Report in which the committee requests to be kept informed of development - Report No 343, November 2006

Case No 2436 (Denmark) - Complaint date: 21-JUN-05 - Closed

Allegations: The complainant alleges that, in order to bypass the provisions of Danish law, which require as a condition for obtaining a taxi licence that the employees of the taxi company be paid in accordance with the relevant collective agreements, the Danish Taxi Companies’ Employers’ Association established a puppet union named the Drivers’ Association which entered into a collective agreement establishing less favourable terms and conditions of employment for taxi drivers. The complainant considers that the Government

violated Convention No. 98 by recognizing the Drivers’ Association and, more generally, failing to protect workers’ organizations from interference by employers’ organizations

1. 598. The complaint is contained in a communication dated 21 June 2005 from the Union of Drivers in Copenhagen. In a letter dated 20 June 2006, the complainant organization sent additional information.
2. 599. The Government sent its observations in a communication dated 16 May 2006.
3. 600. Denmark has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant’s allegations

1. 601. In its communication dated 21 June 2005, the complainant organization indicates that, according to the Danish Law on Taxi Driving of 24 June 1999, section 5, subsection 5, it is a condition for obtaining a taxi licence that the employees of the taxi company are paid in accordance with the relevant collective bargaining agreements.
2. 602. At the time of entry into force of the Law on Taxi Driving, the Union of Drivers in Copenhagen and its affiliated union, the General Workers Union in Denmark (SiD), were the only trade unions to have entered into collective bargaining agreements covering taxi drivers in Copenhagen. In this respect, the complainant organization submits a copy of the collective bargaining agreement signed by SiD on behalf of the employees and by the Federation of Employers in Trade, Transport and Service (AHTS).
3. 603. The complainant alleges that in 1999 a number of taxi companies organized in a competing employers’ association (Danish Taxi Companies’ Employers’ Association), which had not entered into any collective bargaining agreements, contacted some of their employees asking them to form a drivers’ association in order to fulfil the obligation set down by the Law on Taxi Driving. The taxi companies were also organized in associations named BVH-Taxa, NORD-Taxi and VEST-Taxa.
4. 604. The complainant states that the meetings preparing the establishment of the drivers’ association were held at the offices of the Danish Taxi Companies’ Employers’ Association in the presence of Mr. Knud Erik Knudsen, representative of the Danish Taxi Companies’ Employers’ Association. At the meetings the statutes for the drivers’ association were drafted. The association was to be named Drivers’ Association, BVH-Taxa, NORD-Taxi and VEST-Taxa, (Chaufførforeningen BVH-Taxa, NORD-Taxi og VEST-Taxa); the complainant emphasizes that the last part of the name derives from the name of the employers’ associations.
5. 605. A few articles of the statutes of the Drivers’ Association are reported as follows:
6. 2. Purposes of the Association
7. (1) The purposes of the association, which is an interest organization, are:
8. – to further understanding and collaboration between taxi owners, drivers and office workers in Danish Taxi Federation (DTF) District 10;
9. – to further uniform behaviour and appearance vis-à-vis customers in the district;
10. – to contribute to strengthening shared interests in the district, including extension and improvement of the customer base and internal rules;
11. – to contribute to preventing inadequacies and/or poor customer service;
12. – to contribute to settling disputes between taxi owners, drivers, booking office staff and customers;
13. – to inform the members on new rules and new initiatives and to help and advise new drivers.
14. (2) Another object of the association is to enter into collective agreements without closed-shop provisions, though only after having obtained binding approval in the form of a resolution taken in general meeting or by a ballot among the members of the association.
15. (3) The association shall look after the professional interests of its members, for example in the field of education and training.
16. (4) To assist members in disputes concerning pay and working conditions, including contributing to ensuring that disputes between individual taxi owners and drivers are in so far as possible avoided or otherwise settled amicably.
17. 606. The complainant organization points out that Mr. Knud Erik Knudsen was present – in the role of chairperson of the meeting – when the Drivers’ Association’s inaugural general assembly was held in November 1999. He was also the person presenting the draft statutes to the assembly.
18. 607. About half a year later the Drivers’ Association entered into a collective bargaining agreement with BVH-Taxa, NORD-Taxi and VEST-Taxa. Mr. Knud Erik Knudsen assisted both parties during the negotiations. The complainant alleges that, by and large, this collective bargaining agreement establishes less favourable salary than the collective bargaining agreement between SiD and AHTS, mainly as a result, but not limited to, the lack of obligation for the employers to contribute to the employees’ pension scheme.
19. 608. The complainant further indicates that, on 24 May 2002, Mr. Lars Franyo, a member of Union of Drivers in Copenhagen, filed a claim against his employer. The claim was based on the grounds that he considered being entitled to salary in accordance with the collective bargaining agreement between SiD and AHTS, rather than the one between the Drivers’ Association and BVH-Taxa, NORD-Taxi and VEST-Taxa.
20. 609. The claim was filed at the county court of Hørsholm. The complainant informs that on 27 October 2003 the court found that Mr. Lars Franyo, in light of the Law on Taxi Driving, was entitled to salary in accordance with a collective bargaining agreement. The county court further found that the Drivers’ Association constituted a trade union and that the collective bargaining agreement entered into by the Drivers’ Association was a collective bargaining agreement in accordance with Danish labour law and consequently in accordance with the Law on Taxi Driving. Finally the county court found that the Law on Taxi Driving did not specify which collective bargaining agreement was to be applied in the matter, as a result of which Mr. Lars Franyo was not entitled to salary in accordance with the collective bargaining agreement between SiD and AHTS.
21. 610. The judgement (a copy of which is attached to the complaint) has been appealed to the Danish High Court of the Eastern Circuit, which has been asked to postpone the case until the ILO has had a chance to review the case.
22. 611. The complainant submits: (i) that the State of Denmark by the county court’s recognition of the Drivers’ Association as a trade union under the Danish Law on Taxi Driving has violated its obligations under ILO Convention No. 98 on the right to organize and collective bargaining; (ii) that the Drivers’ Association, if not in name, is in effect a solidarist association or puppet union, established under the supervision of an employers’ association to promote harmony between employers and employees and to further employers’ interests; (iii) that the State of Denmark, according to Article 2(1) of the Convention, has failed to protect workers’ organizations from interference by employers’ organizations; and (iv) that Denmark under Convention No. 98 is obliged to work against the creation of puppet unions and to ensure that solidarist associations do not interfere with trade union activities.
23. 612. In a communication dated 20 June 2006, the complainant indicates that the case is no longer pending before the Danish High Court of the Eastern Circuit. Both Danish high courts have decided that the Act on Taxi Driving, section 5(5), does not stipulate any rights for the taxi drivers to be paid according to a collective bargaining agreement. According to the decision, rather than stipulating individual rights for the taxi drivers, the Act stipulates the requirements to obtain and sustain a licence for taxi driving. Consequently, it belongs to the authorities to control whether or not a holder of a licence does pay his employees according to collective bargaining agreements. In the present case, the complainant informs that the municipal authority that controls whether or not a holder of a licence does pay his employees according to collective bargaining agreements is the Taxi Board of Greater Copenhagen. The Board has in fact recognized that holders of licences paying according to the agreement with the Drivers’ Association do fulfil the requirements in the Act on Taxi Driving.
24. 613. In consequence of the abovementioned judgements on the Act on Taxi Driving, the plaintiff chose to reach a settlement agreement with his employer. The complainant organization considers, however, that the fact that the individual court case has been settled does not make the present complaint redundant, as the Danish High Court of the Eastern Circuit has not had any chances to decide whether or not the Drivers’ Association could be recognized as a trade union. The complainant does maintain that the Kingdom of Denmark, by its local authorities and the county court of Hørsholm’s recognition of the Drivers’ Association as a trade union, has violated its obligations under ILO Convention No. 98.
25. B. The Government’s reply
26. 614. In its communication dated 16 May 2006, the Government emphasized that the starting point for the complaint is section 5(5) of the Act on Taxi Driving (No. 517 of 24 June 1999), according to which: “The holder of a licence shall observe the provisions concerning pay and working conditions for drivers laid down in the relevant collective agreements.”
27. 615. In its reply, the Government indicates that, in Denmark, pay and working conditions on the labour market are governed by collective agreements between the social partners or by individual agreements between the employee and the employer. There is thus no general legislation concerning wages, including a minimum wage. However, the legislation may include provisions, as for instance in the Act on Taxi Driving, with reference to collective agreements concerning pay conditions in the relevant occupational field, without any further specification.
28. 616. The Government recalls that the conclusion of collective agreements is based on the existence of independent contracting parties, i.e. typically an employees’ organization and an employers’ organization that can engage in voluntary and free collective bargaining.
29. 617. While there are different types of collective agreements, ranging from central national level agreements between trade unions and employers’ organizations concerning pay and working conditions down to local agreements, the decisive factor is that the agreement is actually the result of a genuine bargaining process between the two parties. It is not of decisive importance whether the parties have themselves used the term collective agreement about their agreement, but it is also a decisive precondition under Danish labour law that the agreement has been concluded between two mutually independent parties.
30. 618. The Government stresses that the provisions laid down in section 5(5) of the Act on Taxi Driving do not stipulate a duty to conclude a collective agreement concerning pay and working conditions with a specific trade union. The Government states that this provision cannot promote the formation of employees’ organizations dominated by employers or employers’ organizations, as claimed by the complainant, as the very concept of a collective agreement is based on the concept of independent organizations. This provision just implies that the taxicab owner has a duty to comply with the provisions concerning pay and working conditions that may be laid down in one of the collective agreements that may be in force in the field of taxi driving. The Act gives further specification as to which agreement or at which level the agreement is to be concluded.
31. 619. The Government points out that section 5(5) is drafted in accordance with similar provisions in the Act on Bus Service and the Act on Freight Transport and it is stated in the explanatory notes to all three Acts that the aim of these provisions is to contribute to the development of sound competition conditions and – in relation to rules regarding working time and other conditions laid down in the collective agreement – to promote road safety.
32. 620. The Government states that, in the field of taxi driving, licences are issued by individual municipal authorities and, in addition to the national-level collective agreement between SiD and [A]HTS, a number of local agreements also exist. It emphasizes that applicants for licences are not turned down for failing to observe the national agreement, if applicants have chosen to follow a local agreement instead.
33. 621. Concerning the status of the Drivers’ Association, i.e. whether it is an employees’ organization independent of the employer’s interests, and whether the agreement concluded is a genuine collective agreement concerning pay and working conditions concluded by two mutually independent parties, the Government in its communication informed that it would not comment on this question, since the case at the time was pending before a Danish court. However, the Government contests the allegation that the Government has failed to observe its obligations under Convention No. 98 and, in particular Article 2(2), concerning the obligation to ensure that organizations – in an adequate way – are protected against intervention from each other in relation to their formation, operation or administration. In this respect, the Government points out that the case law of both the industrial court and the civil courts includes decisions that hold agreements not to be proper collective agreements because the employees party to the agreement cannot be considered to be an independent organization. The Government specifically refers to two decisions that hold agreements not to be collective agreements because it has been established that the parties have not been independent (Judgement of the High Court from 1946 (U46/353) and Judgement of the Industrial Court from 1977 (No. 8093)).

C. The Committee’s conclusions

1. 622. The Committee notes that the present case concerns allegations that, in order to bypass the provisions of Danish law, which require as a condition for obtaining a taxi licence that the employees of the taxi company be paid in accordance with the relevant collective agreements, the Danish Taxi Companies’ Employers’ Association established a puppet union named the Drivers’ Association which entered into a collective agreement establishing less favourable terms and conditions of employment for taxi drivers. The complainant considers that the Government violated Convention No. 98 by recognizing the Drivers’ Association and, more generally, failing to protect workers’ organizations from interference by employers’ organizations.
2. 623. The Committee notes from the allegations that, according to the Danish Law on Taxi Driving of 24 June 1999, section 5(5), it is a condition for obtaining a taxi licence that the employees of the taxi company are paid in accordance with the relevant collective bargaining agreements. At the time of the entry into force of the Act on Taxi Driving, the Union of Drivers in Copenhagen and its affiliated union, the General Workers Union in Denmark (SiD), were, according to the complainant, the only trade unions to have entered into collective agreements on taxi driving.
3. 624. The Committee notes that, in 1999, a number of taxi companies – BVH-Taxa, NORD-Taxi and VEST-Taxa – all organized in the Danish Taxi Companies’ Employers’ Association – encouraged their employees to form an association of drivers in order to conclude a collective agreement. The collective agreement was concluded between BVH-Taxa, NORD-Taxi and VEST-Taxa and the Drivers’ Association BVH-Taxa, NORD-Taxi and VEST-Taxa for the period 1 July 2001 to 1 July 2003.
4. 625. The Committee notes that, in May 2002, a member of the Union of Drivers in Copenhagen, brought legal proceedings against his employer with the county court of Hørsholm with the claim that his remuneration had been calculated in accordance with the agreement concluded between the Drivers’ Association and BVH-Taxa, NORD-Taxi and VEST-Taxa and not with the agreement between SiD and the Federation of Employers in Trade, Transport and Service (AHTS). In this respect, the county court found that the Law on Taxi Driving did not specify which collective bargaining agreement was to be applied in the matter, as a result of which the plaintiff was not entitled to salary in accordance with the collective bargaining agreement between SiD and AHTS.
5. 626. In this respect, the Committee notes that, in its communication dated 20 June 2006, the complainant informs that the Danish High Court of the Eastern Circuit decided in appeal that section 5(5) of the Act on Taxi Driving does not stipulate any rights for the taxi drivers to be paid according to a collective bargaining agreement, but rather refers to the obligations which must be met to hold a taxi licence. The Committee notes that as a consequence the plaintiff chose to reach a settlement agreement with his employer.
6. 627. Nevertheless, the Committee notes that, according to the complainant organization, the fact that the individual court case has been settled does not make the present complaint redundant, as the Danish High Court of the Eastern Circuit did not decide whether or not the Drivers’ Association could be recognized as a genuine trade union. The Committee will therefore proceed with the examination of this allegation.
7. 628. Regarding the allegation of employer interference, and in particular that the Drivers’ Association is actually a solidarist association or puppet union to further employers’ interests, the Committee notes that the judgement of the county court of Hørsholm considered that the agreement concluded between BVH-Taxa, NORD-Taxi and VEST-Taxa and the Drivers’ Association had been concluded between a plurality of employees’ and an employers’ organization and that the agreement was thus a collective agreement. The Committee notes however from the allegations that: (i) the taxi companies themselves encouraged the taxi drivers to form an association in order to conclude a collective agreement; (ii) the meetings in connection with the formation of the Drivers’ Association were held at the premises of the Danish Taxi Companies’ Employers’ Association (DTA); (iii) a representative from DTA was present during the meetings and presided the inaugural general assembly; and (iv) the outcome of these meetings was the formation of the Drivers’ Association BVH-Taxa, NORD-Taxi and VEST-Taxa.
8. 629. As regards the allegations of the creation of a “puppet union”, the Committee recalls the importance it attaches to protection being ensured against acts of interference by employers designed to promote the establishment of workers’ organizations under the domination of an employer. In this connection, the Committee considers that the conditions for the creation of the Drivers’ Association referred to above do not appear to be in full conformity with Article 2 of Convention No. 98 and would tend to indicate the possibility of employer interference in the establishment, functioning and administration of the Drivers’ Association. The Committee would emphasize in this respect that negotiations should not be conducted on behalf of employees or their organizations by bargaining representatives appointed under the domination of employers or their organizations [Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 771].
9. 630. In responding to the allegations of interference, the Government confined itself to indicating that it would not comment on this question, since the case at the time was pending before a Danish court. In addition, the Government specifically mentions two decisions that hold agreements not to be collective agreements because it has been established that the parties have not been independent (Judgement of the High Court from 1946 (U46/353) and Judgement of the Industrial Court from 1977 (No. 8093)), thus indicating that redress is possible in such cases.
10. 631. The Committee recalls, however, that the individual case referred to by the Government is no longer pending before the Danish courts and that the judgement handed down by the Danish High Court of the Eastern Circuit made no reference to or review of the legitimacy and independence of the Drivers’ Association when dealing with the specific complaint from one of the drivers concerning the collective agreement that should cover his employment. Given the serious nature of the allegations of intereference by the taxi companies in the creation of the Drivers’ Association that have been raised by the complainant, the Committee requests the Government to ensure that the competent national body duly investigates these allegations so that corrective measures can be taken against any interference found. The Committee requests the Government to keep it informed of the measures taken in this respect.

The Committee's recommendations

1. 632. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendation:
   • Given the serious nature of the allegations of interference by the taxi companies in the creation of the Drivers’ Association that have been raised by the complainant and, in the absence of any pending court review of or determination as to the legitimacy and independence of the Drivers’ Association, the Committee requests the Government to ensure that the competent national body duly investigates these allegations so that corrective measures can be taken against any interference found. The Committee requests the Government to keep it informed of the measures taken in this respect.