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Validity of restructuring agreements for union outsiders

Validity of restructuring agreements for union outsiders

No Special Treatment of Non-union Workers in Restructuring Agreements.
(High Labor Court of Düsseldorf, decision dated June 24, 2014 – 16 Sa 388/14)

The plaintiff was employed as a worker not bound by a collective bargaining agreement (outsider) at the defendant employer. The employer, bound by a collective bargaining agreement, provided the agreement to all workers without distinguishing between organized and non-organized labor. The plaintiff accordingly also received special benefits, such as “holiday pay”. In 2013 the employer agreed to a restructuring agreement with the labor union, ver.di, in order to avoid financial difficulties; in the process, special benefits for the years 2013 – 2015 were dropped. The plaintiff, however, wanted to continue receiving these special benefits and justified his position by arguing that his claim arises from customary company practice and that he, as an outsider, is not bound by the restructuring agreement.

The Higher Labor Court of Düsseldorf decided that claims for collectively bargained benefits also existed for workers not bound by a collective bargaining agreement because these workers were formerly treated as unionized workers. It then follows that the unionized and non-unionized workers must be treated equally in the future. According to the Higher Labor Court, the restructuring agreement is therefore to be applied to non-unionized workers. This is in line with the interpretation of the existing practice in the company, as the point of this practice was exactly what the outsider was claiming: to be treated like his unionized colleagues – neither better nor worse. Applying the collective agreement provisions to all workers means that the changes to wage agreements apply to all workers as well. A claim then exists only to the extent that the employer owes those organized employees a benefit under the collective bargaining agreement. The worker therefore has a claim arising from customary company practice only to equal treatment.

Practical Recommendations:
The customary company practice used by the outsider for justifying his claim did not help him here. The decision of the Higher Labor Court is not only convincing but is also important for practical restructuring because the framework is now known: Apart from savings on labor costs, the foregoing of various remuneration components, often special benefits, is, time and again, the only promising means of company restructuring. For employers bound by collective bargaining agreements, this restructuring can be pushed through only by modifying the relevant collective bargaining norms – as, in this present case, by restructuring agreements. The success of restructuring then depends on the effectiveness of the savings on labor costs. Non-unionized workers sometimes dislike having to bear the financial disadvantages of a restructuring agreement. However, those that accept and enjoy the benefits of collective bargaining must also accept the disadvantages that collective bargaining often entails.

By dr. Jan Tibor Lelley

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