Case Law on the Legal Reference Problematic in Collective Bargaining Agreements

Author: Julia Parikka

In the Finnish jurisdiction, the terms of employment have been determined in various ways, including collective bargaining agreements (“CBA”). Collective agreements may, in addition to sector specific provisions, also include references to law. References made to legislation in the currently effective CBAs have, however, created obscurity in practice. The Labour Court of Finland, whose competence covers legal disputes resulting from CBAs, has in its recent case law (TT 2017: 160, TT 2017: 152, and TT 2017: 145) ruled on the so-called legal reference problematic, i.e. references made in CBAs for instance to specific stipulations of the Employment Contracts Act (the “ECA”). These references are often designed in such a way that it is not clear how the content of a specific provision of the CBA in question is considered to be governed when legislation which parties have referred to is or will be amended.

The case TT 2017:160 concerned a reference made in a CBA to the ECA in relation to concluding a fixed-term employment contract. Thus, the Labour Court was to assess the relation between the negotiation rounds of the CBA in question and the proposed and later implemented legislative additions to the ECA. The negotiations regarding the CBA were held in spring 2016, and the renewed CBA entered into force on 1 February 2017. Prior to the signing of the CBA, the Finnish government had submitted a government proposal (HE 105/2016) to include a new provision on fixed-term contracts with a long-term unemployed person to the ECA, of which the negotiating parties (the employee and employer associations) to the CBA were aware. The proposed provision to the ECA entered into force on 1 January 2017. However, the proposed provision to the ECA was not covered in said CBA negotiations. As a consequence, the parties to the CBA disagreed on whether the provision of the recently negotiated CBA without a reference to said truly new provision referred to the renewed ECA or not.

The Labour Court ruled that said reference to the ECA was incorporated into the newly negotiated CBA in its previous form, as the ECA stipulation implemented later was not discussed in the negotiations between the employer and employee associations. Correspondingly, a reference is deemed to be made to the relevant source as the source is at the time of signing of a CBA unless otherwise is agreed or unless it can otherwise be interpreted from the wording of the CBA. Consequently, the Labour Court ruled that as any additional provisions in relation to concluding a fixed-term contract were not included in the CBA, the matter was exhaustively covered in the negotiated CBA. The legal reference problematic has been similarly evaluated in the recent rulings TT 2017:145 and TT 2017:152 by the Labour Court, and the same underlying reference obscurity must exists in many other CBAs as well, which creates a space for employers to be truly alert when applying any CBA.