‘Principle of uniform collective bargaining agreements’ overturned

Until recently German case law – under the ‘principle of uniform collective bargaining agreements’ – provided that where there is more than one applicable collective bargaining agreement in a particular business operation, only one of the agreements can apply. Any conflict over which agreement should prevail was usually solved via the ‘principle of specialisation’ which states that the agreement which is “closest to the business” - operationally, professionally, and personally - supersedes the other agreements.

Following decisions in January and June this year, however, the German Federal Labour Court appears to have abandoned these principles. It has held that there is no overarching principle that only uniform (consistent) sets of collective bargaining regulations can apply to different employment groups in the same business operation. In the Court’s opinion, employees should be treated according to the collective bargaining agreement which directly applies to their individual employment relationship with the employer. This should apply regardless of whether the employer is also bound by other collective bargaining agreements with respect to other groups of employees, potentially in different terms.

The Court’s decision means that it will now be easier for smaller trade unions that do not represent the majority of employees in a business to conclude their own collective bargaining agreements in respect of those they do represent. The collective bargaining situation will inevitably become more complex as a result. Employers are understandably concerned by both the potential administrative chaos resulting from implementation of multiple collective bargaining agreements in the same business operation, and also the risk of strikes by smaller trade unions representing small but vital parts of their workforces. Additionally, the larger trade unions are predictably worried about losing their influence.

It remains to be seen what effect the decisions of the Federal Labour Court will have in practice and whether such concerns are well-founded.