Collective bargaining

The individual trade union and the employer or the employer’s confederations are, under TUI Act, the legal contracting parties to collective agreements. It is different according to the CAPS Act for the public sector as the unions or their federations are the legal contracting parties and the counterpart can hence only be the state or municipalities Despite the aforementioned article 3 in the CAPS from 1986, which stipulates that minister of Finance holds the collective bargaining negotiation mandate on behalf of the Icelandic government, there is certain disagreement regarding interpretation of the term “who the industrial action is directed at” (Art 14) and (Art 15) in the CAPS and in recent Labour Court findings as well.

The unions on the private market can also give that mandate to their respective federation or share it with another union, or unions, as they see fit. Such mandates can be withdrawn at all times before the signing of a collective agreement. Employers in the private sector however transfer their mandate to negotiate to their federation of employers upon becoming a member.

The constituency of a trade union can never be smaller than one municipality under the TUI Act. The constituency can cover more than one municipality and for some trade unions the constituency is extended to the whole country.

The first chapter of the CAPS Act stipulates on the scope and the right to make collective agreements. According to the Act, the trade unions in the public sector have to meet certain criteria to have the right to bargain collectively. The first thing that sets the public sector aside from the private sector in this regard is due to that the Act stipulates that only one trade union shall have the right to negotiate agreements with the same employer for the same class of employers. This however, due to a court decision of the Labour Court in 2007, is subject to some exemptions.

 Within the private sector the law is silent on the content of collective agreements. It is however stipulated in the CAPS Act regarding the public sector. The common practice is that the main chapters in collective agreements generally regard wages, working hours, meal and coffee breaks, minimum rest and maximum working time, travelling cost, (annual) holiday/vacation, facilities, safety and health, tools and working clothes, payment of wages in cases of accident and illness, payments to various funds, pension fee, insurance and termination of employment. The last part usually contains clauses regarding dispute resolution of the negotiating parties and how to deal with changes that occur in the underlying economic factors that affect the expected outcome of wages (e.g. inflation) during the validity of the agreement. In some cases, in the public sector, some of these rights are set by law and are therefore not set by the applicable collective agreements.

The main types of collective agreements are:

  • General collective agreements (see appendix A)
  • Special agreements are collective agreements supplementing a general agreement regarding specific issues.
  • Enterprise agreements are in some cases negotiated for larger industrial companies and can be negotiated on behalf of a number of trade union.
  • Institutional agreements, supplementing collective agreements. Such agreements are made between particular employer and its employees.

Schedule of negotiations

Ten weeks before a valid collective agreement comes up for review, the parties shall jointly draw up a schedule of negotiations and send it to the State Conciliation and Mediation Officer (SCMO) immediately. If they fail to do so, he shall issue a negotiation schedule for the contracting parties not later than eight weeks before the valid collective agreement comes up for review. The fact of the matter is, that these schedules are not respected and have no real value in themselves.

The rules on the negotiation schedule and the role of the SCMO as stipulated in the TUI Act apply to the public sector as well, hence the same rules apply to the public and the private sector regarding negotiation schedules and the role of the SCMO.

The process

If negotiations progress normally, the SCMO is kept out of the picture but must at all times be kept informed of the progress. At any time after the issue of a schedule, the parties may however request mediation from the Officer, request his assistance or refer the dispute to him in the event of breakdown in negotiations, or if either of them considers there is little hope of success being achieved through further attempts to reach a settlement. The Officer then takes over and directs the negotiations. He may also at any time take over the direction of negotiations if he considers this to be of advantage and is obliged to do so if a strike or a lockout has been notified.

Agreement is reached - voting

According to the TUI Act, when a collective agreement has been signed by the competent representatives in the private sector, it is valid from the date of signature unless otherwise agreed and unless it is rejected in a secret ballot by a majority of the votes cast, with the participation of at least one fifth of those on the voting roll or membership register within four weeks of the date of signature. If a general secret postal ballot is held its result shall be valid irrespective of the participation rate. If a collective agreement applies to only part of the union members or employees of an enterprise, it may be stipulated in the agreement that these persons only shall have the right to vote concerning it, provided it is stated clearly how the ballot is to be held.

The unions can decide upon their own to call for a joint ballot amongst all members of unions which are a party to the same collective agreement. Such an arrangement can also be a part of the negotiated conclusions in a collective agreement. If either party neglects to call a ballot within a four weeks’ period from signing, the collective agreement enters automatically into force. The CAPS Act is silent on how to verify a signed collective agreement in the public sector such as on the rules of voting. If the trade union’s rules do not contain clauses on the verification of a signed collective agreement, laws on work stoppage apply.

Compromise proposal

Under TUI Act (Art. 27-31), the SCMO can submit a compromise proposal to resolve the industrial dispute which then shall be voted on as is done with a collective agreement. In principal, the Officer shall consult the parties’ negotiating committees before submitting a compromise proposal. As the law is written, he is not bound by their opinion and can put his proposal op for a vote, even if those consulted are against it. In practice, a compromise proposal is not formally put forward for voting without prior consent of the parties to the dispute.

Industrial peace

When a collective agreement has been signed the parties to that agreement waive their right to strike and lockout (peace clause). Cases concerning violations of a collective agreement or disagreements relating to the interpretation of a collective agreement can be resolved by referring the case to the Labour Court. According to the TUI and CAPS Acts it is not permissible to resolve such grievances by calling a strike.

Industrial peace does not apply to employers that are not individually or because of their affiliation a employer organization that has negotiates on their behalf, bound by a collective agreement.