Master contract
Encyclopedia
A master contract is a contract
reached between parties, in which the parties agree to most of the terms that will govern future transactions or future agreements. A master agreement permits the parties to quickly negotiate future transactions or agreements, because they can rely on the terms of the master agreement, so that the same terms need not be repetitively negotiated, and to negotiate only the deal-specific terms.
agreement which covers all unionized
worksites in an industry, market or company, and which establishes the terms of an effective employment contract
common to all workers so organized in the industry, market or company.
A master contract may be geographically limited and occur at the local, regional or national level. It may also be limited to a specific market, whether local, regional or national. Although a master contract governs the general terms of employment that apply uniformly across the company or industry, master contracts often provide for local terms to be negotiated. Some master contracts may also permit local or regional variations in order to meet special economic, competitive, or other circumstances for a union or company. For example, in the early 1980s the United Auto Workers
exempted Chrysler
from the master contract governing the U.S. auto industry because the company was in deep financial trouble.
Master contracts are common in the automobile manufacturing, shipping, package express, mining (especially coal mining), and general manufacturing industries. For example, the UAW and the "Big Three" American automakers
tend to operate in this pattern: the union selects one manufacturer with which it does most of its negotiation; when an agreement is reached, the union attempts to apply the same contract to the others. Other areas where master agreements can be found include tire manufacturing, public education, baking, custodial and housekeeping services, and healthcare.
In some cases, the goal of a master agreement is to standardize pay and benefit conditions in a market or industry so that employers compete on the grounds of quality services, quality products, or improved workplace safety
.
Master contracts also make it easier for newly organized workers, who get rolled into existing contract rather than having to negotiate their own first contract (with the risk that negotiations may drag on or collapse, causing the new union to eventually collapse).
Traditionally
, such contracts have been struck as exclusive class actions between the whole class of workers and the whole class of (or a single) employer(s), excluding the employment of any workers outside of it. In the United States in particular there has been pressure from the employing class generally on this.
for bargaining with the other employers or worksites.
Master contracts can also be used strategically for other ends such as organizing and to break down employer resistance to collective bargaining. In Canada, unions have used master contracts to organize thousands of new workers. A master agreement has tended to weaken an employer's resistance to the spread of the union to unorganized worksites or divisions, and some industries and markets welcome the standardization of pay and fringe benefits that unionization brings. In the United States, some unions have sought to create master agreements which provide for a neutrality agreement, code of conduct for the organizing election, or neutral third-party oversight of an election in order to make union organizing easier. Some master agreements even state that new workers will automatically come under the master agreement. Master bargaining also reduces the likelihood that employers will refuse to bargain or seek to whittle away at unionization workplace by workplace.
ism. In the United States, unions have engaged in bitter battles over such master agreements in California and Ohio.
, master contracts proved so contentious that they were essentially outlawed under the 1996 WorkChoices
legislation and its 2005 amendments.
Most exchanges and electronic communication network
s (ECNs) require member firms or customers to enter a "Trading Agreement," a contract that sets out the obligations and rights of the exchange and one particular firm or customer. Each executed trade is typically a separate contract, with an obligation to deliver cash in one direction and securities in the other, with most terms of the single-trade contract controlled by the master agreement.
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
reached between parties, in which the parties agree to most of the terms that will govern future transactions or future agreements. A master agreement permits the parties to quickly negotiate future transactions or agreements, because they can rely on the terms of the master agreement, so that the same terms need not be repetitively negotiated, and to negotiate only the deal-specific terms.
Labor context
In the context of labor law, a "master contract" is a collective bargainingCollective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
agreement which covers all unionized
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
worksites in an industry, market or company, and which establishes the terms of an effective employment contract
Employment contract
A contract of employment is a category of contract used in labour law to attribute right and responsibilities between parties to a bargain.On the one end stands an "employee" who is "employed" by an "employer". It has arisen out of the old master-servant law, used before the 20th century...
common to all workers so organized in the industry, market or company.
A master contract may be geographically limited and occur at the local, regional or national level. It may also be limited to a specific market, whether local, regional or national. Although a master contract governs the general terms of employment that apply uniformly across the company or industry, master contracts often provide for local terms to be negotiated. Some master contracts may also permit local or regional variations in order to meet special economic, competitive, or other circumstances for a union or company. For example, in the early 1980s the United Auto Workers
United Auto Workers
The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, better known as the United Auto Workers , is a labor union which represents workers in the United States and Puerto Rico, and formerly in Canada. Founded as part of the Congress of Industrial...
exempted Chrysler
Chrysler
Chrysler Group LLC is a multinational automaker headquartered in Auburn Hills, Michigan, USA. Chrysler was first organized as the Chrysler Corporation in 1925....
from the master contract governing the U.S. auto industry because the company was in deep financial trouble.
Master contracts are common in the automobile manufacturing, shipping, package express, mining (especially coal mining), and general manufacturing industries. For example, the UAW and the "Big Three" American automakers
Big Three automobile manufacturers
The Big Three, when used in relation to the automotive industry, most generally refers to the three major American automotive companies:Ford, General Motors, and Chrysler...
tend to operate in this pattern: the union selects one manufacturer with which it does most of its negotiation; when an agreement is reached, the union attempts to apply the same contract to the others. Other areas where master agreements can be found include tire manufacturing, public education, baking, custodial and housekeeping services, and healthcare.
In some cases, the goal of a master agreement is to standardize pay and benefit conditions in a market or industry so that employers compete on the grounds of quality services, quality products, or improved workplace safety
Workplace safety
Workplace safety & health is a category of management responsibility in places of employment.To ensure the safety and health of workers, managers establish a focus on safety that can include elements such as:* management leadership and commitment...
.
Master contracts also make it easier for newly organized workers, who get rolled into existing contract rather than having to negotiate their own first contract (with the risk that negotiations may drag on or collapse, causing the new union to eventually collapse).
Traditionally
Closed shop
A closed shop is a form of union security agreement under which the employer agrees to hire union members only, and employees must remain members of the union at all times in order to remain employed....
, such contracts have been struck as exclusive class actions between the whole class of workers and the whole class of (or a single) employer(s), excluding the employment of any workers outside of it. In the United States in particular there has been pressure from the employing class generally on this.
Strategy
When negotiating a master contract, the union often selects the financially strongest employer or worksite to negotiate with it. This agreement becomes the master contract, and sets the patternPattern bargaining
Pattern bargaining is a process in labour relations, where a trade union gains a new and superior entitlement from one employer, and then uses that agreement as a precedent to demand the same entitlement or a superior one from other employers....
for bargaining with the other employers or worksites.
Master contracts can also be used strategically for other ends such as organizing and to break down employer resistance to collective bargaining. In Canada, unions have used master contracts to organize thousands of new workers. A master agreement has tended to weaken an employer's resistance to the spread of the union to unorganized worksites or divisions, and some industries and markets welcome the standardization of pay and fringe benefits that unionization brings. In the United States, some unions have sought to create master agreements which provide for a neutrality agreement, code of conduct for the organizing election, or neutral third-party oversight of an election in order to make union organizing easier. Some master agreements even state that new workers will automatically come under the master agreement. Master bargaining also reduces the likelihood that employers will refuse to bargain or seek to whittle away at unionization workplace by workplace.
Criticisms
Some union members criticize master contracts for submerging local differences, and for being undemocratic. Many critics point to master contracts which impose certain fundamental terms and conditions of employment (such as wages, fringe benefits, pensions and certain working conditions) as being nothing more than company unionCompany union
A company union is a trade union which is located within and run by a company or by the national government, and is not affiliated with an independent trade union. Company unions were outlawed in the United States by the 1935 National Labor Relations Act, due to their use as agents for interference...
ism. In the United States, unions have engaged in bitter battles over such master agreements in California and Ohio.
Australia
In AustraliaAustralia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, master contracts proved so contentious that they were essentially outlawed under the 1996 WorkChoices
WorkChoices
The Workplace Relations Act 1996, as amended by the Workplace Relations Amendment Act 2005, popularly known as Work Choices, was a Legislative Act of the Australian Parliament that came into effect in March 2006 which involved many controversial amendments to the Workplace Relations Act 1996, the...
legislation and its 2005 amendments.
Master Service Agreements
Contracts in the information technology, contract research, and similar "open ended" fields are often negotiated as a "Master Service Agreement" and a "Statement of Work." Typically, the Master Service Agreement specifies generic terms such as payment terms, product warranties, intellectual property ownership, dispute resolution, and the like. Each project - a program to be written, a research project to investigate murine effects of a compound, or the like - is negotiated in a Statement of Work, a project-specific rider to the Master Service Agreement, to specify the problem to be solved, schedule, price, and the like.Master Transaction Agreements
Financial service institutions often agree to Master Transaction Agreements, specifying terms such as the types of transactions to be covered, credit limits, margin requirements for open positions, delivery, failure of delivery and other default, clearing and settlement, dispute resolution, and the like. Under the Master Transaction Agreement, individual transactions can be negotiated in seconds—the traders only need to agree to the security, the quantity, and the price. Most master agreements are bilateral, one pair of firms per agreement.Most exchanges and electronic communication network
Electronic communication network
An electronic communication network is the term used in financial circles for a type of computer system that facilitates trading of financial products outside of stock exchanges. The primary products that are traded on ECNs are stocks and currencies. The first ECN, Instinet, was created in 1969...
s (ECNs) require member firms or customers to enter a "Trading Agreement," a contract that sets out the obligations and rights of the exchange and one particular firm or customer. Each executed trade is typically a separate contract, with an obligation to deliver cash in one direction and securities in the other, with most terms of the single-trade contract controlled by the master agreement.