Supreme Court: Illegal strike organized independently by the employees could lead to cancellation of bonus

D&I Quarterly Q2/2016

Posted on

3 May

2016

Dittmar & Indrenius > Insight > Supreme Court: Illegal strike organized independently by the employees could lead to cancellation of bonus

According to a precedent judgement KKO 2016:12 issued by the Finnish Supreme Court on 3 March 2016, an employer may validly apply a bonus system condition according to which no bonus shall be paid to an employee who has participated in an illegal strike organized independently by a group of employees. Such condition may be applied only when the illegal strike has not been organized in cooperation with a labour union.

In the case, the company’s bonus system included a condition stating the annual bonus would not be paid in the event an employee participates in an illegal strike. A group of employees had organized a strike on 30 May 2010 and on 1ā€“3 September 2010. Another group of employees had organized a four hour strike on 4 June 2010. The company had cancelled these employees’ bonuses for 2010 due to the above industrial actions.According to the Supreme Court the company’s decision was legal. The decision to cancel the bonuses was not considered discrimination on the basis of trade union activity as the strikes were not even considered trade union activity. The employees had made the decisions independently and without their union’s cooperation. The cancellation was not considered an illegal indemnification. Instead, the cancellation was simply a result of the employees’ failure to comply with one of the bonus payment preconditions.

If the strikes would have been organized in cooperation with the employees’ union, the company couldn’t have cancelled the bonuses legally. This interpretation is based on an earlier Supreme Court precedent judgement KKO 2010:93.

Even a Short Walkout of a Few Hours Could Cancel a Whole Year’s Bonus

A company may validly require that in exchange for an annual bonus, the employees must refrain from organizing illegal strikes.The Supreme Court’s ruling allows cancellation of the bonus regardless of the duration of the illegal strike or the damages caused to the employer. The damages were not even taken into account as the Supreme Court considered the cancellation simply a result of one bonus precondition not being fulfilled. The ruling therefore enables the use of bonus system conditions aiming to prevent illegal industrial action taken without union support.

Trade Union’s Decision or Cooperation Protects an Employee from Personal Sanctions

As a main rule, the labour union bares the responsibility for its own industrial action related decisions on behalf of the employees it represents. As a result, it is still forbidden to apply a bonus cancellation provision when the employees have taken industrial action initiated by their trade union. The sanctions of even illegal striking and other industrial action initiated by a union must be targeted at the union as the decision maker, not its individual member employees who have simply acted in accordance with their union’s directions.

The above rule is based on precedent judgment KKO 2010:93 submitted by the Finnish Supreme Court in 2010, where the Supreme Court considered it discriminatory to reduce the damages caused by an illegal strike from the same year’s bonus accrual. The strike decision was made by the employees’ union.

A company may validly require that in exchange for an annual bonus, the employees must refrain from organizing illegal strikes.

The high protection of trade union activity relates to actions where a union has been active in one way or the other, not to actions the employees have decided on their own. As a result, in the future the unions may be more likely to take the responsibility for illegal industrial action in the event the alternative is the cancellation of their member employees’ bonuses.

Remember the Following

(i) Consider including a bonus entitlement precondition related to illegal industrial action but pay close attention to the wording of the provision. A broad interpretation of such provision may be considered discrimination even when it comes to taking illegal industrial action.

(ii) Do not cancel the employees’ bonus if their union has made the decision to initiate the industrial action or if it has been organized in cooperation with the union. In such event the correct object of sanctions is the union and the most likely sanction a compensatory fine as regulated in the Collective Labour Agreements Act (436/1946).

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