negotiations with a union in case of a failed attempt to sign a collective agreement.
In Alonial, the employer conducted negotiations with a union during the initial unionisation stage, but they did not culminate in a collective agreement. The employer then decided to unilaterally bestow the benefits negotiated for by the union.
The employer not only notified the employees of the bestowal of the benefits, but added that in so doing it was acting as the guardian of the employees' rights even "without the intermediation of the union".
The union contested the employer's conduct, claiming that the benefits bestowed by the employer were the fruits of its efforts, and that by bestowing them unilaterally and without signing a collective agreement, the employer was attempting to present itself as a substitute for the union and was undermining its power.
The court, balancing the conflicting interests and considerations, made the following observations:
- An employer has a managerial prerogative to improve the employment conditions of employees – a prerogative that prevails during the initial unionisation stage.
- The right to unionise enjoys a special and protected status under the Collective Agreements Law of 1957, which also requires the employer to conduct negotiations with the representative union during the initial unionisation stage.
- The Collective Agreements Law does not require the employer to sign a collective agreement with the union during the initial unionisation stage. Therefore, the employer in Alonial – which had conducted negotiations, but had not signed a collective agreement – had not breached the Collective Agreements Law in this respect.
- Employees should be allowed to receive benefits even if the unilateral bestowing of benefits may undermine the motivation of some employees to join the union; in the balance, the injury to the union is proportionate and reasonable when compared with the benefit to employees.
- In the circumstances of Alonial, the benefits which were unilaterally bestowed were clearly the result of the union's efforts, and it was therefore likely that the employees would recognise the importance of unionisation and its power to improve their employment conditions.
- The union should respond to the unilateral steps taken by the employer, by explaining to the employees that the unilateral bestowal of benefits cannot compensate for the lack of job security, which can only be achieved by a collective agreement.
- Employers must not denigrate unions; therefore, the employer's declaration in Alonial that it was acting as a guardian of the employees' rights even without the intermediation of the union was inappropriate.
In view of this ruling it appears that the ball is in the union's court. The union must now invest in public relations and marketing to underline the importance of joining it, by stressing that the benefits bestowed by the employer were the result of its efforts, and that job security can be provided only by a collective agreement with the union.
For further information on this topic please contact Shoshana Gavish at S Horowitz & Co by telephone (+972 3 567 0700) or email (firstname.lastname@example.org). The S Horowitz & Co website can be accessed at www.s-horowitz.com.
(1) Collective Dispute (T-A) 31826-10-14 The New General Federation of Labor v Alonial Ltd (May 6 2015).
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.