The ruling of the German Constitutional Court on the Tariff Unity Act
By Markus Künzel
The decisions of the German Constitutional Court (Bundesverfassungsgericht, BVerfG) of July 11, 2017 on various constitutional complaints against the German Tariff Unity Act (Tarifeinheitsgesetz), which had come into effect on July 10, 2015, were eagerly awaited. The complaints had been made by several small trade unions, known as craft unions (Spartengewerkschaften), representing the interests of certain occupational groups within a company. These include, for instance, Marburger Bund, representing medical staff mainly in hospitals, Vereinigung Cockpit (VC), representing the interests of pilots and flight engineers, the flight attendants’ union UFO and the GDL union representing the interests of train drivers. In the past, these craft unions have clashed with their employers, like Deutsche Bahn or Lufthansa, as a result of comprehensive strike action and have also garnered public attention due to flights or train services being interrupted for several weeks. The effects of these strike actions were so exceptional because a comparably small number of union members in key areas managed to comprehensively restrict their employers’ business by halting trains or flights. Therefore, the decisions on these cases were not only met with great interest by both the parties involved and the general public, but also by legal professionals, after attempts to overcome the Act by way of interim injunctions had failed in October 2015.
Prior to 2010, the German Federal Labor Court (Bundesarbeitsgericht, BAG) had consistently backed the principle of ‘one company – one tariff agreement’. Once the Federal Labor Court abandoned the principle of tariff unity, there was increasing industrial action by mostly craft unions using their strike power to force employers to meet their tariff demands. The power of such small craft union strikes was down to the employees having key roles as pilots, train drivers or air traffic controllers.
The Tariff Unity Act of July 10, 2015 was meant to change this. The intention was to restore the former legal status of ‘one company – one tariff agreement’ by having the tariff agreement of the union with the largest number of members in a company (majority union) replace the tariff agreement of the minority union. According to the explanatory memorandum, the Act aimed to ensure the freedom of collective bargaining in cases of colliding tariff agreements. This situation arises when multiple unions in one company sign multiple tariff agreements with different tariffs applicable to the same occupational groups. As the big trade unions under the umbrella of the German Trade Union Federation (Deutscher Gewerkschaftsbund, DGB), such as IG Metall or the service sector union ver.di, negotiate tariff agreements for all occupational categories working at airlines, Deutsche Bahn or in hospitals, these unions of course compete with the craft unions.
The Tariff Unity Act was thus meant to counteract the huge power of smaller craft union strikes. The view taken was that, as a consequence of the provisions of the Tariff Unity Act, a strike by a minority union for the enforcement of a tariff agreement that would not take effect because of it being replaced by the majority tariff agreement, was unreasonable. The craft unions, such as Marburger Bund, VC, UFO and GDL, now felt threatened because in a system replacing ‘their’ tariff agreement, they would be unable to enforce anything and membership would become unattractive for the employees of a company.
The Constitutional Court decided that the Act was largely compatible with the German constitution (Grundgesetz). It was considered unconstitutional only insofar as it did not ensure that the majority tariff agreement sufficiently took into account the interests of the minority occupational groups. The legislature must now revise the Act by December 31.
The Constitutional Court also held that the replacement of the minority union’s tariff agreement by the majority union’s agreement must be interpreted restrictively. In particular, unreasonable hardship must be avoided. This means that certain benefits guaranteed in the tariff agreement must under no circumstances be replaced by the majority tariff agreement. Examples given by the Constitutional Court are retirement benefits, a workplace guarantee or benefits regarding working life.
Although the craft unions filing the complaints had hoped to have the Act ruled unconstitutional in its entirety, the Constitutional Court’s statement regarding their right to strike should be welcome news. In this respect, the Court made it clear that despite the replacement rule regarding the competing tariff agreements of different unions, craft unions may generally fight for tariff agreements, including by means of a strike if necessary. For this reason, there will be no liability risk for a striking craft union even where there are clear majorities in a company. The lawfulness of such strikes and their legal consequences will have to be established in detail by the labor courts.
All in all, it is clear that the Constitutional Court has not declared the Tariff Unity Act void, but has confirmed the protection of craft unions. The intended shift of power in favor of the large DGB trade unions as intended by the legislature and said large unions will not be brought about by this Act.
Yet the reasoning of the Constitutional Court raises more questions than it answers. It is expected that the labor courts will have to deal with the issue of the lawfulness of strikes.
It remains to be seen what instrument the legislature can develop for the protection of minority occupational groups without calling into question the very core of the Tariff Unity Act.
It is expected that competing unions representing the same staff groups in a company will once again work together more closely in the future, as was often the case when these unions jointly negotiated tariff agreements with the employer or the employers’ association. On the other hand, craft unions especially will try very hard to gain enough members to make them the majority union and thus give them sufficient clout in tariff negotiations.