By Donald C. Dowling, Jr.
Partner, K&L Gates LLP, New York City
Like it or not, in today’s interconnected world collective labor issues increasingly arise simultaneously across a number of countries, particularly in cross-border “change projects” like global restructurings, cross-border M&A deals, international reductions-in-force and global HR information system launches, as well as union “corporate campaigns” and other cross-border organized labor offensives. In the old days, multinationals used to silo their organized labor relationships by country. Multinationals had little business reason or incentive to align union strategies across borders. But today, multinational human resources operations and organized labor have gone global. Now, multinationals increasingly launch cross-border workplace initiatives that reach staff internationally―global mergers, divestitures, restructurings, reductions-in-force, codes of conduct, human resources policies, intranet systems and the like—that require a cross-border approach to organized labor compliance. Meanwhile, unions themselves have gone global and now focus on cross-border collective labor solidarity as their most cutting-edge, tactic forcing management to respond accordingly. And so both these drivers, headquarters global HR alignment and cross-border union offensives, now push multinationals to coordinate organized-labor strategy internationally.
What steps can a multinational take to facilitate and simplify its ever-growing list of headquarters-driven human resources integration initiatives that reach staff internationally―initiatives like cross-border restructurings, mergers, acquisitions, spin-offs, reductions-in-force, global HR policies, codes of conduct, whistleblower hotlines, international safety programs, global employee benefits programs, conversions to new HR Information Systems and border-crossing internal investigations? And what steps can a multinational take to counter offensives by foreign organized labor―offensives like international union “corporate campaigns” and union demands that the multinational adopt an “international framework agreement,” launch an international employee representative body or respond at headquarters to a foreign labor dispute that cooperating unions wage across borders?
The answer to both questions: Build a global labor relations platform. If a multinational takes the time and spends the resources, it can build a strong platform that serves as both a launching pad for future cross-border workplace initiatives and a parapet defending against targeted international organized labor initiatives. But building the global labor relations platform can be a big job. Headquarters may show little interest in (or budget for) a grandiose undertaking in what management may regard as the moribund, money-sucking backwater of organized labor. Yet building a sturdy platform to support labor relations internationally pays off for many reasons besides just advancing global alignment and integration and saving time and money through increased efficiencies. A well-built global labor relations platform will:
• advance headquarters’ corporate goals and enhance operational flexibility internationally
• harmonize local collective bargaining provisions and procedures across borders, driving uniformity for the organization
• engage and empower the organization’s own overseas labor negotiators who bargain for the employer, motivating them to bargain harder and teaching them to advance headquarters initiatives rather than merely local goals
• streamline and implement headquarters-driven “change initiatives” affecting the workplace internationally
• hold back internationally-focused trade unions teaming up across borders, launching international corporate campaigns and pushing headquarters to launch a European Works Council or sign an international framework agreement
Where these reasons justify building a global labor relations platform, the question becomes how to build it. How does a multinational that today finds itself with a disorganized agglomeration of disparate collective labor relationships scattered across affiliates around the world clean up its inefficient foreign labor contracts, align its various foreign worker representatives and heal its festering foreign bargaining relationships—and then craft them into a global labor relations platform from which it can both launch headquarters integration initiatives and defend against international labor attacks? While building a global labor relations platform takes time and money, the blueprint for building one is fairly simple. It has four parts: (1) project team (2) information-gathering (3) labor philosophy and (4) platform application.
1. Project team
The first step in building a global labor relations platform is selecting the project team. Project management for a cross-border labor alignment initiative should be top-down, falling under the headquarters human resources function or under any headquarters-level global manager of industrial relations. The project team must include the head in-house employment lawyer with global responsibility. Be sure to include on the team any headquarters-level global health and safety function, and consider involving a corporate communications or public relations person as well as someone from corporate compliance. If the company has a European Works Council or other cross-border labor consultation body, the project team should include that body’s management-side liaison who advocates on behalf of management.
Consider adding to the global labor alignment team an outside expert experienced in international labor law like an international labor lawyer or labor consultant with experience beyond just the headquarters country. Any outside lawyer or expert brought in needs to know how to build a global labor relations platform and should bring practical experience wider than just a home-country labor relations mindset. A lawyer leading the global labor project team might be able to structure the global labor platform project so it comes under at least the U.S. attorney/client privilege.
Project team in place, the next step in building a global labor relations platform is to gather information internally about the organization’s existing labor relationships around the world.
• Management labor liaison directory. Too often no one at headquarters is sure who, overseas, speaks on behalf of the organization to local foreign labor representatives. Begin gathering labor relationship information by identifying all the organization’s own internal local labor liaisons—its in-house, on-the-ground labor relations experts who currently consult and negotiate around the world on behalf of management with foreign labor representatives. For example, find out who in your Paris office consults with your French works council on behalf of management, who in your Tokyo facility negotiates for management with your Japanese unions and who in Lima convenes health-and-safety meetings at the Peruvian facility. Put together a country-by-country directory (with up-to-date contact information) and a global email directory listing the organization’s in-house management-side labor liaisons in each overseas location. Be sure to include not only managers who bargain with full-fledged trade unions but also point-people who consult with statutory consultative representative bodies like works councils, worker committees, workplace forums, staff consultation committees, ombudsmen, health/safety committees and the like. Add to the directory the names and contact information of outside labor lawyers and labor consultants that the organization retains to advise overseas facilities.
• Inventory of labor representative bodies. Using the overseas labor liaisons just identified, create a list of all labor organizations that represent staff internationally―full-fledged unions plus in-house standing statutory consultative bodies that the organization’s overseas operations host, sponsor, recognize, consult, bargain, “co-determine” or negotiate with. For each labor body identify the corresponding management-side labor professional who serves as management’s lead contact with that group.
• Library/database of labor agreements. In-house inventory of labor representative bodies now in hand, assemble a virtual library or database of the written labor agreements that the organization has with labor representatives around the world. Include all trade union collective bargaining agreements and all applicable sectoral CBAs, including even applicable sectoral CBAs to which the organization is not a signatory. Collect works council constitutions and “works agreements” including any European Works Council agreement plus all labor ombudsmen charters, health and safety committee constitutional documents, social plans from past lay-offs, grievance resolutions with ongoing effect and any other agreements with labor representative bodies worldwide. In gathering up these collective agreements, inevitably some of them will seem to have expired by their terms. As to those, find out (and note in writing) the company’s position as to roll-over or ongoing enforceability.
Add to this virtual library or database any headquarters declarations on labor relations policy that the organization may have issued, such as any labor/free association statement in a supplier code of conduct, any international framework agreement (“transnational company agreement”) or any charters of multiemployer bargaining groups to which the organization might be a party.
• Other information. Next, assess the nature or tone of the organization’s existing organized labor relationships worldwide. Make notes that summarize the status of the bargaining relationship with each labor organization. Which relationships are typically hostile, and which are generally cooperative? Which if any of the company’s unions are so-called “white” (“white knight”) unions friendly to management? To which global union federations do unions representing the organization’s workers belong? Are any foreign labor organization drives underway? Are any cross-border labor initiatives, secondary boycotts, corporate campaigns or pushes for international framework agreements in the works? If you do not have a European Works Council yet, do you have a European employee population over 1,000 susceptible to getting one? To which employer bargaining groups do overseas affiliates belong?
Then make timetables: When do local meetings with foreign labor groups in each country take place? How long does it usually take to implement new management proposals in each labor group? When are collective agreements next are up for renewals?
Collect data about overseas affiliates’ local bargaining goals and agendas, the patterns of local grievances and disputes, and about the tenor of local bargaining relationships. Which relationships are typically hostile, and which are generally cooperative? Which relationships are proactive and which are moribund? What are foreign worker representatives’ bargaining objectives? How many days, on average, do company affiliates lose to strikes? What are the biggest obstacles the local management-side labor liaisons struggle with around the world?
3. Labor philosophy
Project team in place and information having been gathered, next formulate, articulate and test a global labor relations philosophy or strategy:
• Articulate a global labor philosophy. A Canadian and a German labor lawyer have said: “We believe the best way to protect local operations is for each [multinational] to decline the invitation to sign an [international framework agreement]. Instead, [each multinational employer] should develop and implement its own global labor strategy, taking into account the different labor laws and business environments in which it [does] business.” (Sherrard & Wisskirchen)
Follow this broad advice by formulating and articulating a viable organizational labor relations strategy or philosophy for the conglomerate multinational organization. One simple global labor philosophy, for example, might just be to leverage the organization’s existing labor representative structures around the world advantageously, to facilitate and streamline cross-border headquarters-driven workplace initiatives. Otherwise, a global labor relations philosophy might take more of a stand, even if a polarizing one. At one pole is the quintessentially European view nurturing employee “free association” rights in “social partnership” with management. German-based Volkswagen’s global labor philosophy is accommodating enough to organized labor that the company tried to launch a German-style works council in Chattanooga and then invited in an American union. Paris-based Danone is on record supporting union organization and promoting laborers’ free association through international framework agreements. Danone has declared: “Because we have strong social convictions and a 40-year history of dialog with international labor, Danone works hard to provide good working conditions for all of our employees, wherever they are. One important tool for reaching this goal is signing international master agreements with the international labor federation IUF as part of a regular dialog dating back to 1985.” (Danone 11 Economic and Social Report (2012)) Of course, a U.S.-based multinational will likely reject a labor philosophy so friendly to organized labor, but the (mostly European) organizations that embrace overtly labor-friendly philosophies have, from their point of view, some laudable motives and concrete business imperatives: promoting the universally-recognized human right of worker association; fostering labor peace; enhancing corporate reputation; reducing labor risks; improving relationships with unions and workers; strengthening business relationships; building brand identity; and impressing customers with positive public relations and socially-responsible corporate citizenship.
At the opposite pole of global labor relations philosophies is the quintessentially-American “union-free” position that expressly opposes organized labor wherever opposing labor is legal. (In Brazil, as mentioned, unions are mandatory and so a union-free position is illegal; openly opposing unions also seems to violate Chinese labor law.) American-headquartered multinational fast-food chains and retailers have been said to embrace a labor philosophy like this that opposes organized labor worldwide, where that position is legal. Those companies prefer to deal with their employees directly, without worker representative middlemen in the way—not only in the United States but all over the world.
In articulating an organized labor philosophy, distinguish supply chain labor issues and supply chain agreements like the Bangladesh accords. While unions’ corporate campaigns (in England called “leverage campaigns”) often implicate supply chain labor issues, carefully distinguish the internal labor situation of the multinational’s own staff from supplier labor issues. Too often these very-distinct issues get confused. An organization’s internal labor philosophy does not have to be the same as its supply chain labor philosophy, but the two philosophies do need to align.
• Test the labor philosophy. After articulating a global labor philosophy, whatever it is, test it. Does it work in practice consistently across global operations? As mentioned, one “acid test” of a labor philosophy that resists organized labor is to verify that it aligns with the company’s own supplier code of conduct. A multinational with a union-free labor philosophy would be inconsistent if it also imposes a “free association” mandate on its suppliers. Another “acid test” for a global corporate labor philosophy is to ask the hypothetical “white union” question: Imagine the organization launches a new facility in Mexico and local Mexican advisors suggest (as they often do) inviting in a management-friendly “white”/“white-knight” union to keep away Mexico’s hostile independent militant unions. White unions are common in Mexico and for the most part are legal, although of course they would be flatly illegal in the United States as management-dominated. Decide whether contracting with a white union would be consistent with the articulated labor philosophy.
4. Platform Application
Having articulated and tested the organization’s global labor relations philosophy, the final stage in building a global labor relations platform is to apply that philosophy to the organization’s overseas labor relationships, identifying and resolving problems. This is the most complex step, but at the same time this is the most valuable aspect of a global labor relations platform.
• Problem spotting and solving. Analyze the information gathered in light of the global labor relations philosophy to isolate which labor problems the organization most urgently faces overseas. What themes and patterns hamper the organization across borders? For example, are foreign labor representatives too obstreperous? Too slow in consulting? Too uninformed about headquarters goals? Devise strategies to fix these problems. Factor in management goals.
Pave a path for future “change projects.” Address the cumbersome provisions and procedures in foreign collective bargaining arrangements and other identified obstacles that block the organization’s integration and cross-border projects. If, for example, local collective bargaining processes in some jurisdictions are too slow (maybe local labor representatives insist on discussing just one issue at a time and delay submitting their positions), focus on those locations for attention and reform. If the European Works Council agreement gives too much power to the EWC to obstruct pan-European merger and acquisition deals, then try to amend the EWC agreement. Develop a jurisdiction-by-jurisdiction agenda for reforming local collective bargaining relationships, collective agreements and consultation procedures in a way that advances the global labor relations philosophy, speeds up and aligns consultation timelines across jurisdictions and streamlines headquarters-driven global initiatives.
• Benchmarking. Next, benchmark best labor practices across relevant jurisdictions. If peer employers’ local collective bargaining agreements, works council “works agreements,” social plans and labor representative relationships offer innovative, flexibility-enhancing provisions and procedures, then that might mean your organization is saddled with antiquated labor arrangements that need reform. Bring these into alignment with the local market by borrowing or adapting helpful labor practices from other companies.
• Labor relation “pyramid.” Using the in-house list of management-side labor liaisons already developed, build a cascading-down labor-relations “pyramid” of management-side negotiators worldwide. Design a communications and involvement strategy that engages and empowers overseas management-side labor negotiators, focusing them on the headquarters labor agenda. Teach overseas local managers the kinds of organized labor activity to watch out for. Empower them to report emerging labor issues and union maneuvers to headquarters. To facilitate future headquarters “change projects,” maintain and support the global labor platform pyramid structure using intranet tools and regular conference calls. “[P]ut key [international] labour issues on senior management’s agenda through yearly briefings and HR-related inputs into leadership development. [Ensure j]oint thinking on labour-related relationships with external stakeholders, including international trade unions and NGOs, to pre-empt campaigns.” (C. Jordan, P. Moritz, V. Podolyak, IBA Employment & Industrial Relations Law, Mar. 2014 at pg. 8, 10)
• Change-management process. Turn to this global labor platform every time headquarters launches a new M&A deal, reduction-in-force, code of conduct, work rule, compensation plan, intranet system, HR Information System or other “change project” that reaches rank-and-file overseas staff. Each time headquarters launches another change initiative, use the labor relations pyramid to advance the organization’s global labor agenda.
• Ongoing monitoring. Implement a process to maintain the global labor platform and to monitor how it is working. Keep internal labor directories updated. Keep team relationships active and lines of communication open. Appoint a headquarters labor expert to track organized labor activity across the group worldwide. Monitor the media for news reports of labor activity and corporate campaigns affecting the organization.