Side letter (collective bargaining)
Encyclopedia
A side letter or side agreement is a collective bargaining
agreement that is not part of the underlying or primary collective bargaining agreement (CBA), and which the parties to the contract utilize to reach agreement on issues the CBA does not cover, to clarify issues in the CBA, or to modify the CBA (permanently or temporarily). One may distinguish side letters from "side settlements" or "settlement agreements", which settle a dispute arising from the underlying CBA. In rare cases, bargaining parties may use a side letter to adjust the focus of the contract if the parties are not yet ready or willing to adapt the contract formally.
Under the law of contract
s, a side letter has the same force as the underlying contract. However, the courts may invalidate side letters in conflict with the main collective bargaining agreement. The terms of the CBA govern interpretation of side letters. In the U.S., several courts of appeals
have held that in disputes where side letters do not contain conflict resolution procedures, the parties must use the underlying collective bargaining agreement's dispute resolution mechanism (in these cases, arbitration
) to resolve the dispute.
The range of issues side letters covers is wide. In some cases, side letters have driven national labor law policy. For example, in the United States
, a side letter guaranteeing employer neutrality during union elections in newly acquired plants, subsidiaries or divisions led to a federal lawsuit over the legality of the agreement in 2002 and a major decision by the National Labor Relations Board
revising federal labor policy in 2007.
In Australia
, side letters are becoming increasingly common due to the changes in federal labor law the WorkChoices
Act created. WorkChoices limits the collective bargaining agreements that parties can register for eligibility for workplace tribunals enforcement, and also requires CBAs be strictly limited to work-related issues. The inclusion of even minor non-workplace-related clauses (such as dues check-off) can render a CBA unenforceable. In response, many unions and employers are using side letters to reach agreement on non-workplace-related matters, and not registering these side-letters with the federal government—relying on common law
to enforce the side letters.
Collective 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 that is not part of the underlying or primary collective bargaining agreement (CBA), and which the parties to the contract utilize to reach agreement on issues the CBA does not cover, to clarify issues in the CBA, or to modify the CBA (permanently or temporarily). One may distinguish side letters from "side settlements" or "settlement agreements", which settle a dispute arising from the underlying CBA. In rare cases, bargaining parties may use a side letter to adjust the focus of the contract if the parties are not yet ready or willing to adapt the contract formally.
Under the law of contract
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...
s, a side letter has the same force as the underlying contract. However, the courts may invalidate side letters in conflict with the main collective bargaining agreement. The terms of the CBA govern interpretation of side letters. In the U.S., several courts of appeals
United States courts of appeals
The United States courts of appeals are the intermediate appellate courts of the United States federal court system...
have held that in disputes where side letters do not contain conflict resolution procedures, the parties must use the underlying collective bargaining agreement's dispute resolution mechanism (in these cases, arbitration
Arbitration
Arbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
) to resolve the dispute.
The range of issues side letters covers is wide. In some cases, side letters have driven national labor law policy. For example, in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, a side letter guaranteeing employer neutrality during union elections in newly acquired plants, subsidiaries or divisions led to a federal lawsuit over the legality of the agreement in 2002 and a major decision by the National Labor Relations Board
National Labor Relations Board
The National Labor Relations Board is an independent agency of the United States government charged with conducting elections for labor union representation and with investigating and remedying unfair labor practices. Unfair labor practices may involve union-related situations or instances of...
revising federal labor policy in 2007.
In Australia
Australia
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...
, side letters are becoming increasingly common due to the changes in federal labor law the 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...
Act created. WorkChoices limits the collective bargaining agreements that parties can register for eligibility for workplace tribunals enforcement, and also requires CBAs be strictly limited to work-related issues. The inclusion of even minor non-workplace-related clauses (such as dues check-off) can render a CBA unenforceable. In response, many unions and employers are using side letters to reach agreement on non-workplace-related matters, and not registering these side-letters with the federal government—relying on common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
to enforce the side letters.
External links
- Coalition of University Employees (CUE) and the Lawrence Berkeley National Laboratory (LBNL). "Appendix E: LBNL Wages Side Letter Compensation Agreement." 2001.
- Boston Globe Employees Association/Local 245, The Newspaper Guild, Communications Workers of America and the Boston Globe. "Supplemental Agreement: Clarification of Job Guarantee side letter." February 5, 1997.
- University of Toledo Chapter of the American Association of University Professors (UT-AAUP) and the University of Toledo. "Memorandum of Agreement." Collective Bargaining Agreement. July 14, 1993.
- Office of the Comptroller. State of Connecticut. "Memorandum No. 96-13a: Correction to Memorandum 96-13, for the payment of Vehicle Usage Fees, Equipment and Clothing, and to correct the language for Recruitment and Retention Stipends, for the P-4 bargaining unit." April 26, 1996.