February 2024
Elizabeth Pai and Lilian Hsu
The collective agreement mechanism is one of the channels for labor unions and employers to shape labor conditions through collective bargaining processes. Under this mechanism, when one of the parties initiates a negotiation notice in accordance with the Collective Agreement Act, the other party has an obligation to negotiate in good faith (hereinafter “the duty to bargain in good faith”). This duty requires both the union and the employer not to refuse, delay, or boycott negotiations without justifiable reasons. However, it might be a little confusing to determine what behaviors might be considered as obstructing negotiations and violating the obligation. To avoid the risk of legal liability due to unfamiliarity with the rules, this article summarizes the implications and legal effects of violating the duty to bargain in good faith as follows:
1. The Connotation of the Duty to Bargain in Good Faith
Under the duty to bargain in good faith, the union or the employer must propose corresponding plans and negotiate within sixty days of receiving a written negotiation notice from the other party. During negotiations, both parties must listen to each other’s requests or claims and provide specific or proactive responses or plans to those reasonable and appropriate requests. If necessary, the party has to provide relevant evidence or information (Paragraph 2, Article 6 of the Collective Agreement Act, and Labor Dispute Adjudication No. 50 by the Committee[1] in 2016). The following explains common issues involving the duty to bargain in good faith during the negotiation process.
(1) What necessary information shall be provided during the negotiation process?
The term “necessary information” refers to information relevant to the negotiation issues, and if such information is lacking, the collective bargaining on relevant matters may be impossible or difficult to conduct. The refusal to provide necessary information is deemed a violation of the duty to bargain in good faith.
The Tribunal for Unfair Labor Practice Committee (Hereinafter “the Committee”) holds the view that the determination of necessity will change according to the progress of negotiations and the claims proposed by the parties. For example, when the employer cites financial affordability as the reason for being unable to accept the union’s demands during the negotiation, the employer has an obligation to prove its own financial situation and should provide financial information about the company. Otherwise, it will violate the duty to bargain in good faith.
(2) Can consensus reached during negotiations be overturned afterward?
In practice, it is common for negotiation meetings to be attended by representatives of the union and the employer, who then report the negotiation progress and results to their respective groups after the meetings. At this point, it is possible for the content of the consensus reached during the meeting to be overturned by the union’s general meeting or rejected by the employer’s board of directors.
In this regard, it is considered a violation of the duty to bargain in good faith if both parties have reached a consensus on the terms of the collective agreement during the meeting but refuse to sign a written agreement afterward without providing justifications for the rejection. Furthermore, as, usually, the decision power of the employer is concentrated in the board of directors, the employer’s representative can report to the board on the progress of negotiations at any time and obtain authorization on whether to agree to or modify the terms of the agreement. In contrast, it is more difficult for the union’s representative to obtain opinions from its members. Therefore, when the employer rejects a consensus that has been reached in the meeting, they should provide more reasonable and justifiable reasons.
(3) Does the employer always need to compromise when negotiations reach a deadlock?
The duty to bargain in good faith does not entail the employer’s complete acceptance of the union’s demands. Instead, it requires the employer to provide relevant evidence and engage in sufficient discussion when unable to accept the union’s demands. Even if consensus cannot be reached after sufficient communication, leading to a deadlock in negotiations, it cannot be considered a violation of the duty to bargain in good faith by employer. Conversely, if the employer declares from the outset that they have no intention of reaching an agreement with the union and simply rejects the union’s demands without justifications, this conduct would be considered a violation of the duty to bargain in good faith.
2. Effects of violating the Duty to Bargain in Good Faith
If one of the parties, whether the union or the employer, refuses, delays, or boycotts negotiations without justifiable reasons and is determined by the Committee to have violated the duty to bargain in good faith, they will be fined between NT$100,000 and NT$500,000. Failure to adhere to the deadline set by the Committee for specific actions or inactions will result in additional fines, with penalties accumulating consecutively (Article 32 of the Collective Agreement Act). In addition, when the Committee determines that the employer has violated the duty to bargain in good faith, the union has the right to take some actions such as going on strike (Paragraph 2, Article 53 of the Act for Settlement of Labor-Management Disputes).
In order to facilitate the smooth progress of negotiations and avoid escalating tensions between the union and the employee, both parties should have a basic understanding of the connotation of the duty to bargain in good faith. It is advisable to seek assistance from labor law experts or lawyers when necessary to address various disputes that may arise during the negotiation process and prevent conflicts from escalating.
[1] This abbreviation refers to “the Tribunal for Unfair Labor Practice Committee.”.
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