Definition of Recognition Agreement
A recognition agreement in the context of industrial relations is essentially a deal struck between an employer and a group of employees, typically represented by their union, whereby the employer agrees to a process with those employees for taking action in relation to industrial matters, such as negotiating a new enterprise agreement or participating in a dispute resolution mechanism.
Such an agreement would usually be coupled with a ‘scope of bargaining’ request from the union, setting out the claims that the employees may seek to pursue in bargaining over a new agreement.
Once reached, a recognition agreement will effectively require the employer to include the union and those employees in any relevant process, including negotiations, that is required under the relevant industrial law.
By way of example, Part 2-4 of the Fair Work Act 2009 (Cth) (FW Act) states that if a group of employees and an employer have entered into a recognition agreement that is in operation and either the notice of intention to bargain or the bargaining period for a new enterprise agreement under the FW Act has commenced, then:
As explained by the Fair Work Commission (the Fair Work Commission), a recognition agreement will commonly also set out details of the representatives for the union and employer parties, and what conduct will or will not amount to industrial action during bargaining .
These agreements were particularly common during the enterprise bargaining boom, as they provided certainty for employers about the enterprise bargaining process and/or the entitlement of unions and members to take industrial action.
It should be noted that an enterprise agreement provision or term that would otherwise have been prohibited under the FW Act may still be lawful if it is included in a registered recognition agreement and not inconsistent with the provisions of the exchange of correspondence from the Fair Work Commission (or his or her delegate).
There is no legal obligation on an employer to enter an enterprise agreement with a group of employees where a recognition agreement has been entered into, but it is clearly an effective tool to streamline the process and avoid an allegation of bargaining in bad faith.
The simplest way to conclude enterprise bargaining has been reached is for an employer and union parties to enter into a recognition agreement that contains a provision to the effect that the employer will apply to the Fair Work Commission for approval of the new enterprise agreement covering the employees currently subject to the recognition agreement.
Such an approach was taken by Stapylton Concrete Co. Pty Ltd for example, where the parties entered into a recognition agreement in exchange for an enterprise agreement that could be certified by the Fair Work Commission without an employee vote.
Legal Basis of Recognition Agreements
Recognition Agreements operate within a regulatory framework composed of the EU and UK primary legislation as well as secondary legislation.
The Employment Rights Act 1999 (Recogition of Employment Interests in Trade Unions) Regulations 2000 set out the statutory procedure for recognition. The recognition scheme is overseen and administered by the CAC. Union representatives should ensure compliance with the key CAC criteria.
Firstly, a union may gain statutory recognition by making a valid request for recognition to an employer representative who engages in collective bargaining. The union may make such a request if it can command majority support from its members in any part of the UK in which the business has been operating for six months. Furthermore, the request can only be made in respect of employees in a "bargaining unit" that the CAC considers appropriate. When determining the bargaining unit to which the request applies, the CAC will have regard to factors such as the availability of facilities for training union members and the needs of the labour market.
The CAC’s powers extend to setting the parameters of the negotiations between the employer and union once recognition is achieved. However, it does not arbitrate in collective agreement disputes between the two parties.
The CAC is also empowered to decide whether recognition should be withdrawn under specified circumstances, normally when industrial action is taken in a way that contravenes the relevant provisions of the legislation.
Finally, regulation 13 of the Trade Union and Labour Relations (Consolidation) Act 1992, as amended by the 2004 Regulations, sets out the mechanism whereby an employer may challenge the legitimacy of an application for recognition. The CAC must refuse recognition if the application is vexatious or is otherwise not in the interest of good industrial relations.
An agreement will not be legally enforceable until a certificate of recognition is issued by the CAC. There are no prescribed requirements for the content of a recognition agreement and it is advisable that a union representative ensures compliance with the relevant statutory requirements. However, the terms of such agreements can cover a broad set of issues, including the breadth of the bargaining unit, means of communication between union and management, facilities for union representative(s), the approach to be adopted in the event of a dispute over pay, hours, holidays or other conditions, and procedures for identifying an individual’s role in the bargaining unit.
The Role of Recognition Agreements in Industrial Relations
Recognition agreements occupy a crucial position in a variety of contexts within the sphere of labour relations. They are most commonly referred to in the context of the recognition and de-recognition of trade unions under the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULRCA 1992"). There are separate rules set out in Schedule A1 of TULCRA 1992, which provide a framework for recognition between employers and trade unions. In addition to a recognition agreement being inherently tied up with a TULRCA 1992 Schedule A1 process, recognition agreements may also be used in the context of collective agreement recognition and, more recently, have been used as an alternative to collective agreement recognition.
A recognition agreement is effectively a contract between the employer and the trade union. In consideration for the union agreeing to abide by the terms of the recognition agreement, the employer gives certain concessions to the union in terms of its rights to negotiate on behalf of the employees it represents. This is a particular feature of collective agreement recognition, but is an implication of the trade union recognitions process too. In the context of trade union recognition pursuant to TULRCA 1992, Schedule A1, there is an express provision that an employer does not have to recognise a trade union in respect of those areas which are specifically excluded from collective bargaining, including pay rates, direct access of employees to management (in certain circumstances), discipline and dismissal. However, these are expressly matters of collective bargaining which can be negotiated by the trade union with the employer. The value to an employee of being represented by a trade union in negotiations with an employer is the ability to negotiate as part of a larger body of employees, rather than having to input into negotiation with the employer on an individual basis.
The general principle behind recognition agreements is that the employer agrees to negotiated, rather than unilateral, management of individual or collective wellbeing, terms and conditions, policies and procedure issues.
In this sense, recognition agreements, whether pursuant to TULRCA 1992, Schedule A1, or otherwise, help to provide a stability of relationships between an employer and its employees, or at least a large body of employees. As there is a level of contractualisation of the employment terms and conditions, both parties are able to agree to a formalised process of addressing issues which arise under the agreement, thus making for a predictable, rather than a reactive, relationship between the parties.
Drafting a Recognition Agreement: A Step-by-Step Guide
A recognition agreement must be in writing, signed by the parties, and intended by both parties to be legally binding. Provided those three minimum requirements are satisfied, a recognition agreement will be enforceable, even if the agreement does not fully address an employer’s rights and obligations under the Industrial Relations Act.
If the parties intend to enter into a recognition agreement, the following steps should be followed to draft a simple agreement:
- Identify the Union;
- Identify the employees to which the agreement will apply;
- Describe what industrial activities may be undertaken by the union to demonstrate its capability to represent the employees;
- Describe what obligations the union will take with respect to the company’s employment practices;
- Describe the parties’ process for agreeing upon how industrial matters will be dealt with;
- Describe the mechanism for resolving disputes.
- Obtain the signature of the decision maker of each party;
Given the minimal nature of a recognition agreement, it is important that the parties are aware of their options and ensure that the agreement is properly drafted for those options to be effective. For example, a recognition agreement does not give the union "exclusive right of entry" (an element which is required for a registered organisation to exercise entry under the entry requirements of the Industrial Relations Act). For a union to have those rights, the agreement needs to include an express clause stating that the Union can take any industrial action (including enter the premises) for the purposes of pursuing its industrial aims (under s 333 of the IR Act). A failure to do so will prevent the entry provisions of the IR Act from being available to the union.
Limits and Solutions to Recognition Agreements
Recognition agreements can sometimes lead to disputes, either between the employer and the union or within the union itself. There are a few common industry-wide challenges that could arise regarding recognition agreements with unions, and there are avenues for resolving issues before they escalate.
Disputes over representation of a workplace group may occur if multiple unions are requesting recognition at the same time for workers in the same workplace. Employers must be cautious when a union’s membership includes workers at more than one workplace. Even if the organizing campaign was at one workplace, the union could end up attempting to represent workers at multiple workplaces with a single agreement.
These general industry challenges are often avoided during industry-wide unionization drives. But even a wage and benefits agreement covering several employers will result in confusion over the number of unions trying to expand their reach into new workplaces. These roadblocks can pose serious problems to a company trying to implement a recognition agreement.
A common area for dispute is when a recognition agreement does not specify what happens if workers are laid off, or what happens to those workers regarding the agreement if they are later rehired. By default, a recognition agreement would still be expected to be applied to rehires, but some employers and unions prefer to include express language. An employer may wish to ensure the recognition agreement does not cover laid-off workers or rehires, to avoid increased benefit costs.
Verification of union membership is also an often-overlooked issue. While a majority of employees at a workplace may have signed union authorization cards, the union may be able to produce documentation of additional signatories in the absence of a proof of majority. Some employers seek a verification process that will establish the union has a majority, so that it cannot create a bargaining chip with the employer by producing an unverified card count. Both sides need to have clear expectations and understandings regarding the verification process.
An employee who does not qualify as part of the bargaining group may still sign a union authorization card. However , such cards could later be used to challenge eligibility for a contract that otherwise covers workers only in a particular job class or workplace. An employer may seek to exclude such signatories when counting bargainability. Excluding such cards can reduce the risk of a bargaining unit by workplace becoming "fluid" during the life of the collective bargaining agreement.
As mentioned in the previous blog post, it is vital to include clear, easy-to-understand and precisely-worded terms in a recognition agreement. Anything that is left vague is bound to cause confusion, which leads to further disputes. Unions and employers would both benefit from spending extra time, money and effort up front to fully flesh out agreement terms.
In Missouri, those disputes regarding recognition agreements are largely resolved under a "card check agreement" process. Most issues can be resolved by the National Labor Relations Board or other state and federal agencies. But card-check-recognition agreements may be handled internally as non-binding arbitration. This could lead to disputes if, lower than something like interest arbitration, (the binding arbitration method) becomes binding in practice.
A common frustration regarding a recognition agreement is that some employees have joined the union and some have not. Employers should always remind workers that both unions and non-union employees are expected to come to work whenever there is a labor shortage. In addition, it is usually the duty of the union to encourage its members to take on extra shifts if a labor shortage arises, and to volunteer for overtime if the employer requests it.
Employers should keep in mind that organizing activity can be chaotic, and even if management does everything by the book, issues of credibility, reliability and operational ability might arise. But most legal hurdles over recognition agreements can be anticipated, avoided, managed, and resolved.
Recognition Agreement Case Studies
Recognition agreements play a pivotal role in many labor negotiations. The following case studies present a detailed examination of how these agreements are used, including the benefits and strategic advantages they can theoretically provide.
Freight and Legislative Conference: Agreement with Teamsters Regarding Development of New Local Control Language (1926) In an agreement between the Freight and Legislative Conference (F&LC), also known as the Railroad Division of the Brotherhood of Maintenance of Way Employes (BMWE), and the Brotherhood of Railway & Steamship Clerks, Freight Handlers, Express and Station Employees (BR&S), the two unions agreed to joint jurisdiction over clerical work previously assigned to locomotive firemen and train engineers that was consequential to reductions in train crews. The F&LC/BR&S agreement referenced above, however, may not have been the first such recognition agreement. In 1917, the same unions entered into a similar agreement.
United Airlines: Agreement with "Council of Machinists" Covering Aircraft Technicians (1981) On August 16, 1981, United Airlines and the three unions representing United’s aircraft technicians ("ATAA"), engineers ("UALA"), and stock clerks ("ATSC") entered into a recognition agreement, which merged the three unions’ contracts into a single agreement covering all aircraft technicians. The agreement, however, did not contain any traditional union security provisions or recognize any agency shop, union shop, or other forms of union security. Instead, labor-management affected the content of such collective bargaining provisions, with United maintaining the terms of employment.
Burlington Northern: Agreement with Brotherhood of Railway, Airline and Steamship Clerks (1986) In 1986, Burlington Northern entered into an agreement with the Brotherhood of Railway, Airline and Steamship Clerks (BR&ASSC) for the purpose of transferring the work of reporting and clearance terminals (R&CT’s) to small freight houses, thus eliminating R&CT’s in the process. The parties found that the elimination of R&CT’s would reassign, among other jobs, the work of calling track switches at various junction points. Under the agreement, Burlington Northern eliminated the R&CT’s systemwide. The reallocation of costs of switching calls was a complicated process that took place over a long time period though. Under a later amendment to the original agreement, Burlington Northern agreed that calls to 711 junction points near or off its mainline could not be performed by those in the pool of employees working outside the home terminal, if work was available within the home terminal.
Recognition Agreements: Future Developments
As globalisation continues to affect a broader cross-section of industries and workforces, the choice of whether or not to enter into a recognition agreement is likely to be subject to further examination by unions and employers alike.
With industrial relations policies and practices evolving alongside shifts in the Australian workforce demographics, the issue of whether unions can obtain a recognition agreement with a non-unionised employer will, we believe, continue to be of interest and of practical significance in the future.
Even though the issue concerning recognition agreements requires detailed consideration on a case-by-case basis , it is clearly preferable for non-unionised employers to reach an agreement with a union rather than risk losing control, such as by entry of a favourable order by the Fair Work Commission.
Given that the success of unions in respect of obtaining recognition agreements has historically tended to correlate with their ability to use the conciliation and arbitration process as a pressure point, this will continue to feature prominently in any future developments relating to recognition agreements.
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