Lithuania: Can a collective agreement be a good thing…for employers?

Problems of collective bargaining in Lithuania. Are they being addressed and resolved?  (Part 1)

In general

International legislation, in particular International Labour Organisation (ILO) conventions and publications, present collective agreements as a factor guaranteeing smooth social dialogue, while the experience of European countries shows a clear trend towards collective agreements being seen as an effective and efficient complementary instrument for regulating labour relations between employers and employees.

Trade unions in Lithuania, in particular, have been vocal about the benefits, the neeed for and importance of collective agreements for companies and institutions. However, employers and employees have different views about their benefits.

The Lithuanian Labour Code („LC”) states that the parties entitled to initiate collective bargaining and conclude collective agreements are employers (their organisations) and trade unions (their organisations). However, it is important to note that this right to initiate, negotiate and sign collective agreements is exclusively delegated to trade unions, while other workers’ representatives (works councils or workers’ trustees) do not have this right.  This is why trade unions are the loudest voice. Their main message is that collective agreements are needed in every enterprise, but employers are slow to believe in the need for them, resist signing them, and hold up negotiations. This is why social dialogue in the country has made little progress.

The problem of collective bargaining incentives.

The essence of a collective agreement is to conclude an agreement by which the two parties to an employment relationship agree on more favourable regulation of that relationship, taking into account the specific conditions of the undertaking or establishment and ensuring a balance of interests.  Such an agreement can therefore be an excellent complementary set of rules for both parties to an employment relationship. It should also be mentioned that the LC distinguishes between several types of collective agreements that may be concluded – national (inter-branch), territorial, branch, employer and workplace level – all of which differ in terms of content.

The trade union, as the representative of the employees and with the right of initiative, usually exercises this right by proposing to the employer to initiate a collective agreement. In reality, however, such an initiative can be complicated for several reasons:

1) there may be a large number of trade unions in an undertaking or institution (almost unlimited in theory) and if they do not agree or do not wish to form trade union representation, the situation of an employer-level collective agreement initiative is not realised, or the employer only concludes a collective agreement with the single most active trade union, but the agreement does not really achieve its aim;

2) if the enterprise does not have a trade union and the workers are represented by a works council, and these enterprises are not covered by national, sectoral or territorial agreements, and the general meeting of workers has not authorised the sectoral trade union to negotiate a collective agreement at employer level, they do not even have the theoretical possibility of initiating a collective agreement.

My opinion

Therefore, it makes sense that, alongside the issue of initiative in collective bargaining, we can also raise the issue of proper representation of workers – why does a strong works council in a company not have the right of initiative to propose a collective agreement to the employer?

The author has never heard of a case where a collective agreement has been initiated by the employer or employers’ organisations, although the legislator has given them the right to do so.

A well-prepared initiative by the employer to start collective bargaining could lead to a positive outcome.  It is worth remembering that a party who receives an offer to enter into negotiations does not have the right to refuse to take part in the negotiations.

The initiative also includes clearly formulated demands on the other party – and when drafting these, it is important to pay attention to which type of collective agreement is being initiated and what the claims are. For example, the LC allows a national, territorial or branch agreement to discuss wage issues and an employer-level agreement may discuss wage conditions, while all types of agreement may discuss „other labour, social and economic conditions of importance to the parties”.

Given that an employer-level collective agreement must not contain provisions deviating from some of the mandatory rules of the LC, it is certainly possible to get lost without the help of a lawyer as to whether or not the claims made by the other party are in line with the permissible provisions of the content of a collective agreement.

Lawyers instructed by the employer can thoroughly prepare the initiative of negotiations for collective agreements, so that collective agreements are not just a necessary evil for employers but really a fruitful instrument for social dialogue in their own company. Furthermore, we are happy to constructively represent employers in collective bargaining.

(continued in next paragraph)

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