Working with trade unions

Designed to help companies support progress on worker representation, this section, references the global trade unions structure, women’s representation in relation to Freedom of Association.

There is an expectation that businesses and employers have a positive and supportive attitude towards investing in worker representation as enshrined in universal conventions and core labour standards.

The ETI base code includes the responsibility of members to ensure that the right to freedom of association (FOA) and collective bargaining (CB) are respected. This means having an open attitude to trade unions and to work with their suppliers to find constructive solutions where this is not the case.

The ETI Base Code clause two expectation  

Under ETI’s Base Code, and in the interest of promoting collective bargaining, companies should recognise trade unions in a factory or on a farm. Suppliers should not bypass trade unions to negotiate terms and conditions directly or individually with workers. Where workers are not represented by a trade union, suppliers should engage with democratically elected worker committees or worker councils. 

2.1 Workers, without distinction, have the right to join or form trade unions of their own choosing and to bargain collectively. 

2.2 The employer adopts an open attitude towards the activities of trade unions and their organisational activities. 

2.3 Workers representatives are not discriminated against and have access to carry out their representative functions in the workplace. 

2.4 Where the right to freedom of association and collective bargaining is restricted under law, the employer facilitates, and does not hinder, the development of parallel means for independent and free association and bargaining.

Trade union membership 

As a tangible result of and intrinsically linked to FOA, trade unions represent the ideal model for worker representation. Independent unions have legal protection, access to resources, support of wider trade union networks, and are free from influence from the employer.  

Where FOA is restricted and where unions cannot operate either due to legal restrictions or capacity, the best available form of independent worker representation should be pursued.

What is a trade union?

A trade union is an organisation of workers that comes together to achieve common goals, represent those workers and protect members’ rights. This may include safeguarding the integrity of their trade, improving workplace safety standards or attaining better wages, benefits and labour conditions through collective bargaining with an employer.

While legal requirements vary from country to country, where trade unions are legally permitted, there is likely to be a process of recognition and formal registration of unions with the local authorities.

Union members form committees and elect leaders with a mandate to discuss the issues that matter to the membership. This may include the negotiation of wages, company rules, complaint procedures, rules governing the hiring, dismissal and promotion of workers, benefits and workplace safety and policies. It can also include productivity, quality and work planning.

Trade unions traditionally have a constitution that details how their bargaining unit (or may be called a workplace union) is governed, along with their affiliation to a sector or industry federation, or a national centre or confederation that represents workers’ interests within the sector or nationally.

Alternate forms of representation 

Recognising that there are situations where unions face significant challenges to carry out legitimate activity – this should not be used as a reason to establish alternative forms of representation that frustrate or interfere with union access or engagement in the future.  

On the contrary, steps should be taken to help build social dialogue, develop worker and employer industrial relations skills, support engagement with unions and build the relations that will enable full representation. This not only helps workers access their rights but reduces the risk of disruption.  

However, members should be aware that any alternative or interim forms of representation requires a greater commitment to compensate for the lack of union recognition, for example,  

• greater use of leverage to offset lack of legal protection,  

• greater provision of capacity building support, such as access to information and training, and 

• to offset the lack of union networks and strict requirements on the employer to respect the rights of representatives to speak and act freely and equally in representing the workforce. 

Workplace cooperation forums or committees 

The ILO guidelines for worker participation or cooperation forums and committees are mainly found in its Recommendations – listed with links in the recommended steps in this document. While they can promote effective consultative and cooperative practices between employers, workers and trade unions, they are not a substitute for collective bargaining.  

A critical difference between a workplace committee and a trade union is that committees have little or no decision-making powers in negotiations with employers and are not supported by the resources and guidance available from a trade union.  

Trade unions seek to negotiate and agree resolutions on workplace and employment issues on an equal standing with employers.  Committees can therefore make proposals or recommendations to managers on behalf of workers but may not be able to influence the outcome.

Legitimate versus “yellow” unions 

A yellow union, a workplace collective group or association sponsored, controlled and often financed by the supplier’s company or its managers, may appear to be structured to represent workers, but is not based on employees’ free choice. These may also be called ‘white unions’, ‘pocket unions’ or ‘paper unions’. 

Although yellow unions usually take the form of associations within a single company, national unions in some countries may also work with employers to hinder or block the efforts of genuinely representative worker organisations. An employer may sign a collective agreement with one of these ‘non-aggressive’ unions without the workforce’s knowledge or consent. 

Such ‘sweetheart agreements’ or ‘protection contracts’ generally involve the employer paying fees to the union and agreeing a minimum legal level of wages and working conditions, in return for the union guaranteeing not to intervene in the company’s affairs. The fees usually take the form of compulsory deductions from workers’ pay as ‘union dues’, without any consultation with workers.  

Supplier deals with such sponsored and controlled unions prevent genuine unions from representing the rights and interests of the workforce effectively. ILO Conventions outlaw such arrangements and stipulate that the ability to freely choose a union is a fundamental worker’s right and not a matter for employers.

Supplier deals with such sponsored and controlled unions prevent genuine unions from representing the rights and interests of the workforce effectively. ILO Conventions outlaw such arrangements and stipulate that the ability to freely choose a union is a fundamental worker’s right and not a matter for employers.

Management-appointed ‘worker representatives’ are not an indicator or guarantee that workers are free to raise collective concerns and have no role in ensuring freedom of association. Unless workers can freely choose their own spokespeople, the process lacks credibility.

For effective dialogue to take place, workers need to be confident that they can raise issues and negotiate solutions directly with employers, without fear of reprisal.

An ethical trading policy established by the brand or retailer should set out the ground rules defining how workers can organise and choose their own representatives, in order to voice their concerns and aspirations to managers.

This should guide the company’s engagement with suppliers, manufacturers and producers with respect to FOA and CB.

Collective bargaining

The ILO’s Collective Bargaining Convention, 1981 (No. 154) defines collective bargaining (CB) as, “all negotiations which take place between an employer, a group of employers or one or more employers’ organisations, on the one hand, and one or more workers’ organisations.”  It typically only takes place where there is provision under law for trade union activity.

According to Convention No. 154, the term “collective bargaining” covers negotiations related to:

• Determining working conditions and terms of employment; and/or
• Regulating relations between employers and workers; and/or
• Regulating relations between employers or their organisations and a workers’ organisation or workers’ organisations.

In unionised workplaces, trade unions act as the formal representatives of workers for the purposes of collective bargaining. In the absence of formal unions, workers’ interests may be raised by elected worker representatives.

Scope of collective bargaining

The scope of collective bargaining – whereby worker representatives or trade unions formally negotiate improved conditions of employment with employers, on behalf of workers – includes all matters related to an employee’s pay, labour conditions and employment, such as wages, benefits and allowances, working time, annual leave, training, equal opportunities and trade union facilities.

Collective bargaining builds on freedom of association and is typically the practical focus of worker representation efforts. It is a fundamental workplace right, rooted in the ILO Constitution and reaffirmed in the ILO Declaration on Fundamental Principles and Rights at Work.

The formal process of dialogue between workers and managers:

• Enables workers to articulate and negotiate their terms and conditions of employment through their trade union

• Is a key means through which employers and worker representatives, ideally trade unions, can establish fair wages and working conditions

• Provides the basis for sound labour relations and early resolution of disputes.

Collective bargaining agreements

Collective bargaining agreements may or should also address the rights and responsibilities of the supplier and elected worker representatives involved, in order to help achieve harmonious, productive industries and workplaces. Enhancing the inclusiveness of collective bargaining and collective agreements is a key means of reducing inequality and extending labour protection.

At the global level, international framework agreements (IFAs) – also referred to as global framework agreements (GFAs) represent the chief mechanism through which to manage trade union relationships.

Brands and retailers may enter directly into agreements with trade unions to facilitate worker engagement in the due diligence process and through grievance procedures.

Examples of direct agreements with trade unions include freedom of association protocols, global framework agreements (GFAs) and company agreements:

• IFAs/GFAs are agreements negotiated at a global level between a company and a global union federation. They serve to uphold workers’ rights across a company’s operations and supply chain by implementing standards on trade union rights, health, safety and environmental practices and quality of work principles, regardless of the standards existing in a country.
• Freedom of association protocol agreements establish a joint understanding and commitment between trade unions and companies regarding strategies to promote freedom of association as part of improving industrial relations within a given context. They may be established locally between a single company, supplier and trade union, or at a regional or sector-wide level between a group of companies, suppliers and trade unions.

Beyond the efforts of individual companies, global sector agreements between a group of companies and trade unions may also be established to address specific-sector risks through collaborative initiatives.

Benefits of negotiation

The process of joint decision-making inherent to collective bargaining is distinct from other forms of governance such as government regulation, individual contracts and/or the unilateral decisions of employers. However, the value of good faith negotiations between trade unions and employers should not be underestimated. In the workplace, they can foster a commitment to help workers improve their skills, improve pay and conditions and provide greater employment security, which in turn boosts productivity and reduces the costs related to high staff turnover. Bargaining in good faith also means that each party should make every effort to avoid any unjustified delays in reaching agreements.

Employers should share relevant financial information about the company’s economic position, in order to allow workers to engage in negotiations effectively. Agreements should be binding and implemented at a minimum throughout the term of the agreement. Failure to implement collective agreements undermines the principle of good faith.

Trade union members protection

No employee should be prejudiced in employment due to past or present trade union membership or legitimate trade union activities. Protection against acts of anti-union discrimination should cover: hiring, dismissal, and discriminatory measures during employment such as transfers, downgrading, reduced access to wage enhancements (e.g. bonuses or overtime) and other biased or discriminatory acts.

All practices involving the blacklisting of trade union officials or members constitute a threat to the free exercise of trade union rights. Governments are obliged to take stringent measures to combat such practices by laying down explicit remedies and dissuasive sanctions against acts of anti-union discrimination

Trade union representatives

Workplace representatives are elected at the workplace by members of a union. The Union Executive Committee in dialogue with the employer will determine the number of representatives, this will be agreed and be part of the collective bargaining agreement.

Representation is an important part of the union’s role and will in most instances be written into the Union Constitution, stating to whom representatives are accountable, for example, a Branch Secretary, Treasurer or the Chair of the Executive Committee.

Negotiating an annual or bi-annual collective bargaining agreement on behalf of workers is often the tip of the iceberg for elected representatives. Their many other important day-to-day activities may include:

• Dealing with issues in the workplace ranging from sexual harassment to safety, pay or overtime discrepancies.
• Knowing the relevant occupational health and safety, environmental and gender equality laws, and monitoring implementation at the workplace.
• Representing members in collective or individual disputes, for example, if a member is threatened with dismissal or if managers want to make changes to the workplace that has an impact on workers without consulting the union or workers.
• Monitoring dispute procedures so they are implemented correctly. This could be following up compensation claims, monitoring the use of overtime or investigating accidents.
• Being accessible to members, listening to their concerns, answering their questions and keeping members informed of progress on negotiations or grievances.
• Educating the workforce on rights, responsibilities, protections, health and safety, equal opportunities and changes to working practices.
• Conducting formal and informal meetings to involve members in decision-making; preparing and giving reports and speaking in public on fundamental workplace issues.

Resources

Agreements, protocols and research tools

Wage Indicator Foundation: database of collective agreements from 54 countries. Also includes sample agreements and country models.

Indonesian Protocol: A sector agreement on Freedom of Association.

IUF Global Union: database of Global Framework Agreements with multinational companies.

IndustriALL Global Framework agreements with multinational companies.

Country collective bargaining references

International centre for trade union rights (ICTUR) FOA and CB map (ICTUR is an international NGO that brings together a global network of expertise on international law, trade union rights, human rights, and industrial relations)

Interactive decent work map

Additional ILO resources

Collective bargaining and a fair society

Recommendations

1. Review policy position on collective bargaining and trade unions.
2. Map sourcing country ratification of:
   1. Right to Organise and Collective Bargaining Convention, 1949 (no.98) – the Application of the Principles of the Right to Organise and to Bargain Collectively
   2. Workers’ Representatives Recommendation, 1971 (No.143) – a recommendation concerning Protection and Facilities to be Afforded to Worker’s Representatives
   3. Identify local labour regulation for the rules governing trade union recognition, representatives and collective bargaining arrangements.
      1. This information is free and easy to access from the ILOs country profile website and provides links to a country’s national legislation. This includes information, for example, on general provisions, FOA, CB and industrial relations, tripartite consultations, conditions of work and occupational safety & health.
   4. Map site trade union, local federation/s and national centre/s.
   5. Request evidence of bargaining agreements, pay settlements and minutes of trade union and management meetings.
   6. Where appropriate, verify relationship and/affiliation to a Global Union Federation or the ITUC