[Germany] Employers should prepare for new collective bargaining obligations

In Germany, the Federal Ministry of Labour and Social Affairs introduced a draft bill on collective bargaining compliance on July 22, which brings new obligations for employers, Pinsent Masons reports.

The draft law is part of the German government’s broader strategy to reverse the decline in collective bargaining coverage country-wide.

Collective bargaining agreements once reportedly covered around 75 per cent of jobs in Germany, but now only apply to approximately 50 per cent of the workforce. 

The new law will counter this by requiring that companies awarded deferral public contracts should adhere to sector-specific collective agreements. The obligation will also extend to subcontractors to ensure fair wages and working conditions are upheld throughout the supply chain.

The government reportedly emphasised that collective bargaining agreements are a cornerstone of decent work and a functioning social partnership, balancing the interests of both employees and employers to ensure reliability and security for both sides. According to Pinsent Masons, the law is designed to promote fair competition and prevent ‘wage dumping’ in publicly funded projects.

Andreas Schöberle - employment law expert at Pinsent Masons - said, “The goal of the draft legislation is to strengthen declining collective bargaining coverage. This increases the amount of bureaucracy in companies, which must prove compliance with the new, more onerous standards. Besides, the new law limits the constitutional right of companies for autonomous work conditions negotiations with trade unions.”

Source: Pinsent Masons

(Quote via original reporting)

In Germany, the Federal Ministry of Labour and Social Affairs introduced a draft bill on collective bargaining compliance on July 22, which brings new obligations for employers, Pinsent Masons reports.

The draft law is part of the German government’s broader strategy to reverse the decline in collective bargaining coverage country-wide.

Collective bargaining agreements once reportedly covered around 75 per cent of jobs in Germany, but now only apply to approximately 50 per cent of the workforce. 

The new law will counter this by requiring that companies awarded deferral public contracts should adhere to sector-specific collective agreements. The obligation will also extend to subcontractors to ensure fair wages and working conditions are upheld throughout the supply chain.

The government reportedly emphasised that collective bargaining agreements are a cornerstone of decent work and a functioning social partnership, balancing the interests of both employees and employers to ensure reliability and security for both sides. According to Pinsent Masons, the law is designed to promote fair competition and prevent ‘wage dumping’ in publicly funded projects.

Andreas Schöberle - employment law expert at Pinsent Masons - said, “The goal of the draft legislation is to strengthen declining collective bargaining coverage. This increases the amount of bureaucracy in companies, which must prove compliance with the new, more onerous standards. Besides, the new law limits the constitutional right of companies for autonomous work conditions negotiations with trade unions.”

Source: Pinsent Masons

(Quote via original reporting)