2003/06/11 - Pl. ÚS 40/02: Collective Bargaining Agreement

11 June 2003

HEADNOTES


1)

In the settled opinion of the Constitutional Court (see findings file

no. Pl. ÚS 24/99, Pl. ÚS 5/01, Pl. ÚS 39/01 – published in Collection of

Decisions, vol. 18, p. 135 et seq., vol. 24, p. 79 et seq. and vol. 28)

an essential component of a democratic state governed by the rule of

law is protection of the freedom of contract, which is a derivative of

constitutional protection of the right to property under Art. 11 para. 1

of the Charter (the fundamental component of which is ius disponendi).

Tied to the very nature and purpose of collective bargaining, the

institution of their extension, i.e. the possibility of extending the

normative over the obligation-creating effect of a collective bargaining

agreement, thus, from a constitutional law viewpoint, establishes

conflict between the restriction on property rights under Art. 11 of the

Charter and the public good under Art. 6 of the European Social

Charter, published under no. 14/2000 Collection of International

Treaties, in connection with Art. 1 of the Constitution and Art. 27 of

the Charter.

If the starting point for constitutional acceptability of extending the

applicability of higher level collective bargaining agreements is

European democratic legal experience and the standards arising from it,

comparison with European Union law, as well as finding a procedural

mechanism to ensure a balance between legal protection of freedom and

guaranteeing the internal peace of human society, in the adjudicated

context the related aims can be achieved only at the price of

restricting property rights. However, the priority given to the public

good over the right to property must be conditioned on the legitimacy

(representativeness) of the collective bargaining system, so by the

relevance of the contracting parties’ market share in a given field.

Further, the requirement of minimizing the interference in a fundamental

right or freedom, which is part of the principle of proportionality,

also gives rise to the safeguard that this measure must be exceptional,

and the related maxims for the norm creator to accept extending the

applicability of a collective bargaining agreement only in

extraordinarily justified cases of the public interest.

2) Thus,

an individual regulation contained in a legal regulation which deprives

the addressees of the possibility of judicial review of whether the

general conditions of a normative framework have been met concerning a

particular entity, a regulation which lacks transparent and acceptable

justification within the general possibility of regulation, must be

considered inconsistent with the principle of a state governed by the

rule of law (Art. 1 of the Constitution), to which the separation of

powers and judicial protection of rights is immanent (Art. 81, Art. 90

of the Constitution). These derogatory grounds for judicial review of

constitutionality apply fully to evaluating the constitutionality of § 7

of the Collective Bargaining Act. It is fully up to the legislature

whether it sets the procedure for extending applicability in the form of

administrative proceedings with the possibility of judicial review (as

the Constitutional Court indicated in its resolution of 11 July 2002

file no. IV. ÚS 587/01) or in the form of a general normative definition

of an entire group of employers to which the extension applies, with

the possibility of judicial review of the fulfillment of subsumptive

conditions (e.g. in a dispute on the exercise by an employee of claimed

entitlements arising from a higher level collective bargaining

agreement, or judicial review of administrative decisions concerning,

e.g., inspection of working conditions).





CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT

IN THE NAME OF THE CZECH REPUBLIC

 

The

Plenum of the Constitutional Court, after oral proceedings on 11 June

2003, decided in the matter of a petition from a group of 52 deputies of

the Chamber of Deputies of the Parliament of the Czech Republic, in

whose name deputy A. P. is authorized to act, to annul § 7 of Act no.

2/1991 Coll., on Collective Bargaining, as follows:
 

The provision of § 7 of Act no. 2/1991 Coll., on Collective Bargaining, is annulled as of 31 March 2004.

 


REASONING


I.
 

On

8 November 2002 the Constitutional Court received a petition from a

group of 52 deputies of the Chamber of Deputies of the Parliament of the

Czech Republic to annul § 7 of Act no. 2/1991 Coll., on Collective

Bargaining.
 

The petitioner

first recapitulates the content of the contested statutory provision,

which permits the Ministry of Labor and Social Affairs (the “Ministry”)

to provide by legal regulation that a higher level collective bargaining

agreement is binding on employers who are not members of the employer

organization which concluded the agreement. It points out that the legal

framework distinguishes between a collective bargaining agreement

concluded between the appropriate union body and an employer (a

“company” agreement) and a collective bargaining agreement concluded for

a greater number of employers between the appropriate union body and

the employer organization or organizations (a “higher level collective

bargaining agreement”), and it points to § 20 of the Labor Code and to

the Collective Bargaining Act. In terms of their content, it points out

that these agreements are of a partly normative character, in relation

to employee entitlements based on the employment relationship, and

partly of an obligation-creating nature, i.e. they set the mutual

obligations of the parties to the agreement. From the point of view of

evaluating the general character of collective bargaining agreements,

the petitioner classifies them with private law agreements, in which it

is typical that the parties to the agreement regulate their

relationships voluntarily, on the basis of an expression of their free

will. It considers a legal framework which would limit the free will of

contracting parties in private law agreements to be inconsistent with

Art. 1 of the Constitution of the Czech Republic (the “Constitution”),

which provides that the Czech Republic is a democratic state governed by

the rule of law. The petitioner includes the freedom to enter into

private law relationships among the attributes of a state governed by

the rule of law.
 

In the

petitioner’s opinion, inconsistently with this requirement that Art. 1

of the Constitution places on the legal regulation of the freedom of

contractual relationships, § 7 of the Collective Bargaining Act permits

the Ministry to provide by legal regulation (decree) that a higher level

collective bargaining agreement is binding on employers who are not

members of the employer organization which concluded the agreement. The

petitioner believes that this violates an age-old legal principle which

is part of European legal culture, the principle that a contract can

regulate only relationship between the parties to it, as the state is

assuming the right to extend the application of an entire higher level

collective bargaining agreement, in its own discretion, to subjects

other than those which concluded it, and which thus did not demonstrate

the intent to regulate their relationship in this manner. In this

regard, the petitioner also points to the practice of the Ministry

which, although it asks employers who are not members of employer

associations in writing for their position on extending the binding

effect of the agreement, goes ahead with extension regardless of the

position they express.
 

Concerning

the obligations arising for an employer from higher level collective

bargaining agreements, the petitioner states that these are, in

particular, the setting of wage conditions, lengthening of convalescence

leave and setting other, as a rule above-standard, labor law

entitlements of employees, and these obligations are set by a mere

sub-statutory act (a decree), yet they are enforceable in judicial

proceedings (§ 20 par. 3, § 207 of the Labor Code). In the petitioner’s

opinion, this procedure, established by § 7 of the Collective Bargaining

Act, also establishes inconsistency with Art. 2 para. 4 of the

Constitution and with Art. 2 para. 2 and 3 and Art. 4 para. 1 of the

Charter of Fundamental Rights and Freedoms (the “Charter”), which set

constitutional limits on the ability to statutorily limit freedom, and

also with Art. 11 para. 1 and 4 of the Charter, in connection with

restriction of property rights tied to extension of the binding nature

of higher level collective bargaining agreements.
 

The

petitioner also points to the fact that the institution of

overextending the binding effect of a higher level collective bargaining

agreement may also have unfavorable effects on employees, because under

§ 4 para. 2 let. c) of Act no. 2/1991 Coll., a (company) collective

bargaining agreement is invalid if it guarantees employees wage

entitlements in a scope greater than that set by a higher level

collective bargaining agreement as the highest permissible, i.e. invalid

in the amount exceeding this highest permissible scope.
 

The

petitioner considers another deficiency of the contested statutory

regulation to be the fact that an employer to which the binding effect

of an agreement is extended has practically no opportunity to defend

itself against that step. When extending the binding effect of

collective bargaining agreements the Ministry does not issue any

decision which would apply to individual employers (i.e. a decision of

the nature of an administrative decision), against which means of

redress exist. From the point of view of protecting the right to

possible procedural means, the petitioner points out that issuing a

decree can not be considered a measure under the Act on the

Constitutional Court, and the process which takes place before issuing a

decree extending the binding effect of a higher level collective

bargaining agreement is a legislative process, and thus, from the

position of those on whom obligations are imposed, it is not subject to

possible legal review. The petitioner points out that including a

particular employer on a list which is an appendix to the decree under §

7 of the Collective Bargaining Act is, by its nature, de facto a

decision which can interfere in the rights of an employer which,

however, is not provided procedural protection under Art. 6 para. 1 of

the Convention on Protection of Human Rights and Fundamental Freedoms

(the “Convention”).
 

From an

empirical point of view, the petitioner states that in 2001 alone

decrees no. 238/2001 Coll., no. 300/2001 Coll., no. 303/2001 Coll. and

no. 417/2001 Coll. extended the binding effect of seven higher level

collective bargaining agreements to a total of 3,860 employers – legal

entities and natural persons. In 2002, as of the day the petition was

filed, decrees no. 81/2002 Coll., no. 223/2002 Coll., no. 300/2002

Coll., no. 301/2002 Coll., no. 302/2002 Coll., no. 409/2002 Coll. and

no. 410/2002 Coll. did so to a total of 2,282 employers. Thus, according

to the petitioner, some higher level collective bargaining agreements

are, on the basis of a sub-statutory legal regulation, binding on a

greater number of employers than the number for which they were

concluded. In the petitioners opinion, a minority of employers thus

forces its will on the majority in a given sector or field, which the

petitioner considers inconsistent with the rights arising from Art. 26

of the Charter.
 

In this

regard, the petitioner points to the fact that, although under § 7 para.

2 of the Collective Bargaining Act the binding nature of a higher level

collective bargaining agreement can be extended only to an employer

with similar activities and similar economic and social conditions, the

procedure applied by the Ministry does not guarantee that this rule will

be observed, because – with such a great number of affected employers –

the individual conditions of individual employers are not reviewed, nor

can they be. Due to the foregoing, a number of them may find themselves

in a difficult economic situation, which applies particularly to small

businesses.
 

In terms of the

certainty and understandability of the text of the contested statutory

provision, the petitioner considers the expression “employers with

similar activities and similar economic and social conditions, with

their registered address in the appropriate republic,” to be disputable,

in view of meeting the elements contained in it.
 

The

petitioner also argues with the purposes of extending the applicability

of collective bargaining agreements. It points out that they consist of

an effort to create the same of comparable conditions in a competitive

environment, as well as the same or comparable social conditions for

employees. However, in the petitioner’s opinion, extending the binding

effect of a higher level collective bargaining agreement, in the manner

provided in § 7 of Act no. 2/1991 Coll., not only does not support

competition, but, on the contrary, restricts it, by setting conditions

for the conduct of business for employers who are not members of the

relevant employer association – regardless of their specific

possibilities. If the state subjects employers who are not members of

the relevant employer association to a legal regime which is the result

of collective bargaining, then, according to the petitioner, it

discriminates against these employers and also indirectly pressures them

to join the employer association, which the petitioner considers

inconsistent with the right of the freedom of association under Art. 27

para. 1 of the Charter.
 

In

view of all these arguments, the petitioner proposes that the

Constitutional Court annul § 7 of the Collective Bargaining Act due to

inconsistency with Art. 1 and Art. 2 para. 4 of the Constitution, Art. 2

para. 3, Art. 4 para. 1, Art. 11 para. 1 and 4, Art. 26 para. 1 and

Art. 27 para. 1 of the Charter, as of the day this finding is

promulgated in the Collection of Laws.
 


II.
 

Under

§ 42 para. 3 and § 69 of Act no. 182/1993 Coll., on the Constitutional

Court, as amended by later regulations, the Constitutional Court sent

the petition at issue to the Chamber of Deputies of the Parliament of

the Czech Republic. In the introduction to his position statement of 17

December 2002, the Chairman of the Chamber of Deputies of the Parliament

of the Czech Republic, PhDr. Lubomír Zaorálek, states that the

International Labour Organization Convention no. 98, concerning the

Application of the Principles of the Right to Organise and to Bargain

Collectively, (1948) provides the right to state support of voluntary

bargaining on collective agreements between employers and employer

organizations, on the one hand, and employee organizations on the other

hand, so that conditions of employment can be regulated in this manner.

Similarly, the European Social Charter (1961) requires the parties to

support, where necessary and suitable, mechanisms for voluntary

negotiation between employers or employer organizations and employee

organizations for purposes of setting employment conditions through

collective agreements. International Labour Organization Recommendation

no. 91, concerning Collective Bargaining Agreements, (1951) presumes

that the binding effect of a collective bargaining agreement will be

extended to other employers an employees, even if they did not

themselves sign the collective bargaining agreement; some conditions are

to be met, specifically, that the collective bargaining agreement

already binds a representative number of employers and employees, that

the application for extension will be filed by one or more employee or

employer organizations which are parties to a given agreement, and that

employers and employees to whom the binding effect of a collective

bargaining agreement is to be extended will be invited to state their

positions.
 

Starting with

this outline, the party to the proceedings concludes that international

agreements give precedence to the regulation of minimum wages and other

working conditions being secured by collective bargaining agreements

(their normative provisions), i.e. precedence over a framework provided

by statutory or sub-statutory regulations; the role which collective

bargaining agreements are to fulfill, in particular as sources of law,

is tied to an important rule, the extension of the applicability of a

collective bargaining agreement. This rule, according to the statement

of the Chairman of the Chamber of Deputies, makes it possible to

guarantee a uniform standard of labor law and wage conditions for groups

of companies with similar activities, economic and social conditions,

usually for a certain economic sector or field, and the rule also

prevents speculative behavior by certain employers, who could avoid the

binding effect of a collective bargaining agreement on their business by

not becoming members of an employer organization.
 

For

these reasons, the party to the proceedings concludes that extending

the applicability of a higher level collective bargaining agreement, is

not, in and of itself, inconsistent with international treaties by which

the Czech Republic is bound.
 

According

to the Chairman of the Chamber of Deputies, a legal regulation which

extends the binding effect of a collective bargaining agreement differs

from other labor law regulations in that its content is not the actual

regulation of labor law relationships, but in fact only the extension of

the binding effect of an already existing legal regulation (source of

law) to other labor law subjects, and thereby also relationships. Thus,

according to him, this regulation does not take the provisions of a

collective bargaining agreement as its own provisions; the collective

bargaining agreement, vis-à-vis affected third parties, does not change

into a ministerial regulation issued independently on the basis of a

statute and within its bounds, but remains a collective bargaining

agreement.
 

The position

statement further states, critically, that unlike international treaties

and International Labour Organization Recommendation no. 91, the legal

framework contained in § 7 of the Collective Bargaining Act is very

terse and does not correspond to the requirements of the Recommendation.

The party to the proceedings believes it is undisputed that the Act

itself should set certain conditions for extension and not leave the

matter to the absolutely free and unrestrained discretion, that an

obligation should be provided for the state administration to evaluate

the need for extension, set criteria for evaluating that need, also

criteria for evaluation the representativeness of a given collective

bargaining agreement, as well as criteria for setting the general

interest in extending its binding effect with the aim of ruling out

economic detriment to some employers. For this purpose the statutory

framework, according to the Chairman of the Chamber of Deputies, should

ensure that the necessary determinations will be made, in particular

determination of the positions of those subjects which are to be

affected by the extension; the framework should also contain at least

the most basic procedural rules, in particular concerning the discussion

of the legal regulation which is to extend the binding effect of a

collective bargaining agreement, beyond the usual legislative

discussion. Despite these reservations, the party to the proceedings

considers the contested statutory provision of § 7 of the Collective

Bargaining Act to be consistent with international treaties (with

Convention no. 98, concerning the Application of the Principles of the

Right to Organise and to Bargain Collectively and with the European

Social Charter), as well as with Art. 2 of the Constitution and Art. 2

and Art. 4 of the Charter.
 

The

position statement’s conclusion states that it is up to the

Constitutional Court to evaluate the cited provision in connection with

the filed petition and to issue an appropriate decision.
 

Under

§ 42 para. 3 and § 69 of Act no. 182/1993 Coll., as amended by later

regulations, the Constitutional Court also sent the petition in question

to the Senate of the Parliament of the Czech Republic. In his position

statement of 19 December 2002, the Senate Chairman, doc. JUDr. Petr

Pithart, states, concerning the petitioners’ reservations about the

purpose of extending the binding effect of higher level collective

bargaining agreements, that the main purpose is to create a comparable

competitive environment for employers which are active in similar fields

of activity, which means creating comparable conditions in their

economic competition. In this regard, in his opinion, the public law

nature of higher level collective bargaining agreements completely

predominates, which arises from the fact that a collective bargaining

agreement (both a company agreement and a higher level agreement), in

terms of its normative content, is a source of law, and always applies

to all of the relevant employer’s employees, including those who are not

members of the union organization which concluded the collective

bargaining agreement. Because of the foregoing, he expresses doubts

about the arguments of the petitioner, which derives the

unconstitutionality of this institution from something which is

characteristic of private law relationships and private law contracts.
 

The

position statement points to the fact that extending the binding effect

of higher level collective bargaining agreements was already done in

the Czech Republic – after developing somewhat roughly from the

beginning of the 20th century – in the period of the “pre-Munich”

republic, when collective bargaining agreements as understood today were

called collective employment agreements. These agreements were first

applied on the basis of the principle of subsidiarity (i.e. wage and

other agreed conditions applied to the parties’ employees unless

something else was agreed upon in individual employment agreements), and

subsequently became binding (if individually agreed upon conditions

were worse than the conditions in the collective work agreement, the

more favorable framework contained in the collective work agreement

applied). During a certain period the legal framework permitted a

collective employment agreement – under specified conditions – to be

declared binding in a particular area, if the employer or employee, or

both, were not members of the organizations which negotiated the

collective employment agreement. That was the situation, for example

under government directive no. 102/1935 Coll. of Laws and Directives,

which regulates the working conditions of workers in textile

manufacturing for a transitional period, or under government directive

no. 141/1937 Coll. of Laws and Directives, on the binding effect of

collective employment agreements.
 

From

a comparative legal viewpoint, the Chairman of the Senate states that a

similar institution is also applied in other European countries. For

example, in Germany, the Act on Collective Bargaining, in § 5, contains a

regulation which permits extending the binding nature of collective

bargaining agreements under the specified conditions to employees and

employers who are not members of any of the organizations which

concluded the collective bargaining agreement.
 

A

procedure which, according to the party to the proceedings, to a

certain extent can be compared to extending the binding effect of

collective bargaining agreements is also applied in European Union law.

Art. 139 of the Treaty of Amsterdam provides that “Should management and

labour so desire, the dialogue between them at Community level may lead

to contractual relations, including agreements. Agreements concluded at

Community level shall be implemented either in accordance with the

procedures and practices specific to management and labour and the

Member States or, in matters covered by Article 137, at the joint

request of the signatory parties, by a Council decision on a proposal

from the Commission.” In recent years, a European Community Council

directive was thus passed in a number of cases, the content of which was

a framework agreement containing regulation of the relevant area of

labor law, which was concluded by labor and management, the European

Trade Union Confederation (ETUC), the Union of Industrial and Employers’

Confederations of Europe (UNICE), and the the European Centre of

Enterprises with Public Participation (CEEP). On the basis of the

directive thus passed, member states must, in their own jurisdiction,

pass legal regulations or other measures which will be in accordance

with the directive, i.e. ensure the validity and effectiveness of the

framework agreement in their territory. In the opinion expressed in the

statement from the Chairman of the Senate, in this manner, basically the

binding effect of framework agreements concluded between management and

labor is extended to all employers in the member states. As an example,

the party to the proceedings cites European Council Directive 96/34/EC,

on the framework agreement on parental leave concluded by UNICE, CEEP

and the ETUC, European Council Directive 97/81/EC concerning the

Framework Agreement on part-time work concluded by UNICE, CEEP and the

ETUC, and European Council Directive 1999/70/EC of 28 June 1999

concerning the framework agreement on fixed-term work concluded by ETUC,

UNICE and CEEP. The reasons for this procedure are expressed in detail

in the preambles to the directives, which indicate, among other things,

that in certain cases such a procedure is considered suitable and

desirable in the European Union. In this regard, the position statement

states that one of the reasons mentioned in the preambles to the

directives is the fact that the Council did not decide (i.e. a consensus

was not reached) on the draft of the relevant directive in the area of

employment relationships, submitted with regard to interference with

economic competition, and it called on management and labor to conclude

relevant agreements “with the aim of increasing the competitiveness of

companies.” The party to the proceedings concludes from this that the

aspect of comparable conditions in economic competition is also

accentuated within the European Union, in the area of employment

relationships. The Chairman of the Senate points out that these

framework agreements between management and labor at the European Union

level will also bind all of our employers, or in some cases already do,

because, for example, Directive 96/34/EC, on the framework agreement on

parental leave concluded by UNICE, CEEP and the ETUC was reflected in

the Labor Code when it was amended by Act no. 155/2000 Coll., as part of

the harmonization of our legal order with European Union law.
 

Concerning

the petitioner’s reservations concerning the inadequacy of the legal

regulation extending higher level collective bargaining agreements,

including the cited arguments, according to the Chairman of the Senate,

one can agree with them in principle, because no appeal can be filed

against the issuance of any legal regulation can be filed in

administrative proceedings or the administrative courts. In this regard,

as he states further, it would evidently be useful to define the

mechanism of extending higher level collective bargaining agreements

more closely in the legal framework, including defining the decisive

criteria for evaluating whether the conditions for extension have been

met in a particular case. However, it is an open question whether

unconstitutionality can be seen in the fact that the statutory framework

appears too concise, as the petitioner concludes. Such a statutory

framework can also be, in the opinion of the party to the proceedings,

applied in a constitutional manner (by a procedure preceding the

issuance of a legal regulation on extending the binding effect of a

higher level collective bargaining agreement so that the existing

statutory conditions of that extension will be fulfilled without any

further steps). Thus, according to the Chairman of the Senate, more

detailed legal regulation would make it possible to evaluate, either

within the total re-codification of labor legislation currently being

prepared (the new Labor Code being prepared and amendments to related

laws), or even earlier, in “routinely” executed amendments to labor law

regulations.
 

Beginning with

the possibilities given by § 49 para. 1 of Act no. 182/1993 Coll., and

because application of § 7 of the Collective Bargaining Act directly

affects the Ministry of Labor and Social Affairs, the Constitutional

Court turned to the Ministry with a request for a position statement on

the petition at issue.
 

In

its position statement of 23 December 2002, the Ministry states,

concerning extending the binding effect of higher level collective

bargaining agreements, that this has become a component of modern legal

orders of democratic European countries, and its use is widespread in

various forms in many states, e.g. in Austria, Belgium, France and

Germany (a detailed overview is contained in an appendix to the position

statement). The purpose of the institution of extending the binding

nature of collective bargaining agreements is, according to the

Ministry, an effort to prevent unjustified competitive advantage for

those employers who resist collective bargaining, or bargain

collectively but do not want to provide their employees the advantages

which are usual and appropriate at similar employers, whereby they

create for themselves a more advantageous cost of labor and a better

market position at the expense of their employees. At the same time,

extending the binding effect of higher level collective bargaining

agreements is recognized as a state measure to support collective

bargaining under International Labour Organization Convention no. 98,

concerning the Application of the Principles of the Right to Organise

and to Bargain Collectively (no. 470/1990 Coll.).
 

Concerning

the inconsistency, alleged by the petitioner, of the contested

statutory provision with Art. 2 para. 4 of the Constitution and Art. 2

para. 3 and Art. 4 para. 1 of the Charter, the Ministry states that the

state imposes obligations under the Charter through its bodies, and that

the expression “on the basis of law” must be understood so that

“obligations may be imposed by a statute or a norm other than that which

is expressed in a statute, but only if that norm where authorized

thereto by a regulation with at least the legal force of a statute.”

Likewise, “the bounds determining imposition of obligations may be,”

according to the Ministry, “set only by regulations with at least the

legal force of a statute.” The Collective Bargaining Act, which in § 7

para. 1 authorizes a legal regulation (decree) to extend the binding

effect of a higher level collective bargaining agreement, i.e. to impose

obligations, must be considered a statute which determines these

bounds; in § 7 para. 2 it provides the bounds for imposing obligations,

and permits extension only to employers who have similar activities and

similar economic and social conditions.
 

In

the Ministry’s opinion, the state does not proceed capriciously when

extending the binding nature of higher level collective bargaining

agreements if such extension must meet statutory conditions. The

position statement also states, with reference to Constitutional Court

resolution file no. IV. ÚS 587/01, that § 7 of the Collective Bargaining

Act is incomplete, and as a result the Ministry, in the recent period,

on the basis of dialogue with management and labor, has sought to

complete the wording of the Act by a procedure agreed upon in the

Council of Economic and Social Agreement. Applying the condition of

“similar activities” for extending the binding effect of a higher level

collective bargaining agreement is at present based on data from the

Administrative Register of Economic Subjects/Entities of the Ministry of

Finance, which gives the activities of economic entities under the

Industrial Classification of Economic Activities, maintained by the

Czech Statistical Office, which uses employers’ data as a basis. Another

criterion for the evaluation of individual entities by the Ministry is

the number of employees, which is verified from three independent

sources (data from the parties to the higher level collective bargaining

agreement in question, the Administrative Register of Economic Entities

of the Ministry of Finance, and the Register of the Czech Social

Security Administration), and the binding effect of a higher level

collective bargaining agreement is not extended to entities with fewer

than 20 employees.
 

In

practice, according to the Ministry, the process of extending the

binding effect of higher level collective bargaining agreements is begun

by at least one of the parties submitting a properly justified

petition. If both parties do not submit the petition jointly, the

position of the other party must be attached to it. If the other party

does not agree with the petition, this disagreement is submitted for

evaluation to the consulting body of the Ministry of Labor and Social

Affairs – the Commission for Extending the Binding Effect of a Higher

Level Collective Bargaining Agreement to Other Employers (the

“Commission”). The Commission is composed of three representatives of

employers and three representatives of the unions, who are appointed

after agreement and at the proposal of the top bodies of the

organizations of employers and the unions. It is presided over by the

deputy minister who, however, does not vote. Although in the current

practice the sides in the Commission have always agreed, if there is no

agreement, then the decision falls to the minister. The Ministry also

evaluates whether the higher level collective bargaining agreement

contains provisions which are inconsistent with legal regulations; if it

finds such inconsistencies, it conducts negotiations with the parties

to correct them.
 

The

Ministry calls on employers to whom extension of the binding effect of a

collective bargaining agreement has been proposed to take a position

which is evaluated by the Commission. It also informs them that if it

does not receive their position statement by a stated deadline, they are

presumed to have consented with the proposed extension of the binding

effect. The Ministry considers this mechanism a certain protection for

employers who may, for competitive reasons, hesitate to give information

about employees’ above-standard advantages or about their economic

intentions. If it is not proved that a request for a position has not

been duly delivered to a particular employer, the binding effect is not

extended to it. The Commission evaluates the fulfillment of conditions

required by the Collective Bargaining Act separately with each employer

to which the binding effect of a higher level collective bargaining

agreement is extended, and presents a recommendation to the minister.
 

In

the conclusion of its position statement, the Ministry states that the

draft decree on extending the binding effect of a collective bargaining

agreement goes through the usual legislative process, i.e. discussion

with all commenting parties and then in the bodies of the Government

Legislative Council, or in the Government Legislative Council, in

accordance with the government’s legislative rules.
 


III.
 

Under

§ 68 para. 2 of Act no. 182/1993 Coll., the Constitutional Court, in

decision making in proceedings to annul statutes and other legal

regulations, evaluation the content of these regulations from the

viewpoint of their consistency with the constitutional order, or with

statutes, in the case of a different legal regulation, and determines

whether they were passed and issued within the bounds of

constitutionally provided jurisdiction and in a constitutionally

prescribed manner. If the Constitutional Court, within its review of

norms, evaluates the constitutionality of the jurisdiction of a

norm-creating body and the constitutionality of the norm-creating

process, it takes as its basis § 66 para. 2 of the Act on the

Constitutional Court, under which a petition in proceedings to annul

statutes and other legal regulations is inadmissible if a constitutional

act or an international agreement with which the reviewed regulations

are inconsistent according to the petition, ceased to be valid before

the petition was delivered to the Constitutional Court. The foregoing

indicates that with legal regulations issued before the Constitution of

the Czech Republic, Act no. 1/1993 Coll., went into effect, the

Constitutional Court is authorized to review only their consistency with

the existing constitutional order, but not the constitutionality of the

procedure in which they were created and observance of norm-creating

jurisdiction. (See finding file no. Pl. ÚS 9/99, published in Collection

of Decisions, vol. 16, p. 13-14.)
 

This

interpretation of § 68 para. 2 of Act no. 182/1993 Coll., applies fully

to the adjudicated matter, where Act no. 2/1991 Coll. was approved by

the former Federal Assembly of the CSFR on 4 December 1990, and went

into effect on 1 February 1991, i.e. before the Constitution of the

Czech Republic went into effect; the contested § 7 of the Act was not

affected by any of the amendments to it (i.e. Acts no. 519/1991 Coll.,

no. 118/1995 Coll., no. 155/1995 Coll., no. 220/2000 Coll. and no.

151/2002 Coll.).
 


IV.
 

The text of § 7 of Act no. 2/1991 Coll., contested by the petition, is the following:

"§ 7"

(1)

The Ministry of Labor and Social Affairs of the republic may provide,

by legal regulation, that a higher level collective bargaining agreement

is also binding on employers who are not members of the employer

organization which concluded the agreement.
 

(2)

The binding effect of a higher level collective bargaining agreement

can be extended under the previous paragraph only to employers with

similar activities and similar economic and social conditions with their

registered address in the territory of the relevant republic and for

which the higher level collective bargaining agreement is not binding.”
 


V.
 

The

legal institution of collective bargaining agreements is established in

the Czech legal order by, in particular, § 20 to 22, § 30, § 32, § 35, §

60a, § 73, § 74, § 83a, § 85, § 88, § 92, § 95, § 96, § 99a, § 102, §

105, § 111, § 119, § 120, § 124-126, § 128, § 129, § 131, § 140, § 143

and § 200 of the Labor Code and by Act no. 2/1991 Coll., on Collective

Bargaining, as amended by later regulations. Collective bargaining

agreements are the result of collective bargaining between management

and labor. The purpose of legal regulation of collective bargaining in

the European Context, and within that also of collective bargaining

agreements, is to ensure social conciliation and to create a mechanism

for on-going social communication and democratic procedural resolving of

possible conflicts between employers and employees. The system of

collective bargaining reflects the development of European democracy in

the second half of the 19th and first half of the 20th centuries; it

reflects the search for a mechanism for peaceful, non-violent resolution

of the tensions which endanger domestic peace.
 

The

realistic functioning of this mechanism comes from acceptance of the

result of social bargaining by the state (under certain conditions, in

Czech law contained in, e.g. § 4 of the Collective Bargaining Act), i.e.

giving the normative content of collective bargaining agreements the

status of being a source of law; the agreements then give rise to

entitlements which are exercisable in court.
 

The

mechanism of collective bargaining is also applied in areas other than

labor law relationships. An analogous example is § 17 para. 2 of Act no.

48/1997 Coll., on Public health Insurance, as amended by later

regulations, under which the regulation of substantive performance in

providing health care to insured parties is given by a framework

agreement which is the result of negotiations between representatives of

associations of health insurance companies and representatives of the

relevant group health facilities represented by their professional

associations, where the individual framework agreements are submitted to

the Ministry of Health, which evaluates them in terms of consistency

with legal regulations and the public interest and then issues them as a

decree.
 

In a free society,

in which neither employees or employers can be considered to have an

obligation to associate instead of the right to do so (Art. 27 of the

Charter), the institution of collective bargaining, resulting in

collective bargaining agreements, is regularly tied to the extension of

their normative applicability beyond the framework of an

obligation-creating jurisdiction. The mechanism of this extension can be

conceptually contained even in the collective bargaining agreement

itself, without such extension then requiring the passage of another

normative act (an example is the legal framework in Great Britain), or

this mechanism assumes that a special normative act will be issued which

establishes the extension of applicability. The European conceptual

standard in this regard is based on an assumption that the concept of

collective bargaining agreements in the sense of legal acts binding only

the parties would not make it possible to achieve the basic aim of

collective bargaining.
 

If

the aim of collective bargaining is to be a mechanism of social

communication and democratic procedural resolution of potential

conflicts which endanger domestic peace, then it is also tied to a

requirement of legitimacy (representativeness). This is considered to

be, for example in the German legal framework (§ 12 para. 1 of

Tarifvertragsgesetz) the limit of 50% of employers operating in a given

field. In other words, the minister of labor and social affairs of

Germany may proclaim a particular collective bargaining agreement

(Tarifvertrag) to be generally binding only if at least 50% of the

employers in the given field took part in concluding it within the

participating employer associations.
 


V./a
 

The

objections of the petitioner, the group of deputies, against the

constitutional deficiencies in § 7 of the Collective Bargaining Act can

be divided into four groups. The first are objections concerning the

restriction of contractual freedom of employers not participating in

higher level collective bargaining agreements, the second is the lack of

judicial protection for these employers, the third is the objection of

uncertainty of the contested statutory provision, and finally the fourth

is the restriction on the freedom of association.
 


V./b
 

In

the settled opinion of the Constitutional Court (see findings file no.

Pl. ÚS 24/99, Pl. ÚS 5/01, Pl. ÚS 39/01 – published in Collection of

Decisions, vol. 18, p. 135 et seq., vol. 24, p. 79 et seq. and vol. 28)

an essential component of a democratic state governed by the rule of law

is protection of the freedom of contract, which is a derivative of

constitutional protection of the right to property under Art. 11 para. 1

of the Charter (the fundamental component of which is ius disponendi).

Tied to the very nature and purpose of collective bargaining, the

institution of their extension, i.e. the possibility of extending the

normative over the obligation-creating effect of a collective bargaining

agreement, thus, from a constitutional law viewpoint, establishes

conflict between the restriction on property rights under Art. 11 of the

Charter and the public good under Art. 6 of the European Social

Charter, published under no. 14/2000 Collection of International

Treaties, in connection with Art. 1 of the Constitution and Art. 27 of

the Charter.
 

The extension

of applicability of a higher level collective bargaining agreement, by

its generally economic nature, is price regulation, by regulating the

wages and work conditions of employees (the positive law definition of

the concept of price regulation under Act no. 526/1990 Coll., on Prices,

as amended by later regulations, is, however, narrower). The

Constitutional Court delineated a certain constitutional framework in

relation to the legislature for the permissibility of price regulation

in its previous case law. It considered the safeguards for this

permissibility in the context of the acceptability of setting the value

of a point in health insurance, the acceptability of rent regulation,

and finally the acceptability of production quotas for agricultural and

food products.
 

In the

finding in the matter file no. Pl. ÚS 24/99, in connection with setting

the value of a point in health insurance, the Constitutional Court

stated: “An essential component of a democratic state governed by the

rule of law is protection of the freedom of contract, which is a

derivative of the constitutional protection of property rights under

Art. 11 para. 1 of the Charter (whose fundamental component is ius

disponendi). Therefore, price regulation is an exceptional measure, and

is acceptable only under quite limited conditions. Although the

fundamental right contained in Art. 26 para. 1 of the Charter can be

exercised, under Art. 41 para. 1 of the Charter, only within the bounds

of an implementing statute, for the legislature, or for a norm creator,

this case too is subject to the limit set by Art. 4 para. 4 of the

Charter, under which, when applying provisions on limitations on

fundamental rights and freedoms their meaning and purpose must be

preserved. State (public) regulation, based on taking into account

important facts (in this area the amount of insurance premium collected,

the level of expenses in providing health care, etc.), must, when

setting the price, also take into account the opportunity to create

profits. The consequence of the absence of this maxim during price

regulation can be making a certain field of entrepreneurial activity

impossible and creating a state monopoly, i.e. affecting the meaning and

purpose of the fundamental right arising from Art. 26 of the Charter.”
 

In

the finding in the matter file no. Pl. ÚS 3/2000 – published in

Collection of Decisions, vol. 18, p. 287 et seq., the Constitutional

Court again addressed the question of price regulation, this time in

connection with evaluating the constitutionality of legal regulation of

rent. It took as its starting point Art. 1 para. 2 of Protocol no. 1 to

the Convention, which provides states the right to pass such laws as

they consider necessary for the regulation of the use of property in

accordance with the general interest, and also the case law of the

European Court for Human Rights. According to the case law, such

statutes are especially necessary and usually in the field of housing,

which, in modern societies, becomes a central issue of social and

economic policy, and for that purpose the legislature must have a wide

“margin of appreciation” (evaluation), both in determining whether a

public interest exists authorizing the application of regulatory

(control) measures, and concerning the selection of detailed rules for

applying such measures. As the European Court for Human rights

emphasized in the case James et al., state interference must respect the

principle of a “fair balance” between the requirement of the general

interest of society and the requirement to protect the fundamental

rights of the individual. There must be a reasonable (justified)

proportionality relationship between the means used and the aims

pursued. Thus, in this matter the Constitutional Court accepted possible

price regulation of rent, but on the condition of applying the

principle of proportionality (comprehensively, concerning all components

of the principle of proportionality, see Constitutional Court findings,

file no. Pl. ÚS 4/94, Pl. ÚS 15/96, Pl. ÚS 16/98 – published in

Collection of Decisions, vol. 2, p. 57 et seq., vol. 6, p. 213 et seq.

and vol. 13, p. 177 et seq.). Although the Constitutional Court

recognized the presence of the first component, i.e. the suitability of

the means used in relation to the aim pursued, it found that the

principle of necessity had not been met, i.e. the subsidiarity of the

means used in relation to other possible means, from the point of view

of the fundamental right limited thereby (in the given matter, property

rights): “In order for rental building owners to be able to meet their

stated obligations, and so that the right of the individual to adequate

housing under Art. 11 of the International Covenant on Economic, Social

and Cultural Rights (the “Covenant”) to thus have a realistic chance,

one could have chosen the path taken by the legislature of the First

Republic, which in § 9 para. 4 of Act no. 32/1934 Coll., as amended by

later regulations, permitted the raising of rent on the grounds of

compensation of expenses incurred for occasional or extraordinary

necessary repair and renovation of the building.” On the basis of the

cited arguments, the Constitutional Court concluded that Art. 4 para. 3

and 4 of the Charter, were violated, in connection with Art. 11 para. 1

of the Charter. From a general viewpoint, the Constitutional Court, in

the finding in question, also formulated another criterion for

evaluating the constitutionality of price regulation: “Price regulation,

if it is not to exceed the bounds of constitutionality, must not

evidently lower the price so much that the price, in view of all

demonstrated and necessarily incurred expenses, would eliminate the

possibility of at least recouping them, because in that case it would

actually imply denial of the purpose and all functions of ownership.”
 

Peripherally

to the constitutional safeguards for setting quotas for the manufacture

of food and agricultural products, in findings file no. Pl. ÚS 39/01

and Pl. ÚS 5/01 the Constitutional Court emphasized that neither the

constitutional order nor international agreements on human rights and

fundamental freedoms forbid the legislature from limiting the amount of

production, distribution or consumption of values. Therefore, the

legislature may (within the bounds of constitutionally guaranteed basic

principles, human rights and freedoms) in its discretion introduce price

or quantitative regulation of production in a certain branch of the

economy, define or influence the kind and number of entities operating

in it, or limit contractual freedom in the placement of production in

the market or in the purchase of raw materials and production

facilities. The Constitutional Court did not find the free market free

of all regulation to be a value of constitutional importance. It pointed

to the limits on the freedom to conduct business in the European Union,

where a market economy is directly declared to be a constitutional

principle in the establishment treaty. It emphasized that an entitlement

to achieve a certain price in the market is not, however, a fundamental

right. It pointed out that a production quota system is a form of

control of the use of property, which is introduced do to the public

interest. It also referred to the case law of the European Court of

Justice. In its judgment in Metallurgiki Halyps A.E. v Commission of the

European Communities (258/81), the Court emphasized that community

limitations on steel production, although they can endanger the

profitability of a company, are not a violation of the right to own

property. It pointed to the fact that the European Court for Human

Rights has never evaluated the general legal measures of member states

of the Council of Europe, which regulated the volume of economic

production, in view of the compatibility with the European standard of

the fundamental right to own property. It pointed out that the current

case law of constitutional and supreme courts of European Union member

states and other democratic states governed by the rule of law does not

indicate that limiting production for reasons of stabilizing market

prices at a certain level, if fairly imposed on all existing producers,

would be considered incompatible with the national standard of property

ownership. Of course, this statement does not rule out their receiving

political criticism, which is strong. However, the Constitutional Court

did not find a reason to interpret Art. 11 of the Charter differently.

It considered the introduction of production quotas in the adjudicated

cases to be justified, as it serves the public interest, which it

identified as a guarantee of a minimum price in an environment where

state subsidies contribute to an increase in production which demand

would not cause. State intervention in agriculture is motivated by its

social, economic and ecological idiosyncrasies. The Constitutional Court

acknowledged that production quota systems for agricultural products

exist in the European Union, and rejected the idea that the domestic

standard of human rights would require a pure market economy, free of

state intervention. It expressed restraint concerning the request that

it subject to strict control, from the point of view of its necessity

and real need, a legal framework whereby the state intervenes in the

economy. It emphasized that the Parliament of the Czech Republic, as the

political body which bears political responsibility vis-à-vis voters

for recognizing problems in the economy and selecting instruments to

resolve them, has jurisdiction to choose economic policy.
 

In

the matter of the constitutionality of § 7 of the Collective Bargaining

Act, the Constitutional Court concluded that it was justified to

diverge from the previous findings, file no. Pl. ÚS 5/01 and Pl. ÚS

39/01, and to test the acceptability of the priority of the public

interest, arising from protection of values protected by Art. 6 of the

European Social Charter, published under no. 14/2000 Collection of

International Treaties, in connection with Art. 1 of the Constitution

and Art. 27 of the Charter, in conflict with the right to own property

under Art. 11 of the Charter. In cases of conflict it is necessary to

set conditions under which, if met, priority goes to one fundamental

right or freedom, and others under which, if met, priority goes to

another fundamental right or freedom, or a particular public good (on

the principle of proportionality see the settled case law of the

Constitutional Court, in particular findings file no. Pl. ÚS 4/94, Pl.

ÚS 15/96, Pl. ÚS 16/98). Fundamental in this regard is the maxim under

which a fundamental right or freedom can be restricted only in the

interest of another fundamental right or freedom or a public good.

Measuring conflicting fundamental rights and freedoms or public goods

against each other is based on the following criteria: The first is the

criterion of suitability, i.e. evaluating whether the institution

restricting a certain fundamental right makes it possible to reach the

aim pursued (protection of another fundamental right or public good).

The second criterion for comparing fundamental rights and freedoms is

the criterion of necessity, consisting of comparing the legislative

means which restricts a fundamental right or freedom with other measures

which make it possible to reach the same aim, but which do not affect

fundamental rights and freedoms, or which affect them with a lower

intensity. The third criterion is comparing the gravity of both

conflicting fundamental rights or public goods. These fundamental

rights, or public goods, are prima facie equal. Comparing the gravity of

conflicting fundamental rights, or public goods (after the conditions

of suitability and necessity have been met) consists of weighing

empirical, systemic, contextual and value-based arguments. An empirical

argument can be understood as the factual gravity of a situation which

is tied to the protection of a certain fundamental right. A systemic

argument means weighing the purpose and classification of the affected

fundamental right or freedom in the system of fundamental rights and

freedoms. A contextual argument can be understood as the other negative

effects of restricting one fundamental right as a result of giving

priority to another. A value-based argument means weighing the positive

aspects of conflicting fundamental rights n view of the accepted

hierarchy of values.
 

Within

the structure of this principle, the Constitutional Court, in its case

law, does not apply only the postulates of suitability, necessity and

proportionality in the narrow sense, but also the postulate of

minimizing interference with fundamental rights (see finding Pl. ÚS

4/94): “Thus, one can state that if it is concluded that giving priority

to one over another of two conflicting fundamental rights is justified,

a necessary condition for the final decision is also to use all

possibilities to minimize the interference in one of them. This

conclusion can also be derived from Art. 4 para. 4 of the Charter, in

the sense that fundamental rights and freedoms must be preserved not

only when applying the provision on the bounds of fundamental rights and

freedoms, but also analogously in the event of their restriction as a

result of conflict.”
 

In the

adjudicated matter, the institution of collective bargaining and the

connected effect of extension of applicability of collective bargaining

agreements meets the conditions for acceptance arising from the

safeguards of suitability and necessity. It is an effective means for

achieving the aims pursued (social conciliation) and it also meets the

safeguard of analyzing multiple possible normative means in relation to

the intended aim and their subsidiarity from the point of view of

restricting constitutionally protected values – of a fundamental right

or public good (e.g., from the point of view of comparing the extension

of applicability of a collective bargaining agreement and state

regulation outside the system of collective bargaining, an example of

which is setting the minimum wage under § 111 para. 4 of the Labor

Code).
 

The comparison of

both conflicting constitutionally protected values, from systemic,

value-based, contextual and empirical points of view, in and of itself

makes it possible to reach a conclusion to accept the institution of

extension of applicability of collective bargaining agreements, although

only on the condition of meeting certain safeguards.
 

If

the starting point for constitutional acceptability of extending the

applicability of higher level collective bargaining agreements is

European democratic legal experience and the standards arising from it,

comparison with European Union law, as well as finding a procedural

mechanism to ensure a balance between legal protection of freedom and

guaranteeing the internal peace of human society, in the adjudicated

context the related aims can be achieved only at the price of

restricting property rights. However, the priority given to the public

good over the right to property must be conditioned on the legitimacy

(representativeness) of the collective bargaining system, so by the

relevance of the contracting parties’ market share in a given field.

Further, the requirement of minimizing the interference in a fundamental

right or freedom, which is part of the principle of proportionality,

also gives rise to the safeguard that this measure must be exceptional,

and the related maxims for the norm creator to accept extending the

applicability of a collective bargaining agreement only in

extraordinarily justified cases of the public interest.
 

From

the point of view of these conditions from the principle of

proportionality, § 7 of the Collective Bargaining Act must be considered

inconsistent with Art. 11 and Art. 26 of the Charter, in connection

with Art. 4 para. 4 of the Charter, as it did not meet the requirement

of defining the bounds of the representativeness of the collective

bargaining system as part of comparing conflicting fundamental rights

and public goods, and further, from the point of view of minimizing the

restriction of fundamental rights it did not meet the requirement that

such measures be exceptional.
 


V./c
 

The

provision of § 7 of the Collective Bargaining Act authorizes the

Ministry, by decree, to extend the binding effect of a higher level

collective bargaining agreement for employers who are not members of the

relevant employer associations if they conduct similar activities, have

similar economic and social conditions as the contracting parties to

the agreement, and have their registered address in the republic.
 

The

Ministry extends the applicability of a collective bargaining agreement

by decree in the entire period when the Collective Bargaining Act is in

effect by stating in it that, for a precisely identified higher level

collective bargaining agreement, its binding effect is hereby extended

for employers listed in an appendix, where the appendix contains a

precise enumeration of employers with their business name, address and

ID number (see, e.g., decree no. 410/2002 Coll.).
 

Thus,

in practice, fulfillment of the statutory authorization contained § 7

of the Collective Bargaining Act by a decree, i.e. by a generally

binding legal regulation, takes place by a regulation applied to

precisely individualized entities, which is typical for the application

of law.
 

The current practice

thereby deviates from one of the fundamental material elements of the

concept of a law (legal regulation), which is universality . Let us

remember that the requirement of the universality of a law is an

important component of the principle of the sovereignty of law, and thus

also of a state governed by the rule of law.
 

Arguments

in the favor of the universality of a law, or a legal regulation, as

the Constitutional Court has already pointed out in the finding in the

matter file no. Pl. ÚS 12/02 (to be published in Collection of

Decisions, vol. 29), are these: separation of powers, equality, and the

right to independent judge.
 

The

first of the arguments against laws, legal regulations, concerning

individual cases is the principle of the separation of powers, or the

separation of the legislative, executive and judicial power in a

democratic state based on the rule of law: “Passing laws concerning

individual cases meets the most resistance in the area of application of

rights. The right to a lawful judge and the independence of legal

protection also rule out individual legislative directives in areas

where they are not protected by the principle ‘nulla poena sine lege’

(and here lex can meaningfully be only a general and written statement

of law).” (H. Schneider, Gesetzgebung, 2nd edition, Heidelberg 1991, p.

32). Article I Section 9 of the Constitution of the USA states provides

in this regard: “No Bill of Attainder ... shall be passed.”
 

Thus,

an individual regulation contained in a legal regulation which deprives

the addressees of the possibility of judicial review of whether the

general conditions of a normative framework have been met concerning a

particular entity, a regulation which lacks transparent and acceptable

justification within the general possibility of regulation, must be

considered inconsistent with the principle of a state governed by the

rule of law (Art. 1 of the Constitution), to which the separation of

powers and judicial protection of rights is immanent (Art. 81, Art. 90

of the Constitution). These derogatory grounds for judicial review of

constitutionality apply fully to evaluating the constitutionality of § 7

of the Collective Bargaining Act. It is fully up to the legislature

whether it sets the procedure for extending applicability in the form of

administrative proceedings with the possibility of judicial review (as

the Constitutional Court indicated in its resolution of 11 July 2002

file no. IV. ÚS 587/01) or in the form of a general normative definition

of an entire group of employers to which the extension applies, with

the possibility of judicial review of the fulfillment of subsumptive

conditions (e.g. in a dispute on the exercise by an employee of claimed

entitlements arising from a higher level collective bargaining

agreement, or judicial review of administrative decisions concerning,

e.g., inspection of working conditions).
 


V./d
 

The

Constitutional Court has also addressed, in a number of its findings,

the question of the conditions under which the uncertainty and lack of

understandability of a legal regulation must be considered inconsistent

with the principle of a state governed by the rule of law, and thus

under what conditions these become grounds for annulment. In its finding

file no. Pl. ÚS 6/2000 (Collection of Decisions, vol. 21, p. 195 et

seq.), it stated in this regard: “If, under Art. 1 of the Constitution,

the Czech Republic is a democratic state governed by the rule of law,

that means – among other things – that its legal order is supposed to

follow the principle of the foreseeability of the consequences of a

legal regulation and that regulation’s certainty and understandability.

Only a law whose consequences can be clearly foreseen corresponds to the

cited concept of a democratic state governed by the rule of law.” The

court has already stated the factors for testing a legal provision’s

constitutionality with regard to the requirement of certainty and

understandability in finding file no. Pl. ÚS 9/95 (Collection of

Decisions, vol. 5, p. 107 et seq.): “the uncertainty of one of the

provisions of a legal regulation must be considered inconsistent with

the requirement of legal certainty and thus also with a legal state

governed by the rule of law (Art. 1 of the Constitution) only if the

intensity of that uncertainty rules out the possibility of setting the

normative content of that provision with the use of the usual

interpretative procedures.”
 

These

factors must be applied in connection to the requirements of

constitutionality, which the Constitutional Court imposes on the

legislature when it sets implementing legal provisions.
 

According

to the legal opinion contained in finding file no. Pl. ÚS 45/2000

(Collection of Decisions, vol. 21, p. 261 et seq.) constitutional

definition of derived norm creation by the executive rests on the

following principles: “Another legal regulation” must be issued by an

authorized entity, may not interfere n matters reserved to statute

(thus, it can not set primary rights and obligations), and must indicate

the clear will of the legislature to create a regulation which is over

the statutory standard (thus, room must be opened for the sphere of

“another legal regulation”). In finding file no. Pl. ÚS 3/95 (Collection

of Decisions, vol. 4, p. 91 et seq.) the Constitutional Court provided

the condition of certainty of the statutory bounds of “another legal

regulation” in the authorizing provision: “Fulfillment of conditions of a

special regulation which are not specified in more detail, and which

then become ex post constitutive elements of a legally protected

subject, creates the impression that it would be possible to formulate

the legislature’s authorization of the executive power in other areas of

the life of the society with equal uncertainty.”
 

The

provision of § 7 of the Collective Bargaining Act identifies the state

body whose norm creating authority it establishes, and defines a class

of possible extension of applicability of a collective bargaining

agreement by the elements of similar activities, similar economic and

social conditions, and a registered address in the Czech Republic.

Although very general, one can assume that this framework offers an

adequate interpretative framework for setting conditions for extension

in connection to a specific higher level collective bargaining agreement

with regard to the viewpoint of the similar position of employers who

are members of employer associations and those who are not.
 

From

the point of view of the petitioners’ objections concerning the

uncertainty of § 7 of the Collective Bargaining Act, the Constitutional

Court states that the wording of the contested statutory provision fails

to meet not the requirement of certainty, but the requirement of

completeness, which arises for statutory authorization of the extension

of applicability of a higher level collective bargaining agreement from

the principle of proportionality, by the deficiency in regulating the

representativeness of collective bargaining and the extraordinariness of

a measure restricting the fundamental right to property, and which

arises for it from the maxim of ensuring a fundamental right to judicial

protection.
 


V./e
 

The

petitioners’ objection concerning the restriction of the freedom of

association applies to restriction of the negative aspect of that

freedom, i.e. the right to freely decide not to be a member of a

particular association, and the corresponding ban on forcing anyone to

join an association.
 

If it

were possible to agree with this objection from the point of view of the

current wording of § 7 of the Collective Bargaining Act, which, in

terms of the proportionality principle suffers from the lack of a

definition of the bounds of representativeness of collective bargaining,

when these bounds are established the criticism that extending the

applicability of a higher level collective bargaining agreement is

inconsistent with the right to freedom of association loses its

relevance.
 


V./f
 

In

view of all the reasons laid out, the Constitutional Court annulled § 7

of the Collective Bargaining Act due to inconsistency with Art. 11

para. 1, Art. 26 in connection with Art. 4 para. 4 of the Charter and

Art. 1, Art. 81 and Art. 90 of the Constitution.
 

Aware

of the fact that annulment of the cited statutory provision without a

commensurate delay in effect vacantia legis would result in a

constitutionally undesirable incompleteness in the Act, by postponing

the effect of the annulment finding under § 70 para. 1 of Act no.

182/1993 Coll., to 31 March 2004, the Constitutional Court created

sufficient time for the democratic legislature to constitutionally

implement Act no. 2/1991 Coll., on Collective Bargaining, as amended by

later regulations.

Notice: Decisions of the Constitutional Court can not be appealed.

Brno, 11 June 2003