Summary:

I.

Pursuant to the Act on Collective Agreements (hereinafter, the “Act”), the Federal Ministry of Labour and Social Affairs can declare collective labour agreements to be generally binding. This means that they do not apply only to parties to the agreement, i.e. trade unions and employer associations as well as their members, but also to others. For a long time, such declarations were common in the construction industry. Within that industry, collective agreements have been concluded to establish social insurance funds to provide benefits in the areas of holiday, pensions and professional training, which are financed by contributions of employers. These contributions were determined within the Collective Agreement on Social Insurance Funds (hereinafter, the “Agreement”). In principle, the obligation to make such contributions is limited to employers who are bound by the Agreement, due to being a member of an organisation that has been involved in its conclusion. Yet in the past, the Agreement has routinely been declared generally binding, pursuant to § 5 of the Act by the Federal Ministry of Labour and Social Affairs. This required employers not bound by the Agreement to contribute to the funds as well.

In 2016, however, the Federal Labour Court held that the declarations of the agreements’ generally binding nature made in 2008 and 2010 were invalid. The Court argued that the declarations had not satisfied the requirements set out in the Act applicable at the time, namely being carried out by the competent Minister themself, and to originally apply to a minimum number of employees. A social insurance fund and a trade union that had concluded an agreement on such funds challenged this order.

II.

The Federal Constitutional Court did not admit the constitutional complaint for decision. The applicants’ freedom of labour coalitions had not been violated by the order of the Federal Labour Court.

The freedom of labour coalitions in Article 9.3 of the Basic Law does indeed protect the right of parties to collective agreements to also conclude agreements that intend to bind non-members. However, there is no fundamental right that such agreements must be declared generally binding. Rather, the state cannot assign its legislative powers to non-governmental organisations at will, and it cannot subject its citizens to the legislative powers of parties who have no democratic legitimation or legitimation derived from membership without imposing any limitations on these powers.

Article 9.3 of the Basic Law does not contain a requirement that the practical success of any aim pursued by a labour coalition must be facilitated. Rather, this fundamental right guarantees that labour coalitions have an actually viable opportunity to use their activities to safeguard and promote labour and economic conditions. Insofar as this opportunity is not afforded, relief can be sought. But no such scenario could be identified in the case at hand. The requirements imposed by the Federal Labour Court on declarations of the agreement’s generally binding nature do not negate the labour coalitions’ efforts to achieve their aims. Requiring specific members of staff within the competent ministry to take responsibility for the declaration does not hinder the opportunities of a labour coalition either. The requirement that at least 50% of employees to which the Agreement applies work for employers who are bound by the Agreement does indeed restrict the coalitions’ options of extending their collective agreements to outsiders. However, it does not remove all options of exercising the freedom of labour coalitions.