Thursday, March 5, 2015

USA - A Quick Guide to Employee Representatives Outside the US - Or, Why the US Wagner Act Union Regime Stands Alone

By Donald C. Dowling, Jr
Partner, K&L Gates, New York City

One main reason American organized labor differs from collective representation elsewhere is the binary, “either/or” nature of U.S. labor relationships―the so-called “single channel” model of U.S. labor representation. Unionization in the United States is binary or all-or-nothing in that only one “channel” of labor representatives exists: unions. American employers get unionized only after a formal government-supervised certification process that features a representation petition, union recognition proceedings, a government-supervised union election, union certification and then, maybe later, a decertification. (Wagner Act § 9) Where a U.S. employer is unionized, each of its employees either falls within a workplace “bargaining unit”—or else is non-union staff. Every American employer is either a party to a formal, federal-government-enforced bargaining relationship with a recognized labor union in its workforce—or else it is not. Every employer is either “unionized”—or else is a “non-union shop” with no collective bargaining obligations.

The United States is not unique in having a binary or “single channel” organized labor system; binary labor regimes are also said to exist in a number of countries outside the United States, from Canada to Malaysia to Latin America to Scandinavia and beyond. But many jurisdictions around the world, including much of Europe, take a layered approach to labor representation. Indeed, even Canada, Malaysia, Latin America, Scandinavia and other purportedly-single-channel jurisdictions actually recognize at least one layer of labor representatives in addition to unions.

In many layered worker representation regimes, American-style binary union elections are not an issue because national unions act as worker representatives at the industry level with little formal “shop level” presence in most local workplaces, except that at a big employer a union might have an internal “committee” or “cell.” (See Verna Glassner, “Transnational Collective Bargaining in National Systems of Industrial Relations,” chap. 2 in I.Schomann et al., Transnational Collective Bargaining at Company Level (2012)) In some layered collective labor regimes, union elections are not an issue because trade unions represent only their members within a given workplace―employees are free to join a union or not, and bosses deal with unions almost as employees’ personal agents. In Japan, for example, dues-paying union members might use their union to confront their employer with grievances, while non-union-member colleagues may be on their own. In Germany, a collective bargaining agreement might cover a dues-paying union member employee but not a non-member co-worker.

In other layered collective labor regimes, American-style binary union elections are not an issue because the law empowers so-called “minority unions” that may represent just one or a handful of workers within a workplace bargaining unit. In Poland, for example, a union with just one member in a workforce can enjoy recognition status. In Russia “it only takes three employees to form a union, demand formal recognition and obtain the protections against dismissal and detriment which the law offers to union members.” (D. Whincup, “Boss-napping, Wheelbarrows and Trumpets: Trade Union Power in Europe,” WestLaw Int’l HR Journal, Spring 2014 at p. 29, 30) In Colombia a minority union enjoys full collective bargaining and grievance-processing rights even in a workplace where a majority union represents most of the rest of the staff. (Colombia Decree-Law 89/2014 of 20 Jan. 2014)

And this just speaks to layered relationships with actual trade unions. In addition, many countries have layers of non-union labor representatives. Law in many countries forces employers to set up―and then to bargain or consult with, and often to fund―so-called “statutory consultative bodies” that exist separate and apart from trade unions.

Collective bargaining, consultation and negotiation. As a point of semantics, in some legal systems only trade unions are said to engage in “collective bargaining.” But actually these non-union statutory consultative bodies consult and negotiate with bosses over terms and conditions of employment and grievances in a way that, in the United States, would qualify them as regulated “labor organizations.”

Examples. The lead example of a non-union statutory consultative body is the “works council,” which in some jurisdictions can exist at various levels within an organization, from company-wide works councils down to local site-level works councils. Separately, Europe requires large pan-European employers to set up multinational works councils called “European Works Councils” or EWCs. (EU Works Council Directive, 94/45/EC) Some European-based multinationals have even voluntarily launched so-called “global works councils”—in-house bodies of worker representatives from company workforces worldwide.

Other statutory consultative bodies include: labor/management councils, worker committees, staff consultation committees, employee delegations, working-environment committees, employee ombudsmen, workplace forums (as in South Africa), stand-alone worker representatives (as in Denmark) and “enterprise employees as one party” (as in China). (China Labor Contract Law of 2007 at arts. 51-52)

In addition, some jurisdictions force employers to set up temporary, ad hoc or one-off worker representative groups elected to consult or negotiate with management over a specific workplace issue. These “pop up” staff representatives pop up, for example, when a European Union employer without a standing works council or union group tentatively decides to do a reduction-in-force/“collective redundancy” or asset sale/spin-off/divestiture. As another example, Japanese employers regularly enter overtime pay agreements with one-off ad hoc employee representative bodies which can get elected by a mere show of hands. (Japan Labor Ministry Tsuutatsu of Mar. 31, 1999) As another example, Chinese workers form a temporary “assembly of laborers’ representatives” to negotiate whenever management proposes changing “material matters that have a direct bearing on the immediate interests of its laborers concerning labor remuneration, working hours, rest and vacations, occupational safety and health, insurance and welfare, employee training, working discipline or work quota management, etc.” (China Labor Contract Law of 2007 at art. 4 ¶ 2)
Further, many countries around the world require that employers set up labor/management “health and safety committees.” In France and elsewhere these committees wield authority to consult with management over topics well beyond what Americans (at least) would consider workplace health and safety―overtime and vacation, for example. In fact, some jurisdictions including Canada, Malaysia, Latin America and Scandinavia that are called single-channel labor representation systems actually mandate health and safety committees, in addition to unions, in some contexts. (E.g. Malaysia Act 514, Occupational Safety and Health Act 1994 § 30)

What is the effect of layered employee representation? That is, does having layers of staff representatives raise or lower the voice of workers in labor/management dialogue? American labor policy would say non-union groups beholden to management hurt workers because they keep independent unions away, which is why U.S. labor law defines a “labor organization” essentially to mean an independent labor union, with virtually no room for other types of worker representative bodies. (Wagner Act § 2(5)) Federal law forbids non-union consultative bodies beholden to management as presumably weak and impotent shams. Volkswagen learned this the hard way when, in 2014, it found itself unable to host a German-style works council at its Chattanooga plant.

But overseas, statutory consultative bodies often prove to be tough, rich and influential—sometimes fierce negotiators that wield real clout and impede management-sponsored changes in the workplace. Many American-based multinationals grumble about militant works councils at their French and German branches pushing back every time the organization seeks to do a reduction-in-force, restructuring, or merger, or just roll out a new work rule, code of conduct or whistleblower hotline.

Further, non-union worker groups can get expensive because employers generally have to fund them―often (as in France) with a flat percentage of total payroll. Employers find themselves paying for high-rate independent experts for worker groups, underwriting expensive business trips for staff representatives and funding other costly extras. A big labor representatives group like an EWC can cost hundreds of thousands of dollars every year.