The Rise of Transnational Company Agreements

Friday, November 29, 2013 | Published by

With the rise of global workforces, we have also witnessed the demand for industrial agreements to govern employment contracts not only in one country or one continent, but in several countries and continents throughout the world. Whereas a collective bargaining agreement is only effective at a national level, transnational company agreements (TCAs) can be entered into at the international level and are therefore an attractive option to multinational employers.

Transnational company agreements apply to employment and working conditions and/or the relations between employers and their employees, or their various representatives, and are concluded by such representatives. The primary areas of agreement in TCAs govern cross-border employment issues and restructurings, as well as human resources and management matters.

In Europe, legislators are attempting to identify key areas of debate when considering if and how to implement TCAs at the European Union Level. In September of 2012, the European Commission published a staff working document on transnational company agreements, seeking input and advice from decision-makers on the future of these agreements. Specifically, the Commission focused on gaining insight regarding the transparency of these agreements, how to better integrate these agreements between the Member States, and whether the European Union should develop a mechanism by which to govern TCAs in order to ensure the legal certainty of such agreements.

Currently, the individual Member States dictate the implementation of TCAs in the workforce. In Belgium for instance, it would be possible to implement a TCA through an agreement with the European works council, the national works council, the committee for prevention and protection at work, the trade union delegation or even a delegation of employees. In the event of a legally binding commitment, only the beneficiaries, i.e. the individual employees (not a collectivity of employees such as a union), can rely on the TCA, despite the fact that employers do retain legal personality. TCAs can be enforced by employees or employers, but not the organizational bodies that typically represent them, as they would in a collective bargaining agreement.

To date, the European Commission has identified and catalogued more than 250 transnational company agreements. The majority of these agreements were signed by companies headquartered in Europe. In 2013 alone, six TCAs have been registered with the European Commission, including for example, ENEL and AIR France/KLM.

Transnational company agreements are also commonly used in Africa, Asia, South America and North America, particularly in the form of Global Framework Agreements (GFAs), which are intended to protect the interests of workers across a multinational company’s operations. Companies such as Ford, AngloGold Ashanti Limited, Lukoil, Mizuno, Petrobras have implemented GFAs in the past 10 years.

In a world that is increasingly more globalized, multinational corporations and the countries where they operate are examining the various types of industrial agreements applicable to the workforce in order to choose the best option for management and employees alike… and transnational company agreements are becoming the agreement of choice for multinationals.

Image courtesy of Wikimedia Commons.