Mohammad Bashayreh, PhD, senior legal consultant.

Significance of CBAs

A collective bargaining agreement (CBA) plays a vital role in regulating work and employment conditions. Article 2 of the Labour Code stipulates that a CBA organizes the conditions of work. As such, a CBA is not, and should not, be confined to prescribing pecuniary benefits for the employees. Indeed, the mandate of a trade union under article 99 of the Labour Code includes the contribution to the improvement of work conditions and terms and labour relations in general through collective bargaining and CBAs. Besides, the parties will usually agree to a mechanism for joint enforcement and administration of the CBA. Like legislation, therefore, CBAs constitute a source for the regulation of labour relations.

However, unlike legislation, international labour conventions, and enterprises’ bylaws, CBAs are consensual as they are made voluntarily through direct negotiations between the representatives of the employees (or their union) and an employer (or employers’ association). By virtue of their voluntary nature, CBAs can better address the needs of the particular employees and employers, whereas legislation reflects the State’s policy tailored mainly towards general social stability.

Despite its consensual basis, however, the legal effect of a CBA is distinct from that of a contract concluded by private parties. A CBA sets rules that have normative value; that is to say, the provisions of a CBA may bind non-signatory parties; like legislation, a CBA establishes standards for individual labour relations so that an individual contract may not provide a less favorable treatment to employees.  A CBA may not be repudiated in accordance with the principles of the law of contract contained in the Civil Code. A CBA does not create an individual work relationship; it is the legal frame work for individual work contracts.

Negotiations for a CBA are not necessarily triggered by a labour dispute. Indeed, negotiations and collective bargaining should be an ongoing process within a defined procedural framework for regular consultations and dialogue between the representatives of the employees and the employer.  The process of bargaining the settlement of disputes may be facilitated through outside assistance in the form of conciliation or mediation. The more labour relations are governed by CBAs, the more stable these relations should be, provided CBAs are duly implemented.

As such, the importance of CBAs is manifold. First, CBAs are important as a legal tool to regulate the workplace. They may introduce rules not covered under the Labour Code or provide a more favourable treatment for the employees than is contained in the Code. Second, CBAs can benefit the market by reducing unfair competition among employees through ensuring similar conditions; CBAs also help link employees’ benefits to productivity and economic development. Further, the positive impact of CBAs can be felt at the social level as they contribute to the improvement of the employee-management relationship, the work atmosphere and, consequently, the welfare of the employees and their families.

Relationship with the Employer’s By-law

According to article 55 of the Labour Code, each employer hiring ten or more employees must lay down a by-law containing: work hours, daily breaks and weekly days of rest, disciplinary offences and pertinent sanctions and actions, including dismissal and the manner of implementing these actions, and other matters necessitated by the nature of the work. Such by-laws have to be ratified by the Minister of Labour (or any officer authorized by him); they are not effective unless and until they are so ratified.

For ratification purposes, employers’ by-laws are filed with the Legal Department at the Ministry of Labour, where they should be reviewed to ensure they do not contain any provision that is inconsistent with a mandatory rule of the Labour Code. However, since CBAs contain normative rules, the Ministry of Labour would review by-laws against CBAs that are binding on the respective employers.

Although the Labour Code does not explicitly mention CBAs within the mandate of work inspectors, relevant international and Arab labour conventions make it clear that inspection covers the provisions of the labour law and CBAs. Article 98 of the Arab Labour convention number 98 on the Levels of Work 1976 provides that “the legislation shall regulate work inspection and its mandate to ensure the implementation of the provisions of the labour legislation, collective bargaining agreements, and internal by-laws in respect of the protection of work conditions and the employees . . .”.

Also, article 27 of the ILO Labour Inspection Convention number 81 of 1947 states that “In this Convention the term legal provisions includes, in addition to laws and regulations, arbitration awards and collective agreements upon which the force of law is conferred and which are enforceable by labour inspectors.” It follows that, if an employer’s by-law conflicts with a binding CBA, the work inspector will have two sets of conflicting provisions that the employer is required to comply with, where compliance with one may result in violating the other.

Needless to say that if one instrument (the CBA or by-law) is obviously more favourable than the other, and the employer complies with the more favourable instrument, no issue of employer’s default should arise. However, in some aspects, regulatory rules contained in a by-law and a CBA may not be susceptible to an absolute judgment as to which is more favourable to the employees (e.g., safety measures). Hence, by-laws must be compatible with binding CBAs, and this compatibility has to be verified by the Ministry of Labour when reviewing new by-laws for ratification.

If an existing bylaw is inconsistent with the CBA, the CBA takes precedence so long as it is more favourable than the relevant bylaw. This is because their binding effect is recognised by law, and the favourable terms prevail in accordance with section 4(b) of the Labour Code.

Legislative requirements for CBAs

The legislative guidance on CBAs is contained in articles 2, 42, and 43 of the Labour Code which lay down certain requirements and parameters with which CBAs must conform. Thus,

  • CBAs can be signed by a group of employees or a trade union on the one hand, and an employer or employers’ association on the other; since union CBAs are most common;
  • A CBA may not contravene mandatory provisions of the Labour Code;
  • The Labour Code stipulates certain formalities that a CBA must satisfy. First, a CBA must be made in writing in accordance with articles 2 and 39(a) of the Labour Code, otherwise a CBA is not valid. Further, the CBA must be organized signed in three original copies, one kept by each party, and the third one has to be deposited with the Ministry of Labour. Finally, the CBA must be registered in a special registry at the Ministry of Labour and published in the official gazette.
  • Under the Directives relating to the registration of collective bargaining agreements, issued by the Minister of Labour pursuant to article 39(b) of the Labour Code, the parties to a CBA must register an original copy of it at the Ministry of Labour within 30 days from the date of signing it.
  • The Labour Code does not state that a CBA will be void if the registration procedure is not completed. Indeed, article 40(a) of the Labour Code may suggest that a CBA is binding on the parties from the date designated in it regardless of registration. Nevertheless, the significance of the registration procedure lies in the fact that the provisions of the CBA will not be enforceable by the work inspectorate of the Ministry of Labour unless the CBA is formally registered.
  • The registration of the CBA can be effected by either party or jointly by filing one original, signed copy of the CBA. The filing takes place at the Labour Relations Directorate. And no levies apply upon CBA registration. Once registered, the Ministry of Labour will procure that it is published in the official gazette.
  • While the Labour Code does not stipulate explicitly that a CBA must be written in Arabic, this is required necessarily due to the fact that CBAs shall be published in the official gazette. However, a CBA may be organized in additional languages as the parties deem necessary for the purpose of communicating its content to the beneficiary employees.
 Term, Extension, Renewal, and Amendment

Article 42 of the Labour Code requires CBAs to contain clauses dealing with their term, extension, renewal, and amendment.  However, the following legal parameters should be borne in mind:

  1. The parties can set the date of effectiveness of the CBA as they may mutually agree. If the CBA does not mention the date of its effectiveness, it shall be deemed effective upon its registration at the Ministry of Labour according to article 39(a) of the Labour Code.
  2. Article 40(a) of the Labour Code provides that a stipulated term for a CBA may not exceed two years. It is common in other jurisdictions to set a maximum period for the effectiveness of a CBA. This is a reasonable approach since the conditions of the enterprise, the market practices, and the economic situation in general may change materially during the currency of the CBA, which renders it irrelevant or unfair to either party or both of them.
  3. If the CBA is silent as to its term or is made for an indefinite term, upon the lapse of two years from its effective date, either party may issue a notice to the other for the termination of the CBA at least one month before the specified termination date.
  4. Article 41(a) of the Labour Code provides for a statutory extension of the CBA for a maximum period of six months if negotiations for its extension or renewal have commenced before its expiration. However, if no agreement is reached to extend or renew the CBA within the period of the statutory extension, the CBA shall come to an end automatically upon the lapse of the statutory extension.
  5. Article 41(b) of the Labour Code stipulates that the employer may not detract from the rights that the beneficiary employees acquired under the expiring CBA.
Can a CBA be amended to suspend or remove worker benefits?

I submit that a CBA may be amended by the agreement of the parties to suspend or remove worker benefits. Admittedly, this is against a generally held (mistaken) view that CBA amendment cannot take away any worker benefit.

My opinion on the amendment of CBAs rests on the generality of the legislative provisions permitting the amendment of the CBA. Also, through setting a maximum term of a CBA of two years, the intent of the legislature is clearly to protect the parties against material change in circumstances that renders the CBA burdensome to either party, the employer or workers. In my opinion, there is no legal basis to assert that a CBA amendment cannot be amended but to make it even better for the workers.