UNI APRO FINANCE NATIONAL TRAINING COURSE ON COLLECTIVE BARGAINING FOR FINANCE SECTOR UNIONS IN INDONESIA

3-4 NOVEMBER 2012, JAKARTA INDONESIA Aim: To develop the participants understanding of the basic elements and importance of a collective agreement in assisting members and in strengthening the trade union. Objectives: At the completion of the session the participants should be able to: define a collective agreement; describe the value of a collective agreement to both workers and management; list the ten key elements in a collective agreement. What is a collective agreement? Every worker should have a contract of employment. In some countries the contract of employment must be written, it must contain all of the terms and conditions of employment and may refer to rights and obligations under legislation. In some countries the contract of employment may be very limited or even oral and may include may implied arrangements. Obviously a detailed written document is better. The International Labour Organisation (ILO) encourages the development of collective bargaining. It does so because it recognises that individual workers (except in the smallest establishments) do not have equal power with the employer. In addition many employers recognise that it is easier to regulate the working relationships for all workers than to develop a contract individually with each. Collective bargaining is the process by which a collective agreement is reached. Most collective agreements have simply grown over time becoming more sophisticated as the demands of the organisation grow. The following document is not presented as an example of an actual collective agreement. It is presented to indicate the range of issues about which trade unions and employers may wish to bargain. The union must develop policies to deal with these issues. In different countries and industries different solutions have been found to them. The outline of a collective agreement presented here is structured in ten articles. Each article deals with a specific range of similar issues. In order to appreciate the full rights and responsibilities of workers and employers under a particular matter in the collective agreement it may be necessary to refer to several articles or clauses in the agreement. For example, when dealing with how much a worker should receive for certain overtime it will be necessary to check the articles dealing with the job description, the hours, and the wages.

The trainer should collect a number of collective agreements from industries in their country to become familiar with them. It would be useful to re-write one of them using the format used in the training course. This will both familiarise the trainer with the format, and will highlight any difficulties in using the format. It would also be worthwhile asking international trade union organisations to provide examples of collective agreements from other countries. 1. Recognition Agreement name, parties This article should commence with the name of the Agreement. In it the parties to the agreement agree to recognise each other. On the one side will be the employer (several employers or an employers association). On the other side is the collective of workers, normally a trade union (at the enterprise, in an industry, a region etc). Recognition is an important issue by no means guaranteed in many countries. Agreed objectives for enterprise Because the future of the enterprise is critical to the welfare of both parties it may be appropriate to include in the collective agreement a statement of the intentions of the parties. The parties may wish to indicate a commitment to ensuring that the company is efficient and profitable, providing efficient services to customers, and that the workers will have well-paid, secure, interesting, safe and healthy work. Where there is agreement on consultation it may be appropriate to go further and include a joint mission statement. Both statements should be jointly determined and agreed. Supersedes all earlier agreements It is appropriate that this article note that all past agreements or individual contracts with persons covered by the agreement are superseded. The collective agreement should indicate that each worker will have a written contract of employment indicating its relationship to the collective agreement. It should also be noted that where legislation supersedes any provisions the terms of the legislation will apply (and should be a focus of correction in subsequent collective bargaining). Agree all work rules In all work places some of the conditions of employment will be covered by work rules which may not have been included in the collective agreement. It is appropriate to seek agreement that, in future, these be codified and new ones established and amended through consultation. It may also be appropriate to include them in the agreement. When seeking a first collective agreement codification of the existing work rules may be a useful starting point.

Permit check-off of union dues The union may wish to ensure regular payment of contributions by members through a check-off system. The employer may agree to deduct union dues from each pay and forward them to the union office. Members must provide the employer with the necessary authorisation to deduct payment. There may be provision for some of the dues to be paid to the union organisation in the workplace. It is appropriate that the check-off systemdeduct dues from each pay and that the financial status of the members is secure. Where check-off is not used the union will need to ensure that it has in place systems for collecting dues and keeping members financial. Union access to new starters The agreement may also indicate that the employer will advise new workers that the union is recognised and that there is a system of check-off. In addition it may be agreed that the employer will advise the union of the names and departments of new workers. Where there are induction programs for new starters the union may negotiate for an opportunity to make a presentation at the induction. All of these measures will make it easier to recruit new starters as they will not be fearful of management opposition.

2. Job classifications
Include skills and responsibility, training and qualifications In this article all of the jobs should be described. Ideally the job descriptions should include the training and qualifications required to perform the function, and the skills and responsibilities which are to be performed. Jobs with similar training, skills and responsibilities may be broad banded to reduce the range of payments making further development easier. Job classification hierarchy Where possible the classifications will be arranged in a vertical hierarchy with the lowest grade in terms of qualifications, skills and responsibilities at the base and the highest grade in terms of qualifications, skills and responsibilities at the top. By appropriate training persons should be able to progress to higher positions. Where possible the training should be linked to the formal vocational system giving wider recognition than merely in the one enterprise. The employer should be encouraged to see that adding value to employees is a good strategy for improving efficiency and quality of production, and hence profitability. For workers increased access to training means better paid and more interesting jobs. Such an approach may be preferable to one based upon service increments (a higher rate for each year of service). Service increments satisfy the need of workers for higher pay and the employers gain loyalty as workers would not receive the same pay if they moved to another employer. 3

However, most workers gain in skills and experience either through training (formal or informal) a system for recognising increased skill and moving workers to a higher classification and pay would secure greater recognition with similar results. Probation rules There may be arrangements for new employees to serve a period of probation. There should be specific rules regarding probation. It should be for a limited period (preferably not more than for three months) with provision for either side to give notice of termination. However, termination by the employer should result from some failure to met the requirements of the job and it should be possible for the worker to be advised of any shortcomings prior to the end of the probationary period. The worker should also be able to be represented by the union. Provisions dealing with probation should be included with other aspects of the discipline procedure (see Article 9). The probationary appointment should be made on the basis of prior experience and qualifications. The rate of earnings should be the same as for any other similarly skilled worker less any service increments. Non-permanent employees rules A key union objective (job security) depends upon the creation and maintenance in the enterprise of as many permanent positions as possible. However, there will be situations in which non-permanent employment may be accepted by the union with appropriate safeguards. These relate to seasonal occupations, the replacement of persons on leave of some sort, dealing with special orders, etc. Provision may be made for the employment of temporary (or casual) workers when the demand for labour increases temporarily. Unions will seek to restrict the number of hours per week they may work (if a temporary worker is working a full week perhaps a new full-time position should be created). Temporary workers may be given priority for further employment if the need arises. The hourly rate of pay for temporary workers may be higher than for permanent workers to reflect the fact that they do not receive payment for holidays, sick leave, etc. Unions will want to include as much as possible in the loading for temporary work as it will discourage employers from employing temporary workers because they are cheaper. There may also be provision for temporary workers to become permanent if they work full-time hours for more than a specified period (say three weeks).

3. Wages
This article should include all money amounts for whatever purpose - for example wages, various allowances, bonuses, payment by results rates, etc. Each time the agreement is renewed the actual amount of the pay should be indicated as well as the amount of the increase (either a flat rate or a percentage). If only the rate of increase is shown it would be necessary to check with earlier agreements to find out what is the current rate for the job. This would increase the possibility of mistakes. 4

Where payment by result schemes operate it may be appropriate not only to list the amounts agreed at the time when negotiations were concluded but to note in what circumstances other amounts may be agreed (for example when a new, or more difficult product line is introduced). The arrangements for logging the time spent on each job, noting the number of units produced, and any deductions for poor quality work should all be agreed. Ordinary hours rates For each of the classifications in the previous article there will be an ordinary hours rate of pay - the rate of pay for a person working the normal (ordinary) hours of work. This should be expressed as an hourly rate, although payment may be made by the day, week, fortnightly or monthly. The rates offered should reflect the qualifications, skills and responsibility of the classification. Premium rates Premium (or penalty) rates are paid to compensate the worker for work done outside ordinary hours, or in unusual conditions (excessively hot, noisy or dirty work, for example).

Overtime
Work done in addition to or outside ordinary working hours is paid at a premium rate. The rate is usually expressed in terms of the proportion of time to be paid. For example some hours may be paid at 1.25, 1.5, 2.0, even 2.5 times the normal hourly rate. There may be an arrangement giving some extra payment and additional recreational leave. There may be limitations in the amount of overtime which a worker may be expected to work. This may be expressed in a maximum number of hours a week or month, or may be more general a reasonable amount of overtime. Workers should be able to refuse to work overtime except in emergencies without discrimination. Unions sometimes negotiate overtime rosters to ensure that all receive a fair amount.

Shift payment
Workers who work outside normal working hours are paid a shift premium. Shift work allows the employer to achieve higher utilisation of equipment. The variable cost of production therefore falls generating opportunities for greater compensation for the workers who must work unsociable hours. The shift premium is usually expressed as a per centage of the normal rate. Some workplaces work two shifts - day and afternoon for a normal week (there may be some who work day work as well); some work three shifts; some work seven days requiring an extra crew to provide for days off. Each type of shift will lead to different levels of penalty. Where shift workers work a public holiday the penalty may be expressed only in money terms or as a combination of money and extra leave. Shift workers often have an extra weeks annual leave as

additional compensation for the stress involved in working shift work affecting family life.

licenses
Some workers are required to have a license (to drive various vehicles or equipment, to work on electricity, to perform first aid) for which payment is made. This payment may be refunded or a regular payment may be added to the base rate for having the licence and being able to assume additional responsibilities. Disability payments Payments are sometimes made to compensate for some disability associated with the work which makes it different to the ordinary. Examples include: location Location: when working on a construction site, or mine or oil rig normal facilities may not be available, and the cost of food, etc may be higher. height, dirt, heat, confined space, danger money Height, dirt, heat, danger money (ideally the situations in which payment must be made should be limited through effective occupational safety and health action to eliminate hazards). Allowances An allowance is paid in compensation for payments associated with the work. The list provided here is not exhaustive. Some allowances are paid automatically others are only paid in specific instances. travel allowance Where workers may have to travel to a distant location (for example, constructing a new shopping centre or town) there may be a payment for travel (or the employer may be required to provide transport to and from the work site). This may be conditional (paid only on days that the worker travels to the site, not paid when the worker is sick, on leave or on public holidays) or it may be paid in all circumstances. Other conditional travel allowances relate to payment for travel in unusual circumstances (when required to work late after public transport is no longer available, when required to install or repair equipment at the customers site, etc).

meal allowance A meal allowance is normally paid when a worker must work, overtime without prior notice, or when travelling away from the normal work place for longer than, say eight 6

hours, or overnight. When travelling the amount paid is in recognition that, even though the worker must always eat, meals may be more expensive since they must be purchased rather than prepared at home. incidental allowance When a worker is away from work overnight an incidental allowance to cover additional expenses such as newspapers (which may still be delivered at home) or toothpaste or cleaning may be paid. standby allowance Maintenance workers may be required to be available after working hours. The allowance is paid as they cannot go about their normal business but must stay at home, near a telephone. call back Workers may be called back to work after leaving for the day. Usually there will be limits on how often this may be done each month, on the minimum hours of payment (to avoid its use for minor problems), on travel costs and meals, etc. other Clothes, tools allowance: where workers must buy their own clothing or tools for use at work they may be paid an allowance. The clothing allowance may also include payment for laundry or dry cleaning (or, in the interests of occupational safety and health there may be agreement that the clothing will be laundered by the employer in sanitary conditions). Bonuses Some bonuses are paid to individuals, related to their effort; in other cases the payment relates to group effort. Sometimes they are fixed, in other cases they vary according to some measure: output, quality, sales. It is important that the basis for calculating the bonus is clear and that those involved can measure the amount. It is also important that all involved are treated equally. Where more senior staff get bigger bonuses without obvious effort trouble may arise. Bonuses may be paid at the time workers take their annual leave, or at some festive season (for example at Christmas or Ramadan or Lunar New Year). The amount of such bonuses varies, in some cases being several months pay.

4. Hours Ordinary hours

The agreement should make clear what are the ordinary hours of work (for which the base rate is paid). Ordinary hours are usually expressed as so many per day and week (eight hours per day, forty-two hours per week). Usually in a workplace the hours will be from, say 8 am to 4.30 pm with a half hour un-paid lunch break. It may be possible to vary these by agreement and with sufficient notice within a range of time from, say 6 am to 6 pm. Different groups of workers may have different ordinary hours - clerical and administrative workers, for example. Shift hours Where shift work is carried out (for example, three eight-hour shifts in a day) the meal break may be shorter but will often be paid. Overtime may also be worked with paid meal breaks. The agreement should indicate what are the starting and finishing times of shifts and how to deal with shifts on rest days and public holidays. Rest breaks Most agreements nominate how long a worker may work without a break. If, for some reason, the worker must work through a normal break a penalty may be charged. The worker may be permitted an additional fifty per cent increase in the length of the break. This is done to discourage the employer from expecting workers to work beyond a reasonable time without a break.

5. Leave
There are many types of leave - paid and unpaid. Each form of leave will be qualified. In order to benefit the worker may have to work for a specified period. For example, three months before receiving paid sick leave. Twelve months before recreation or maternity leave.
Annual or recreation leave

Each twelve months a worker is entitled to paid recreation leave. Normally in each fifty two weeks they will receive two, three, four weeks leave according to a national or industry standard (which may be fixed by law). In some cases the amount of annual leave is related to length of service (although why a worker with five years service needs more recreation leave than one who has one year service is not clear - it is not a good trade union principle for that to be the case). A variety of rules may apply to the taking of annual leave. In seasonal industries where the enterprise shuts-down or does little work at a particular time of the year it may mean that a part, at least, of the leave will be taken during the shut-down. There may be minimum notice requirements for arranging leave. There may be rosters to ensure that there are sufficient staff available at peak holiday periods. In some instances there are limitations on breaking up the leave. It may be the union view that, if breaking up recreation leave is permitted, no break should be less than, say, one week.

There may also be provisions requiring annual leave to be taken within a specified period after they fall due (say, not more than six months afterwards) and to prevent cashing out of the leave except when leaving the employer.
Public holidays

For a variety of reasons there are paid holidays related to national, public or religious occasions. The total number varies from country to country but is normally a minimum of six and they are often specified in the law. Some public holidays may be held on a specific day of the month (for example, in Australia ANZAC Day is 25 April). If that is a Saturday or Sunday a decision must be made whether an alternative day is granted to those who do not work on the Saturday or Sunday. Again in Australia in the case of Christmas Day and Boxing Day (25 and 26 December) an alternative is offered if either or both days fall on the weekend. Provision may be made that, if a public holiday falls during a workers recreation leave, an extra day is added to the leave. For shift workers there may be a penalty for working on a public holiday and an extra days annual leave. Sick leave Workers fall sick and cannot attend for work. The collective agreement will indicate the number of days of sick leave permitted per year. It may be necessary to provide a doctors certificate, at least for absences greater than one day. There may also be a limit on how many single day absences are allowed. A worker may have to work for three or six months to qualify. Workers may be able to accumulate un-taken sick leave. This may be attractive to older workers more subject to ill-health. However, there may be a limit on how many days may be accumulated. In some cases workers may be paid for un-taken sick days to discourage using them unless sick (on the basis that if the worker does not use the days the employer is saved disruption, and perhaps having to employ extra workers in case of sickness. If the worker simply loses the sick days it may seem logical to take them off even if the worker is not sick rather than waste them).
Parental/maternity/paternity leave (adoption)

Maternity leave; A pregnant worker will require some time off work in order to give birth to her baby. The union objective of job security requires that the job be kept open. Provision for the pregnant worker to take leave may involve paid and unpaid periods. There may be restrictions on the type of work which may be performed in the months prior to birth. There may be rules regarding how long before the birth date work should cease. Additionally, there may be limitations on how soon after the birth the worker may return to work.

The employer may be required to keep the job open for up to twelve months. In order to qualify the worker may have had to be employed for a minimum time - say, twelve months. Once the worker returns to work there may be arrangements for feeding the child. Paternity leave allows parents to decide how they will raise their children. The father may elect to raise the baby for some time after the birth. Paternity leave would then allow the mother to return to work and the father would require leave (often unpaid) with the job being kept open for a period after the father takes leave. In a more limited form paternity leave may provide several days paid leave immediately following the birth when the father may accept other responsibilities. Parental leave involves bringing these two issues together. It has particular relevance to situations in which the child is adopted, although it could be simply applied to either maternity or paternity leave with suitable amendments.
Bereavement/family leave

When there is a death in a workers family paid leave may be available. Limitations may be to restrict access to immediate family (death of parents, spouse, children). In other cases sick leave may be used when a family member for whom the worker is responsible needs nursing care.
Civic duty leave

In many countries citizens are able to take part in a range of civic duties such as jury or court duty. The worker may be entitled to unpaid leave, or to make-up pay in which the worker receives the difference between what is paid for jury duty and what would have been paid at work. Such leave is part of the acceptance that all groups in society should be able to contribute to society. Study leave ILO Convention 140 deals with paid educational leave. It encourages training for vocational, trade union training and civic education (again to encourage greater involvement and commitment to society by workers). Training for union representatives is critical to the effective implementation of a collective agreement. It will also be important in ensuring that consultative arrangements are effective. Paid trade union training leave is very important for the employer as well as the members. Ineffective workplace representatives may cause dissatisfaction leading to lower morale.

6. Job Security
Job security is a vital issue for workers. There can never be an absolute right to job security - there are too many factors outside the control of those who own and control the enterprise (as well as many which can be placed in their responsibility). However,

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there should be rules which cover all circumstances in which workers may enhance or lose their employment. In some countries there is a compulsory retirement age; in others an age at which there is ability to access an old-age pension. The collective agreement may regulate the manner in which the option of retirement may be exercised.
Termination, change and redundancy

Dismissal might involve a number of categories but also should be subject to agreed rules including union representation. These categories might include:
summary dismissal (for example, for drunkenness, fighting, theft); dismissal for unsatisfactory work (following warnings [including written warnings], positive counselling [designed to assist the worker to find a solution to the employers complaint]. Where the worker overcomes the problem the record should be wiped clean after a period such as six months); retrenchment/redundancy (where jobs are lost through new technology, restructuring, economic difficulties [here there should be advance notice to the unions members to permit discussion of alternative strategies, payment of severance payments based upon years of service and all other entitlements]).

Employment, probation, promotion, training The collective agreement should provide arrangements for employment of workers (advertising both internally and externally allowing existing workers to seek promotion or transfer) and rules on probation. Job descriptions based upon training, skills and responsibility should form the basis for training plans to give existing workers opportunities to train for advancement. Discipline and counselling A worker should, except in unusual circumstances (such as being caught in some criminal act), be entitled to a fair hearing of any complaints by the employer. A fair hearing implies:
that any accusation will be stated to the worker (it should be based upon issues such as unsatisfactory work performance); the worker will have an opportunity to answer it and the right to be represented by a union representative; any punishment will 'fit the crime' usually a number of oral and then written warnings, prior to dismissal.

In the various stages the worker should receive positive counselling designed to rehabilitate the worker. Created and Persented By : Jayasri Priyalal Director, UNI APRO Finance, Professional & Managers Sectors UNI asia & pacific Singapore

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