Bulletin of Comparative Labour R

Catherine Barnard Fellow, Trinity College, and Reader in Law, Cambridge, United Kingdom

Sukwan Choi Ph. D. Candidate of Law, Seoul National University, and Postgraduate International Research Student, University of Tokyo

Anthony Forsyth Senior Lecturer, Department of Business Law and Taxation, Faculty of Business and Economics, Monash University, Australia

1. Japan Decentralizing Decentralized Industrial Relations?: the Role of Labor Unions and Employee Representatives in

7. Australia Decentralisation and ‘Deregulation’ of Labour Relations

This issue of the Bulletin of Comparative Labour Relaitons is a collection of papers submitted to the 8th Comparative Labor Law Seminar (JILPT Tokyo Seminar)[1] held on 21 February, 2006. This seminar considered one of the most controversial labor policy issues: Decentralizing Industrial Relations and the Role of Labor Unions and Employee Representatives. The seminar organizers asked the participants to describe the following issues in their national papers.

•The main forms of labor unions and the levels of organization in your country.

•The role and function of labor unions in labor relations and in labor legislation.

•Are there any employee representation systems such as works councils or employee representatives that are different from labor unions?

•If you have any employee representation systems, what are their functions, powers and roles? How are members of such non-union representatives chosen? Are unions given preferential treatment in submitting lists of candidates for non-union representatives? If there is no employee representation system, what are the reasons? Are there any demands for employee representation systems?

•What are the differences between labor unions and non-union employee representatives? Are non-union representatives allowed to strike? What is the legal effect of agreements concluded between employers and non-union representatives?

Is there any discussion on jurisdiction conflicts between labor unions and non-union employee representatives? Are non-union representatives entitled to participate in collective bargaining?

3. Recent developments in collective labor relations: the decentralization of industrial relations and the changing roles and functions of labor unions and employee representatives

•Have there been any significant changes in collective bargaining patterns in recent years? Are there any trends in centralized unions delegating their bargaining power to decentralized parties such as local unions, employee representatives at the company level, or individual employees?

•Is an agreement concluded at the company or establishment level allowed to unfavorably change working conditions prescribed by collective agreements concluded at the national, sectoral or regional level? If so, are there any substantive or procedural requirements to do so?

•Is an individual employment contract allowed to change working conditions prescribed by collective agreements? If so, are there any substantive or procedural requirements?

•Are there any mechanisms to allow the collective and individual parties to deviate from statutory imperative norms? If so, what are the reasons and conditions for such deviations?

•If any changes in collective bargaining patterns and in the centralized system to establish working conditions have occurred, what are the reasons for such changes? Does declining union density and the legitimacy of centralized parties explain such trends? Does the decentralization of collective bargaining occur in connection with the need to make labor protective regulations prescribed by statutes or collective bargaining agreements more flexible?

The main topics in the seminar can be divided into three: the relationship between labor unions and employee representatives, the shift in collective bargaining from industry or branch towards the company or establishment level, and the role of labor unions or employee representatives in the flexibilization of labor protective regulations.

As for the relationship between labor unions and employee representatives, in any country, the traditional and typical form of workers’ representation is a labor union. However, in countries where collective bargaining is conducted mainly at the industry or regional level, there is a type of workers’ representation at the company or establishment level other than a labor union. This is an employee representative. German works councils (Betriebsrat) are typical examples of employee representatives. In France there are not only union representatives (délégué syndical), but also elected employee representatives such as Comité d’entreprise and délégué du personnel. However, French works councils (Comité d’entreprise) are different from their German counterpart, in that the former is composed not only of worker representatives, but also of employer representative, while the latter is composed solely of worker representatives. Currently in Japan, the Study Group organized by the Ministry of Health, Labour and Welfare recommended that a standing labor-management committee should be promoted, particularly in workplaces where there is no labor union. This labor-management committee is similar to the French works council model, at least in terms of composition.

What is the difference between labor unions and employee representatives? First of all, labor unions are associations of union members, but employee representatives are elected by all employees represented at each workplace. Secondly, labor unions are a spontaneous form of worker representation, but employee representatives are created by legal intervention.

In countries where there exist double forms of worker representation, that is labor unions and employee representatives, the relationship between both is a delicate problem.

In Germany, works councils are organs separated from labor unions, and the area of operation of the former is also separated from that of the latter. But works councils do not play the same role as labor unions, rather they are normally under the strong influence of labor unions. Furthermore, the possibility that works councils can conclude work agreements (Betriebsvereinbarung) with employers is considerably limited, in that the conclusion of a work agreement is prohibited for matters usually handled by collective labor agreements concluded by labor unions (Article 77, Section 3 of the Betriebsverfassungsgesetz). French labor unions are not only allowed to have their own representative within the workplace, but also hold a influence on employee representatives; that is French labor unions have a priority for submitting a candidate list for the elections of employee representative.

In Italy, employee representatives are not clearly separated from labor unions. Italian workers representatives at the establishment level (Rappresentanza Sindacale Aziendale) are a mixture of labor union workplace representatives and elected employee representatives (Article 19 of the so-called Workers’ Statute). In practice, the three big confederations of labor unions agreed to formulate a unitary representative at the workplace level (Rappresentanza Sindacale Unitaria), which corresponds to RSA, which is a unique legally recognized workers representative at the workplace level. In any event, obviously RSA or RSU is strongly influenced by external labor unions.

Thus in some European continental countries, where collective bargaining is conducted at the industrial or regional level, employee representatives are organized at the company or plant level, but the supremacy of labor unions over employee representatives is recognized. There are some reasons for this: first, activities of labor unions are guaranteed by constitutions, but those of employee representatives are not. In a legal hierarchy, labor unions prevail over employee representatives. Secondly, labor unions usually hold some political power. As a result, labor unions tend to be able to resist a legal system in which the authority of an employee representative is strengthened, exerting their political power. Thirdly, employee representatives are not usually allowed to go on strike and consequently cannot have the same bargaining power as that of labor unions. This means that employee representatives are less able than labor unions to protect workers’ interests. Fourthly, labor unions, as associations, are formed voluntarily by workers who are union members; this means that the representative power of labor unions derives directly from the contract concluded between unions and union members. On the other hand, a formation of employee representatives is forced by law. From this it follows that the legitimacy for representation of the labor unions is of a higher grade than that of employee representatives.

When we look at countries where collective bargaining is conducted mainly at the decentralized level, the double channel — union channel and elected employee representative channel — system is not adopted, but the single channel system is introduced as a principle. First of all, in the U.S., labor unions, precisely majority labor unions in the bargaining unit, are granted the authority to monopolize collective bargaining in such a unit. And some attempts to legalize employee representatives were repeatedly frustrated. Since the enactment of the Wagner Act in 1935, there have been fears that employee representatives may be transformed into a company union, that is to say a union dominated by the employer. In the U.K., traditionally the single channel system had been maintained. Recently under the influence of EU law, the elected representative system was introduced, but the U.K., in particular British trade unions, are reluctant to accept the German model, namely a true double channel system, because the existence of employee representatives must be a threat to labor unions. In this aspect, Australian’s situation, where decentralization of collective bargaining has been advanced recently, is similar to that of the U.K. But in Australia, we cannot find a government opinion that protects or promotes labor unions. Such an anti-union policy in Australia, similar to the era of the Conservative Government in the U.K., is notably striking when compared to the systems in other countries.

In Asia, Taiwan, South Korea and Japan are in a more or less similar situations. Practically, collective bargaining plays a less important role in determining working conditions than work rules established by employers. And in Taiwan and South Korea the relationship between enterprise unions and labor-management conferences (Taiwan) or committees (Korea) has been questioned and the distinction between the two forms is not very clear. To European watchers, who are accustomed to seeing labor unions operating at the industrial or regional level, it seems that enterprise unions in these Asian countries, including Japan, are not able to hold bargaining power sufficiently antagonistic to employers. But at least in Japan, worker participation through a labor management consultation system has functioned very well. Sharing managerial information among management and unions has contributed to the development of cooperative industrial relations and Japanese economic growth. Now the problem we are facing is one of a low rate of unionization. In many mid and small-sized companies, there is no labor union. As mentioned above, with a view to creating worker representation in such companies, the government intends to provide employee representatives, which are alternative forms of worker representation other than labor unions. But a serious legal problem remains: whether such a legal intervention is consistent or not with the constitutional norm, which guarantees the right of workers to form labor unions and the right to collective bargaining and to strike, and in this sense obviously privileges the formation and activities of labor unions.

As far as decentralization is concerned, in European countries there is a tendency to shift collective bargaining from the industry or regional level to the company or establishment level. As for the legal hierarchy, in countries such as Germany and France, collective bargaining at the industry level prevails over that at company or establishment level. But even in these countries, decentralized collective bargaining is becoming more and more important. For example, in Germany, strictly speaking, work agreements (Betriebsvereinbarung) are not collective labor agreements, but they have a normative effect. Even though collective agreements at the industrial level prevail over work agreements according to law (BetrVG), recently in practice work agreements or other forms of arrangements concluded between works councils and employers are invading the turf of labor unions, sometimes illegally. Furthermore the escape of employers from employers’ association and OT (without collective labor agreement)-membership is undermining the supremacy of collective agreements. In addition, in France, the law of 2004 drastically changed the supremacy of collective bargaining at the branch level over that of the company level, even though collective bargaining at the branch level continues to hold control over collective agreements at lower levels.

Furthermore, in some European continental countries in general there is a principle of favorability. According to this principle, collective agreements made at lower level prevail over those made at upper levels, only if the former contains provisions more favorable to workers than the latter. But this principle was recently revised (in 2004). Also in Italy, this principle has not been strictly adhered to.

What is more important in this respect is whether a collective agreement at the enterprise level which contains deteriorating working conditions, such as wage or working hours in order to guarantee employment security, is binding and effective. This matter is represented differently in various countries. For example, in some European continental countries, this is a conflict between different levels of collective agreement or between collective agreements and workplace agreements. On the contrary, in the U.S., there is no jurisdiction problem. Collective labor agreements are allowed to include disadvantageous working conditions. This is applied to the U.K. also. In Australia, the “No Disadvantage Test,” which used to regulate the relationship between awards and enterprise agreements, was abolished and instead the AFPCS (Australian Fair Pay and Conditions Standard) was newly introduced, but in essence this means that the prerogative of employers is widely recognized. In Asia — South Korea, Taiwan and Japan — this is mainly a problem of disadvantageous modification of work rules. In any event, we should bear in mind that only in South Korea are there some influential opinions in favor of the centralization of collective bargaining, taking into consideration that the bargaining power of enterprise unions is actually too weak.

To sum up, employers are not free to modify unilaterally working conditions. But with some restrictions, there is room for flexible determination of working conditions through conclusion of enterprise collective agreements or workplace agreements, or a rational — unilateral — revision of work rules.

The last point regards the flexibilization of labor protective regulations. This is one aspect of decentralization of labor regulations. What is most important is the extent to which an individual agreement is allowed to derogate from labor regulations. In some European countries and Japan, one can find some reluctance to derogate from labor regulations through individual agreements. In these countries, the concept of the “subordination of labor” is so profound and far-reaching that one takes it for granted that consent of an individual employee is not a derogative effect. At least the approval of the labor unions or employees’ representative is indispensable for such an individual derogation. On the contrary, in Anglo-Saxon countries with common-law tradition, the concept of the “subordination of labor” is not familiar to people, rather an individual employment contract is a corner stone in labor regulations, as is typically the case with the U.K. In Australia, the AIRC (Australian Industrial Relations Commission) does not play an important role and individual agreements are becoming more and more important in the determination of working conditions. Also in the U.K, as for regulations about working hours, contracting out through individual agreement is recognized. In the U.S. labor unions can monopolize the power to determine working conditions, excluding the possibility of individual agreements to derogate (deviate) from collective labor agreements. But where there is no labor union, everything is left to individual agreements, that is, practically to the employers’ unilateral decision.

Finally, in almost all countries mentioned above there are some common tendencies: labor unions are declining and labor density is decreasing; determination of working conditions at the enterprise level is gradually becoming widespread; pressure for disadvantageous modification of working conditions in return for employment security is growing; derogation and deregulation are being more widely needed and accepted.

In this context, the supremacy of labor unions is being questioned. This issue concerns the historical, cultural and political background of each country. Each country needs to decide which way to go: first, reactivation of labor unions or collective labor agreements; second, abandoning labor unions and at the same time promoting employee representatives or workplace agreements; third, complete deregulation or individualization.

[1] The JILPT Tokyo Seminar was originally organized by Professor Kazuo Sugeno (Professor Emeritus, the University of Tokyo) and Professor Yasuo Suwa (Hosei University) in 1991. The papers submitted to the previous JILPT Tokyo Seminars were published in the Bulletin of Comparative Labour Relations No. 30 (1995), No. 34 (1999), No. 38 (2000), No. 47 (2003), and No. 53 (2005).