T2-12: Regulation and the law

Zakaria Shvelidze, Tbilisi State University

This presentation has been cancelled.

Montserrat Sole Truyols, University of Girona

» Full paper: ilera-2019-paper-141-Sole Truyols.pdf

Spanish industrial relations are marked by under organized unions and a high level of state presence through regulation. In this context, the governments in office – regardless of their ideology – engaged since 2010 in continuous urgency legislation reforms to reduce lay-offs costs and decentralize collective bargaining by setting the prevalence of company level agreements. In 2012 a new urgency legislation was passed which allows employers to opt-out of collective agreements, to modify unilaterally individual working conditions and, to proceed with collective dismissals. All of this on the sole justification that the measure serves to improve business’ results. There is no need for the company to be in economic or market difficulties.

The preamble of the 2012 act (Law 3/2012 of 6th. july, on urgent measures for the reform of the labour market) admits that extending the causes for dismissals or modification of working conditions is necessary in order to avoid uncertainty in employers’ decisions. For that reason, so the law goes on, the judges might only take into account whether the causes exist or not and should refrain to adjudicate considering the proportionality, reasonableness or adequacy of the measure adopted by the employer. Such a limitation of the judicial decision based on competitiveness or economic performance of the company collides with national procedural law on labour matters which establishes the reasoned judgement on the appraisal of the evidences as the legal safeguards for a fair trial. Furthermore, this point of the reform falls outside the constitutional legitimate purposes and creates a problematic situation with regards to the right to an effective legal remedy, protected as a fundamental right in the Spanish Constitution (SC).

This limitation of the judiciary to determine whether just cause exists, was brought to the Constitutional Court for its legality assessment. However, the Court found that the right to legal protection was not violated because the worker is not being prevented to access the justice. The dissenting vote of one of the judges, however, points out that the real problem is whether the trial is fair, and fairness can only be assessed through a motivated resolution. The new law removes motivation; therefore, this provision should have been repealed.

Within the foregoing framework, lower courts in Spain play a minor role as far as industrial relations are concerned. Furthermore, the fact that it is legislation what commands and governs such relations, the Constitutional Court has become the most relevant actor in building the context in which industrial relations in Spain develop. This paper explores the legality concerns brought to the upper court on occasion of the labour reform and the reasoning of the rulings.

Two relevant cases for the purposes of this paper were raised about the constitutional flaws of the 2012 labour reform. The first one challenged two elements of the reform: the employers opt-out of the working conditions collective agreed and the decentralization of the collective bargaining through the legal prevalence of the company agreement, in that both impaired the right to collective bargaining and the right to unionization.

The findings of the Court to dismiss the appeal were grounded on the economic situation of the country and the need to allow the necessary flexibility to the companies to redress their organizational and economic concerns “as it is done in several European countries through the attribution to collective agreements of limited personal applicability” . To this purpose the legislature, in the Court’s opinion, has the power to restrict the scope for collective autonomy if the aim is to secure business competitiveness or if the legislative aim is “to impede that the collective autonomy might frustrate the legitimate objective of creating stable employment” . With that in mind, so the Court’s argument continues, the constitutional protection recognized to labour rights in the past has to yield in the current economic context in favour of the right to freedom of enterprise also constitutionally enshrined in Art. 38 SC . Therefore, the Court inverts its previous jurisprudence on the structure of rights under the SC. The Court had in the past systematically ruled that the right to unionization is a fundamental right while the freedom of enterprise was not fundamental.

Similar arguments have been used in the second relevant case the Court had to deal with. In this occasion the appeal focussed on the change of the legal status of the rights to collective bargaining and unionization. Claimants held that the decentralization of collective bargaining and the possibility of the employers to unilaterally change the working conditions devoid of substance such rights . The Court’s reasoning is based in its previous decision but insists in safeguarding the purpose of the reform as expressed in the preamble of the Act. This is, the economic situation of the country and the need to facilitate employers’ chances to labour flexibility . The judges believe that the legal reform is proportionate and reasonable to the aim pursued by the legislature which is to avoid job destruction. In this ruling, published in 2015 three years after the legal reform was enacted, the Court seems to be unaware that in the year of the reform and subsequent the unemployment rate raised 2% each year.

All in all, the Spanish Court’s rulings have reintroduced into the legal system the managerial prerogatives balanced to economic outcomes, resulting in the transformation of the constitutional protection from persons to economic interests. To a certain degree, these decisions bear a high resemblance to the CJEU’s rulings in Viking and Laval cases in that economic freedoms take a relevant role vis-à-vis of fundamental rights. In terms of methodology it can be argued, however, that the interpretation given in Spain goes even further than that of the CJEU’s since there is no a proper balance among the rights at stake . Whether the Spanish Court has been influenced by the CJEU might be debatable, but it should not be overlooked given the EU’s economic framework influence on the Spanish decision-making process and the conditions of the bailout of the Spanish banking system.

The case of Czechia and Slovakia

Marta Kahancová, Central European Labour Studies Institute (CELSI)
Monika Martišková, Central European Labour Studies Institute (CELSI)
Mária Sedláková, Central European Labour Studies Institute (CELSI)

Recent evidence from Czechia and Slovakia, but also other CEE countries, demonstrates that trade unions, with support of, or even joint effort with employers, increasingly prefer legislative solutions to improve working conditions. Through legislation, social partners have managed to introduce significant improvements, i.e. in relation to precarious forms of work including temporary contracts and agency work.

In this paper we examine why legislative solutions are gaining ground in CEE countries that have established traditions of collective bargaining and with fair levels of unionization. In other words, we raise a question why do unions (and employers) increasingly reach out for legislative solutions even if they have other channels of influence at their disposal, including collective bargaining.

In addition, we question the effects of such legislative solutions on (a) the quality of working conditions; (b) on the organizational stability, membership and reputation of trade unions; and (c) on the established industrial relations structures. In particular, we examine to what extent such legislative solutions have weakened or strengthened collective bargaining. The question we aim to answer is whether legislative solutions are crowding out the institution of collective bargaining, or whether they have the opposite effect: does a more detailed regulation generally increase the benchmark for bargaining outcomes and thereby facilitates more ambitious goals for future bargaining rounds?

To examine these questions, we draw on an analytical framework on innovative trade union practices elaborated in the introductory paper. Unions’ legislative efforts are framed as innovative, because only in the last 5-8 years unions openly push for legislative solutions while previously they attempted to concentrate their capacities both on bargaining and political lobbying. At the same time, in the past 5-8 years unions succeeded in significant improvements related to agency work, especially in Slovakia, through legislative efforts.

We address the above questions by examining temporary agency work (TAW) and healthcare – two sectors that witnessed substantial regulatory changes in the past five years both in Czechia and Slovakia. Evidence from other CEE countries is incorporated to underline the main argument.

The TAW sector in Czechia and Slovakia, previously unorganized, saw an important change, first, in trade unions’ willingness to represent agency workers even without direct impact on membership growth; and second, in employers’ willingness to regulate the highly liberal market of temporary agencies and working conditions of agency workers. In result, unions launched cooperation with employers and laid the foundations of sectoral bargaining. However, later these efforts vanished as both parties successfully sought legislative influence. A supporting political environment helped to facilitate this goal, where unions benefitted from sufficient political support. It is questionable whether the same goals would have been reached in more hostile conditions, e.g., with a government less supportive of trade unions.

In contrast, healthcare is a well-organized sector in both Czechia and Slovakia and has benefitted from established bargaining structures at company (both countries) and sector level (Slovakia). The dissatisfaction of some occupational groups, most notably doctors and nurses, with lengthy collective bargaining, often involving dispute settlement bodies, motivated them to push for legislative solutions on wage regulations. This brought a quick success in legislatively anchored wage rises for doctors in Slovakia. In both countries, doctors’ trade unions succeeded with their campaign for better working conditions without relying on the established bargaining channels. The success of doctors’ unions was followed by nurses’ union in Slovakia, but nurses were not as powerful and their legislative effort of wage regulation was successful only until the Constitutional court yielded the legislation unconstitutional. Recently all healthcare unions fought for a legal regulation of wages of all healthcare workers. While the nurses’ unions are not fully satisfied with the outcome, in general all unions favour the legislative solution to lengthy collective bargaining over wages.

The paper will elaborate the argument that legislative solutions are gaining ground because the costs of bargaining are increasing while trust in compliance is decreasing. In other words, unions find bargaining lengthy and increasingly difficult and are afraid of lack of compliance by employers. In addition, unions (and employers, too) are convinced that ‘only legislative stipulations are powerful enough to yield an improvement in working conditions. Law enforcement is higher than enforcement of collective agreements.

What are the implications of these findings for the institution of collective bargaining? While in the case of TAW, we find that legislative solutions are complementary to collective bargaining, evidence from healthcare suggests that legislative solutions are crowding out the long-established bargaining institutions and leave a significant part of healthcare workers without bargaining coverage.