Definitive Report - Report No 351, November 2008

1. 1135. The complaint is contained in joint communications from the employers’ organization Altro Via, and the workers’ organization LBV, dated 22 February 2008 and 18 March 2008.
2. 1136. The Government sent its observations in a communication dated 23 May 2008.
3. 1137. The Netherlands has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), and the Collective Bargaining Convention, 1981 (No. 154).

A. The complainants’ allegations

1. 1138. In its communication dated 22 February 2008, Altro Via (an employers’ organization) and LBV (a workers’ organization) allege that a government decree, which entered into force on 1 January 2007, modified the Reference Framework for Declaring Collective Labour Agreements to be Generally Binding, and thereby denied the freedom of association and collective bargaining rights of new and smaller unions and employers’ organizations.
2. 1139. The complainants state that the January 2007 decree was the outcome of a questionnaire sent by the Ministry of Social Affairs and Employment to unions and employers’ organizations – members of the Labour Foundation, the Government’s advisory body on social affairs. Third parties, i.e. non-members of the Labour Foundation, including Altro Via and LBV, protested against the decree by sending a letter to the Ministry where they argued that seeking advice from the Labour Foundation amounted to asking the monopolists to search for arguments to strengthen their monopoly.
3. 1140. By way of the legislative history, the complainants explain that the collective bargaining process in the Netherlands is governed by the 1927 Collective Labour Agreements Act (hereinafter, the CLA Act), and the 1937 Collective Labour Agreements Declaration of Universally Binding and Non-binding Status Act (hereinafter, the AVV Act). According to the legislation, any social party can be engaged in voluntary collective bargaining and conclude a collective agreement. The signed collective agreement is sent to the Ministry of Social Affairs and Employment, which then declares a collective agreement legally binding for the social partners and the workers of the companies which are members of the employers’ organizations. Parties, who have already concluded a legally effective collective agreement before an order declaring the universally binding status is issued, may apply to the Minister for an exemption from the order. According to the complainants, at least since the 1990s, the Minister has adhered to the policy of granting an exemption where an employer or subsector is already bound to a company or a subsector collective agreement, as the case may be. Previously, the Minister refused to grant an exemption only where one of the contracting parties was not an independent trade union. Under the new January 2007 decree, when the exemption is refused, the Minister can declare void a collective agreement between a smaller workers’ union and a smaller employers’ organization if he or she concludes that the “specific characteristics” of the smaller organizations are the same as those of the companies to which a national collective agreement would apply. This is also the case when the collective agreement between the smaller organizations is contracted and relied upon before the universally binding agreement is finalized.
4. 1141. According to the complainants, the collective agreement between Altro Via and LBV is a case in point. A collective agreement for the road transport sector covering 40 companies was concluded between the complainants for January 2007–December 2008. The agreement was sent to the Minister of Social Affairs and Employment, who declared it legally binding on the parties on 3 May 2007. Some companies and workers have relied upon this agreement since April 2003, when the Minister exempted over ten collective agreements concluded between Altro Via and LBV from the universally applicable agreement. On 25 July 2007, when an application for declaring a national collective agreement universally binding, Altro Via and LBV applied for an exemption. However, on 10 October 2007, the Minister refused to grant an exemption and justified the refusal on grounds that the activities of the companies to which the collective agreement between Altro Via and LBV applied were no different from the companies that were to apply the national binding collective agreement. In practice, that meant that members of Altro Via had to apply the national collective agreement as from 10 October 2007. On 20 November 2007, the complainants petitioned the Minister of Social Affairs and Employment to reconsider his decision not to grant an exemption. On 22 February 2008, the Minister declared the complainants’ objections unfounded and denied the petition. The complainants transmit a copy of this decision.
5. 1142. The complainants maintain that the Minister’s refusal to grant an exemption violates Convention No. 87. According to the complainants, the “specific characteristics” clause of the AVV Act, as amended by the January 2007 decree, denies the right of new and smaller unions and employers’ organizations to freely conclude collective agreements. The denial undermines the main purpose for the existence of these organizations and threatens to ultimately lead to their dissolution. The complainants also claim that the decree violates Convention No. 98 and Convention No. 154, in so far as it hampers the development of machinery for voluntary negotiations between employers’ and workers’ organizations. At least, the encouragement and promotion is limited to the established unions and employers’ organizations. According to the complainants, instead of complying with its duty to promote and encourage voluntary negotiations, the Government issues measures that discourage the creation of collective agreements.
   • B. The Government’s reply
6. 1143. In its communication of 23 May 2008, the Government maintains that the regulations and procedure in the Netherlands are not contrary to ILO Conventions Nos 87, 98 and 154.
7. 1144. By way of factual background, the Government states that Altro Via and LBV have concluded a legally effective collective agreement with 40 road transport businesses under its scope. Other (larger) employers’ and employees’ organizations have also concluded a legally effective collective agreement for the same sector with approximately 6,500 businesses under its scope. The larger employees’ and employers’ organizations applied for an order declaring their collective agreement universally binding. When the order was granted their collective agreement became binding for all employers and employees in that branch of the industry, including those in the 40 businesses associated with Altro Via and LBV. Altro Via and LBV requested an exemption from the order declaring universally binding status so that their own collective agreement could continue to apply to the businesses associated with them. The request was rejected because the specific characteristics of the businesses concerned did not differ significantly from those of the remaining business in that branch of the industry.
8. 1145. The Government states that in the Netherlands, freedom of association is a fundamental right under the Constitution. Furthermore, Dutch legislation and regulations contain no provisions which specifically regulate the right of employers and employees to associate or which restrain this right in any way. Organizations are free to adopt a certain legal form and regulate their own internal affairs. Only where employees’ or employers’ organizations wish to act as party to a collective agreement, two requirements apply: full legal capacity and the authority pursuant to their constitution to conclude collective agreements. Determining the content of and concluding collective agreements is also a matter for employees and employers alone. Only when parties to a collective agreement apply for an order declaring the universally binding status of its provisions, do the authorities have a role to play. The order declaring universally binding status, whereby the scope of the provisions of the collective agreement is extended to unorganized employers and employees, has been applicable in the Netherlands since 1937 and is intended to counter distortion of competition as to the terms and conditions of employment by employers and employees who are not bound by the collective agreement. This provides support and protection to collective consultation and promotes balanced employment relationships and harmony.
9. 1146. Under the CLA Act a collective agreement is an agreement entered into by one or more employers, or one or more associations of employers with full legal capacity and one or more associations of employees with full legal capacity. A collective agreement mainly regulates the terms and conditions of employment which must be observed in contracts of employment. The collective agreement is binding on every person who during its term is or becomes a member or the employers’ or employees’ associations that have entered into the agreement. Another important provision is that an employer bound by a collective agreement is also bound to comply with the provisions of the collective agreement in employment relationships with employees who, because they are not members of the employees’ association or associations concerned, are not directly bound by the collective agreement.
10. 1147. Pursuant to the AVV Act, the Minister of Social Affairs and Employment is authorized to declare a collective agreement universally binding if it applies to the majority of persons employed in a certain branch of the industry. The collective agreement’s provisions are then binding on all employers and employees in that branch of the industry, including those who were not originally bound by the collective agreement. Interested parties may raise objections to the application for universally binding status, which are then taken into account in the decision-making process. Furthermore, parties who have concluded another legally effective collective agreement, before an order declaring the universally binding status is issued, may submit an application for exemption from the order to the Minister of Social Affairs and Employment.
11. 1148. Concerning the granting of an exemption, the Government explains that, as far as possible, parties to a collective agreement should themselves regulate exclusions for businesses and subsectors. This can be done directly by excluding certain businesses and subsectors from the agreement, or indirectly through defining the scope of the agreement. In so far as exclusions are not regulated by the parties of the collective agreement, the Minister of Social Affairs and Employment can use his or her authority to grant an exemption to certain businesses or subsectors. An exemption is granted by the Minister, if due to compelling arguments, the application of the provisions of a collective agreement that is to be declared universally binding for a branch of the industry, cannot reasonably be required of certain businesses or subsectors. Compelling arguments exist in particular if the specific characteristics of the business or subsector differ on essential points from those to which the universally binding agreement is to apply. It is also required that the parties applying for an exemption have themselves concluded a legally effective collective agreement, and that they are independent with respect to each other. The rationale behind this latter requirement is to prevent employees’ organizations from being placed under pressure to conclude a separate collective agreement by which they would fall outside the scope of the provisions of the universally binding collective agreement in that branch of the industry.
12. 1149. The Government further maintains that the regulations are in compliance with ILO Collective Agreements Recommendation No. 91 of 29 June 1951, which recognizes the possibility of extending the application of the provisions of a collective agreement beyond the original parties, if certain requirements are met. In order to be eligible for an order declaring universally binding status it is required that the provisions of the collective agreement apply to a significant majority of the persons employed in a certain branch of industry; the request must be submitted by one ore more parties to the collective agreement; and interested parties can put forward objections which are then taken into account in the decision-making process.
13. 1150. It is inherent to the application of these rules that provisions of a collective agreement which apply to the majority of persons employed in a certain branch of the industry will also apply to employers and employees not belonging to that majority. In the situation where another collective agreement is concluded for the latter group of employers and employees, this will mean that not all the provisions of that collective agreement will retain their effectiveness. To what extent this will be the case depends on the contents of the two collective agreements. If the collective agreement the provisions of which are declared universally binding contains minimum provisions, the provisions of the other collective agreement will continue to be effective in so far as they are more favourable. If, however, the collective agreement the provisions of which are declared universally binding contains more favourable conditions than the other collective agreement, the order declaring universally binding status will result in these more favourable conditions applying across the board for all employers and employees in the branch of the industry.
14. 1151. The Government maintains that the application of regulations concerning universally binding agreements does not prejudice the right to collective negotiations of employers’ and employees’ organizations, other than the organizations, party to the collective agreement, the provisions of which are declared universally binding. According to the Government, during the course of time, employers’ and workers’ organizations, within the same branch of industry, have successfully concluded separate collective agreements.
15. 1152. According to the Government, the January 2007 decree changes the procedure for granting the exemption, but does not undermine its nature or efficacy. Prior to January 2007, the exemption was granted more or less automatically in those cases where the applicants were already bound by a collective agreement by the time the order for universally binding status was issued. The Government claims that developments in domestic case law gave rise to the view that a decision open to objection and appeal, such as the one to grant an exemption, should not be automatic but based on certain guidelines. As of 1 January 2007, exclusion is granted only where clearly specific characteristics of the subsector or undertaking render the application of the universally binding collective agreement to that undertaking or subsector unreasonable. As explained, and contrary to the complainants’ allegations, this criterion does not breach the collective bargaining rights of the smaller workers’ and employers’ organizations.

C. The Committee’s conclusions

1. 1153. The Committee notes that this case concerns the issue of extension of collective agreements. From the information submitted by the complainants, Altro Via (an employers’ organization) and LBV (a workers’ organization), and the Government, the Committee understands that according to the legislation in force, the 1927 Collective Labour Agreements Act (CLA Act), and the 1937 Collective Labour Agreements Declaration of Universally Binding and Non-binding Status Act (AVV Act), any social party can be engaged in voluntary collective bargaining and conclude a collective agreement. Once signed, collective agreements are sent to the Ministry of Social Affairs and Employment, which then declares a collective agreement legally binding. The Minister of Social Affairs and Employment is authorized to declare a collective agreement universally binding if it applies to the majority of persons employed in a certain branch of the industry. However, parties who have concluded another legally effective collective agreement, before an order declaring the universally binding status is issued, may submit an application for exemption from the order to the Minister of Social Affairs and Employment. Prior to January 2007, the exemption was granted more or less automatically in those cases where the applicants were already bound by a collective agreement by the time the order for universally binding status was issued with regard to another collective agreement and when independence of a trade union, party to the collective agreement, was established. Following the amendments of January 2007 of the AVV Act, exclusion is granted only where clearly specific characteristics of the subsector or undertaking render the application of the universally binding collective agreement to that undertaking or subsector unreasonable.
2. 1154. The collective agreement between Altro Via and LBV is a case in point. The factual information submitted thereon by the complainants is not disputed by the Government. Altro Via and LBV have concluded a legally effective collective agreement with 40 road transport businesses under its scope. Other (larger) employers’ and employees’ organizations have also concluded a legally effective collective agreement for the same sector with approximately 6,500 businesses under its scope and applied for an order declaring their collective agreement universally binding. When this collective agreement became binding for all employers and employees in that branch of the industry, including those in the 40 businesses associated with Altro Via and LBV, the two latter organizations requested an exemption from the order declaring universally binding status so that their own collective agreement could continue to apply to the businesses associated with them. The request was rejected because the specific characteristics of the businesses concerned did not significantly differ from those of the other businesses in that branch of the industry.
3. 1155. According to the complainants, the “specific characteristics” clause of the AVV Act, as amended by the January 2007 decree, denies the right of new and smaller unions and employers’ organizations to freely conclude collective agreements and is therefore not in conformity with Conventions Nos 87, 98 and 154. The denial undermines the main purpose for the existence of these organizations and threatens to ultimately lead to their dissolution. The complainants also indicate that the amendments to the AVV Act were adopted taking into account only the opinion of those workers’ and employers’ organizations, which are represented at the Labour Foundation, the Government’s advisory body on social affairs.
4. 1156. The Government maintains, however, that the procedure described above does not prejudice the right of workers’ and employers’ organizations to bargain collectively and is in compliance with ILO Recommendation No. 91, which recognizes the possibility of extending the application of the provisions of a collective agreement beyond the original parties. In order to be eligible for an order declaring universally binding status it is required that the provisions of the collective agreement apply to a significant majority of the persons employed in a certain branch of industry; the request must be submitted by one or more parties to the collective agreement; and interested parties can put forward objections which are then taken into account in the decision-making process.
5. 1157. Concerning the granting of an exemption, the Government explains that, as far as possible, parties to a collective agreement should themselves regulate exclusions for businesses and subsectors by either explicitly excluding them from the agreement, or through defining the scope of the agreement. In so far as exclusions are not regulated by the parties of the collective agreement, the Minister of Social Affairs and Employment can grant an exemption upon request, if due to compelling arguments, the application of the provisions of a collective agreement that is to be declared universally binding for a branch of the industry, cannot reasonably be required of certain businesses or subsectors. Compelling arguments exist in particular if the specific characteristics of the business or subsector differ on essential points from those to which the universally binding agreement is to apply. It is also required that the parties applying for an exemption have themselves concluded a legally effective collective agreement, and that they are independent with respect to each other. The rationale behind this latter requirement is to prevent employees’ organizations from being placed under pressure to conclude a separate collective agreement by which they would fall outside the scope of the provisions of the universally binding collective agreement in that branch of the industry. It is inherent to the application of these rules that provisions of a collective agreement which apply to the majority of persons employed in a certain branch of the industry will also apply to employers and employees not belonging to that majority. In the situation where another collective agreement is concluded for the latter group of employers and employees, this will mean that not all the provisions of that collective agreement will retain their effectiveness. To what extent this will be the case depends on the contents of the two collective agreements. If the collective agreement the provisions of which are declared universally binding contains minimum provisions, the provisions of the other collective agreement will continue to be effective in so far as they are more favourable. If, however, the collective agreement the provisions of which are declared universally binding contains more favourable conditions than the other collective agreement, the order declaring universally binding status will result in these more favourable conditions applying across the board for all employers and employees in the branch of the industry.
6. 1158. The Committee notes the explanations provided by the parties. It recalls that the specific question of the extension of collective agreements is addressed in the Collective Agreements Recommendation, 1951 (No. 91). According to Paragraph 5 of the Recommendation:
7. (1) Where appropriate, having regard to established collective bargaining practice, measures, to be determined by national laws or regulations and suited to the conditions of each country, should be taken to extend the application of all or certain stipulations of a collective agreement to all the employers and workers included within the industrial and territorial scope of the agreement.
8. (2) National laws or regulations may make the extension of a collective agreement subject to the following, among other, conditions:
   • (a) that the collective agreement already covers a number of the employers and workers concerned which is, in the opinion of the competent authority, sufficiently representative;
   • (b) that, as a general rule, the request for extension of the agreement shall be made by one or more organisations of workers or employers who are parties to the agreement;
   • (c) that, prior to the extension of the agreement, the employers and workers to whom the agreement would be made applicable by its extension should be given an opportunity to submit their observations.
9. 1159. The Committee considers that the system which has been in place in the Netherlands since 1937 is in conformity with the principles and conditions enunciated in the Recommendation. It notes, in addition, that the system had never been criticized by the Committee of Experts on the Application of Conventions and Recommendations.
10. 1160. The Committee recalls that in previous cases concerning the issue of extension of collective agreements, it had considered that the extension of an agreement to an entire sector of activity contrary to the views of the organization representing most of the workers in a category covered by the extended agreement was liable to limit the right of free collective bargaining of that majority organization and that this system made it possible to extend agreements containing provisions which might result in a worsening of conditions of work of the category of workers concerned [see Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006, para. 1053]. The present case, however, raises a different issue and concerns the right of smaller (not majority) trade unions and employers’ organizations representing particular enterprises or subsectors not only to negotiate their own collective agreements, but also be excluded from the industry level/national agreements which may be declared applicable erga omnes. The Committee notes that according to the system, as amended in January 2007, such organizations continue to enjoy this right either by being excluded by a specific provision in the extended agreement or by the Minister of Social Affairs and Employment, upon a request of an interested party. In the latter case, specific characteristics of an enterprise or subsector would permit the exclusion from the extended agreement. In such cases, the collective agreements negotiated between smaller trade unions and employers’ organizations would be applicable. Moreover, from the explanations provided by the Government, more favourable provisions contained in such collective agreements would remain in force even if another collective agreement has been declared universally applicable and exclusion has not been granted. In these conditions, the Committee concludes that the changes introduced to the AVV Act in January 2007 are not in violation of the principles of freedom of association and collective bargaining and therefore considers that this case calls for no further examination.