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On December 14th, the Federal Labor Court (Bundesarbeitsgericht) issued a decisive decree that could have major consequences on many interim firms located in Germany. Confirming the rulings of lower courts, the judges ruled that the Union of Christian Unions in the temporary sector (CGZP) wasn't authorized to conclude sectoral collective agreements. Thus, all its agreements are null and void. Giant killers of this long judicial procedure, the key unions affiliated with the DGB German Trade Union Confederation warned that agency workers paid according to the null agreements were entitled to demand the retroactive payment of the same salary as the company's permanent employees, which could cost the temporary agencies concerned up to EUR 3 billion. (Ref. 100890)

Victory for Verdi and the Land of Berlin. For the Union of Temporary Christian Unions (Tarifgemeinschaft Christlicher Gewerkschaften für Zeitarbeit und Personalserviceagenturen - CGZP), which lodged an appeal against the ruling rendered by the Regional Labor Court of Berlin/Brandenburg (see our dispatch No.  091133), the defeat is now final. The Federal Labor Court also judged that the CGZP wasn’t a “confederation authorized to sign collective agreements in its own name” (Ref: 1 ABR 19/10). It thus gave satisfaction to the Verdi services’ union and to the Land of Berlin, who sued the CGZP in October 2008. They accused the organization of a) systematically taking part in social dumping by negotiating agreements below the DGB and b) not being a true union. Since the CGZP is a “union for the negotiation of collective agreements” (Tarifgemeinschaft), which brought together, at the time, 4 small unions, Verdi and the Land of Berlin judged that the organization wasn’t representative enough to conclude sectoral collective agreements. Today, the Erfurt Tribunal has confirmed this.

Demanded increase of agency workers’ pay. The DGB and its key member unions buoyantly welcomed this decree.  It is a “clear sign against social dumping and complacency agreements signed by the so-called Christian unions” rejoiced Michael Sommer, leader of the DGB. “This decree confirms that the collective agreements signed with the CGZP are null and void and that all workers paid According to them (editor’s note: i.e. about 280,000 people) are entitled to demanding the same pay and working conditions as permanent employees” warned Thomas Klebe, head of the IG-Metall’s legal department.  Indeed, German regulations on temporary work provide that agency workers are entitled to equal pay with permanent employees, unless they are covered by a special agreement.  “In the absence of valid collective agreements, businesses that apply collective agreements signed by Christian unions have to retroactively pay all agency workers the difference between their salary and that of permanent employees” over several years, Klebe pointed out, adding that the IG-Metall would support agency workers willing to press charges.

Risk of chain bankruptcies.  Thus, these claims could be quite costly for the temporary agencies concerned.  According to the sector’s experts, these could amount to several hundred million euros, even up to 2-3 billion.  The day before the verdict, a representative from the AMP temporary employers’ federations, one of the CGZP’s bargaining partners, warned that these financial requirements could lead to a series of bankruptcies and about 300,000 job losses.  Indeed, in addition to increasing wages, temporary agencies could be faced with other financial claims from social insurance firms.  Thus, the IG-Metall called on social funds to learn the lessons of the decree and demand the loss of earning from unpaid social contributions, the result of social dumping practiced by Christian unions.

As for the CGZP, calmly reacted to the Erfurt decree, explaining that, although the judges had questioned its ability to sign collective agreements, the ruling didn’t apply to its member unions, which have also signed many collective agreements.  This should keep many lawyers busy…

This article is from Planet Labor, December 15, 2010, No.  100890 – www.planetlabor.com