Collective Bargaining in Italy

February 27, 2017

Constitutional Model Art. 39 of The Constitution sets forth three principles:

1) Trade Union freedom and thus pluralism

2) Public registration of Trade Unions, with a democratic statute

3) Attribution of the “bargaining capacity” (that is the capacity to stipulate national collective agreements applicable to all workers belonging to the categories to which the contracts referred) to bodies formed according to respective numbers of members

But why Italian System is a “legal system without laws”?

2

“Material” v.s. formal Constitution

When the Constitution came into force, whereas the principle of trade union freedom (guaranteed by Art. 39, clause 1) immediately became a cornerstone of the union system, the remaining part of the provisions set forth in clauses 2, 3 and 4 was not implemented.

This part, in fact, required a series od specifications by State legislation, which never arrived.

3

The features of the Italian Trade Union system

The Italian Trade Union system can be characterized in the following ways:

informal (or anomic, as a result of the non-actualization of the constitutional model provided for in Articles 39 and 40);

under voluntary basis (the Trade Unions are only regulated by Articles 36-38 of the Civil Code);

material (i.e. factual): the principles of our Trade Union system are not written into the Law, but have assumed form in the practice of the "living law" (diritto vivente), over time shaped by Constitutional Court decisions and the Trade Unions actions.

4

The principles of the Italian trade Union system (private sector)

Such principles are:

mutual recognition of actors on the basis of effective representation (representativeness);

equality of the Parties signing the contract;

the prevalence of the collective dimension as opposed to the individual, once the individual has consented (by an act of accession, either explicitly or implicitly) to become part of the system.

5

Notion of trade unions “representativeness”

It refers to Trade Unions which have a <consistent> (that you can’t ignore) representation of the workers belonging to a certain categorie

This notion is used (by legislator) to operate a selection among the various unions

It’s used in expressions like: “most representative association”; or “comparatively most representative trade union association”

6

How it can be measured? Although this notion is widely used by legislators, no attempt

has been made to specify its meaning.

It has thus been the task of scholars and practical jurisprudence to work out a series of indexes to measure the representativeness of a union, such as:

1) the number of members

2) the presence in various production sectors and geographical areas

3) the continuity and systematic nature of their bargaining

7

Public sector employment Only in the public sector employment the legislators have

intervened to regulate the criteria governing legitimisation of trade unions entitled to take part in the stipulation of collective agreements.

So, to take part in a national collective bargaining relating to a “department” (comparto) Unions have to have a minimum of 5% consensus. This percentage is obtained by calculating the weighted average between the number of members in the “comparto” de quo and the votes won in union election (the election through which are constituted the working councils)

The same criteria have now been “transferred” from public to private sector through the Inter-confederate Agreement (january 2014)

8

Majority Principle

In addition, to be entitled to sign national collective agreements, the various unions backing the agreement have to represent at laest 51% of workers, calculated as the average between the electoral and associative data for that department or contractual area, or at least 60% of the electoral data in the same context.

9

The problem of the scope of collective agreements

1) Under the corporative system colective agreements were essentially considered to be equivalent to a law, even though they were formally (as they are today) subordinate to the law from a hierarchical viewpoint

2) Today, in our informal system, the collective agreements of “private-law” only has a legally binding effect between the stipulating parties and their members. The collective agreement therefore does not (or shoud not) apply to third parties who are extraneous to the contract eithe because they are not members of a union or employers’ association, or because they are members of organisations or association other than those which stipulated the contract.

10

The “social” solution But for reasons of social equity courts and scholars in Italy

have been induced to “BEND” the logic of civil law by means of interpretations which have in fact led to a more or less general personal scope of collective bargaining.

Various arguments have been put forward in support of this extension

The “master argument” (principle of sufficiency of salaries) is based on Art. 36 of the Constitution; it allows the salary provisions of national collective agreements to be extended to any workers who asked for them, irrispective of wheter their employer belongs to the association which signed the relative contract

11

Levels of Collective Bargaining

Collective bargaining in Italy takes place at different levels:

1) Inter-confederate level

2) National (or industry or national- wide sector) level

3) Company level (or, only as an alternative to this level, Territorial level)

12

Inter-confederate collective bargaining

It takes place between confederations of employers and workers (in the public sector is called a “framework agreement”)

It’s used when the social partners consider it opportune or necessary to have uniform regulation for several categories of workers

It often takes the form of concertative tripartite (as opposed to direct bilateral) negotiation between the social partners.

Inter-confederate bargaining plays an important role as regards important issues affecting workers in general.

13

National Sector-Wide Collective Bargaining

It’s still the prevalent model of national collective bargaining (public department collective agreement in public sector) = CCNL

In Italy, as in much of Europe, the CCNL was the cornerstone of industrial relations in the Fordist organisation of labour

The National Sector Contracts regulate the minimum wage and conditions applicabile to employment relationships; they are intended to ensure that pay keeps pace with prices and should set increases that take account of inflation (economic part).

In addition, National Sector Contracts deal with a range of others issues such as working time, work organisation, disciplinary dispositions, etc. (normative part).

14

Company Level CB Initially not even formally recognised, the company-

level collective bargaining spread in the early ‘60s

It was a sort of “submerged” phenomenon brought into being by the so called “internal committees” and mainly dealt with salary issues.

This kind of bargaining, was first constrained by rigid objective and subjective rules laid down by the national agreements; today it has become a serious competitor to national bargaining

15

Company Level CB Pay negotiations at company level should provide a

mechanism for the employees to take account of particular company level developments, such as improved productivity on the one hand or the risk of job losses on the other.

In addition company level negotiations also deal with changes introduced by the company such as new working methods.

It is also possible for this lower level of bargaining to be conducted for several employers on a district or regional basis (f.e. in tourism, crafts and agriculture)

16

“Sacrificial” Company Level CB

Today company-level agreements are used with increasing frequency to regulate situation not covered by the traditional incremental-acquisitive function of national agreements.

A so called “sacrificial” company-level agreement is usually stipulated in periods of company crisis to allow broader margins of flexibility in the management of human resources

The problem of personal scope of such agreements is exactly the opposite of what normally happens with national agreement

17

In this case, legal action is taken by individuals or groups of workers who, by virtue of the common entitlement rule, either because they are not union members or because the belong to unions that have not signed the contract, reject the clause in the collective agreement.

Here again various arguments have been put forward.

18

Relationships between the CB levels

Traditionally, the national sector contract determines the modes, the sphere of action of decentralised bargaining e the issues with which company-level agreements are allowed to deal.

This is called the “principle of specialisation and non-overlapping between issues previously defined at a higher level” (non repeatability clause)

Decentralisation is thus accepted, but within the strict limits imposed by the national contract

19

… in Germany In Germany there is a similar system.

Collective bargaining primarily takes place at industry (national) level rather than at the workplace. National level of CB has traditionally been seen as one of the strengths of the German system. It has the potential to keep conflicts on pay and conditions at industry level, between the unions and the employers’ associations, while at workplace level, individual employers and workplace employee representatives – the works councils (see section on workplace representation) – can develop more cooperative relations.

20

Back to Italy But this bargaining framework has come under

pressure in recent years. The employers’ association, Confindustria, has called for bargaining to be more decentralised, giving greater importance to company level of CB.

Confindustria (followed by CISL, UIL, but not by CGIL) argues that it is important to make the system more flexible so that it can respond better to the needs of the company.

21

The disagreement of CGIL CGIL takes a different view, arguing that the main

problems are the long delays in reaching agreements – these are often signed months after the old agreement has run out, and the fact that inflation is often underestimated.

These issues were discussed by the three confederations in an attempt to find a common position, but without success, at least until the stipulation of the Inter-Confederate Agreement of June 28, 2011.

22

Coverage of CB There are no official statistics on the coverage of

collective bargaining, but Eurofound estimated it at 80% in 2014.

Bargaining at company level, to improve or complement the national agreement, is much less common. Recent estimates suggest that only 30/40% of the workforce is covered by company level agreements.

23

Collective Agreement Parts Traditionally, collective agreements are divided in two

parts:

1) Normative part, in which you can distinguish also the economic part (which contains the rules on minimum wages)

2) Mandatory part (which contains the rules that are binding upon the stipulating parties and not related to the employment relationships)

24

Subjects of negotiations Collective agreements in Italy cover not just pay but a

wide range of working conditions (primarily with the protection ot real living standard against inflation) as well as issues such as hours, holidays, training, health and safety, the use of temporary workers.

Italy does not have a system for setting a legal national minimum wage, although, as already noted, the courts will often refer to the minimum wage levels set in the industry agreement in individual cases on pay level.

25

The "shock" of Pomigliano and the short season of separate collective bargaining (January 2009 - June 2011)

January 2009: Separate Confederal agreement with the Government (signed only by the CISL and UIL but not by CGIL)

new model of relationship between the national and the company contract.

April 2009: two Confederal agreements were concluded to actuate the agreement of January 2009 above.

26

The "shock" of Pomigliano and the short season of separate collective bargaining (January 2009 - June 2011)

June 15, 2010: the stipulation of the Pomigliano Agreement between Fiat and its social partners (with the disagreement of Fiom).

October 2010: introduction of art. 4-bis with the intent to consent the modification of the national collective contract at the company level.

27

The "shock" of Pomigliano and the short season of separate collective bargaining (January 2009 - June 2011)

December 2012, 23: the Mirafiori agreement was stipulated in Turin (without Fiom) with similar content to the one of Pomigliano.

this contract was also approved by 54 % in a

workers’ referendum.

28

Interconfederal Agreement of June 28 2011 and art. 8, D.L. n. 138/2011

June 2011, 28: Confindustria, the CGIL, CISL and UIL, finally united, stipulated a new ICF agreement that attempts to solve the problem of separate company agreements by introducing for the first time the majority principle

effectiveness for all employees in the company.

29

Interconfederal Agreement of June 28 2011 and art. 8, D.L. n. 138/2011

From the June agreement, the entitlement to participate at the negotiating table is recognized only to the Trade Unions that exceed a minimum threshold of representativeness (5%) calculated on an average of associative and elective "criterium".

30

Interconfederal Agreement of June 28 2011 and art. 8, D.L. n. 138/2011

On 5 August 2011, the ECB sent a letter to the Italian government in order to promote a reform of the system of the collective wage bargaining.

On the basis of this letter, the Minister Sacconi launched, with Law n. 148/2011, the famous art. 8 which introduced the "agreements of proximity".

On September 21, 2011, the social parties distanced themselves from art. 8.

31

Reaction of Fiat

Fiat removed itself from the scope of national and interconfederal agreements stipulated by Confindustria and made of the new collective discipline the only discipline for all Fiat Group.

The so called “collective agreement of the first level” of December 13, 2011 was signed by Fim and Uilm but not by Fiom.

32

Fiom and art. 19, L. n. 300/1970

As a result of Fiat's exit from Confindustria and the refusal of Fiom to sign the “first level collective contract”, Fiom remained excluded from the access to Union rights and practice at company level according with art. 19, letter b) of Law no. 300/1970 (workers’ Statute).

Fiom claimed before the Italian Constitutional Court the legitimacy of art. 19, letter b), above.

33

Decision no. 231/2013 of the Constitutional Court

The Constitutional Court ruling of July 23, 2013, n. 231 declared for the first time the illegality of article 19, letter b), workers’ Statute: "in so far as it did not provide that the Trade Unions entitled to represent the employees in the company are not only the Trade Unions signatories to collective contracts applied in the unit of production but also those which has participated in the negotiations relating to the same contracts".

34

Decision no. 231/2013 of the Constitutional Court

Given to the absence of a Law regulating unions representation in any way other than a capacity to conclude collective agreements, the new criteria creates some uncertainty.

The Consolidated Text on representation of January 10, 2014 offers a first proposal of interpretation: the "participants in the negotiations" should be considered those Unions which have reached the 5% of representation; have contributed to the definition of the platform; were part of the delegation treating the last renewal of the

collective agreement. 35

ICF Agreement of January 10, 2014

This agreement, at last signed by all three confederations, states that company bargaining covers “matters delegated to it and the way forseen by” the industry agreement that relates to the company.

In other words, company agreements can mofify industry agreements, but only if the industry-level agreements itself permits this.

Where the industry-level agreement does not contain provisions allowing such modifications, they can still be agreed at company level in the issues of work performance, working hours and work organisation, in order to deal with “crisis situation or where there is significant investment benefitting the company’s economic or employment development”

36

The perspectives

There is a great uncertainty: the protagonists of the system (legislators, social partners, Court rulings and constitutional decisions) have so far proved to be not at all coordinated with regards to the possible solutions.

It is not at all a reach to say that while the Constitutional Court has resolved the case of Fiat, it has certainly not resolved the problem of union representation in the companies and in Italy.

37