With the NHL into its fourth work stoppage in the last two decades including one full season being lost in 2004-05, labor unions and collective bargaining agreements have gained some major news time in the last few weeks. Apart from NHL standoffs, we have seen other employer vs. union news (e.g. CP Rail and Air Canada vs. their respective unions) in the recent past.
Not all of us would get the chance to work in a union environment and it may be interesting for some of us to skim the surface and find out how labor unions, collective agreements, lockouts, strikes, etc. work and their financial implications.
The Management and the Union
As many of us may have read or heard, a labor union is an organization of workers meant to safeguard their interests and seek better wages, benefits, and working conditions. The employer and the union negotiate to arrive at a mutually-agreeable set of conditions including employment term, wages, hours, etc. for a defined period of time.
Upon finalizing such a deal, they sign a collective bargaining agreement. Both parties are required by law to abide by the terms of the agreement, failing which a grievance may be filed and arbitration could be required to resolve the dispute(s). As you would have realized, the failure of the two parties to arrive at a mutually-agreeable contract results in standoffs. A union is funded by the monthly dues paid by the employees.
Benefits of being a Union Employee
Being in a union provides a collective voice to its members for negotiating terms. Such a group is more likely to succeed in achieving its bargaining objectives and improving wages/conditions in comparison to an individual employee speaking for themselves. It may be easy for one individual employee with a good working relationship with his supervisor to negotiate pay raises but it may not work out that well for a set of individuals trying the same.
In addition, with collective agreements, unions help to protect the rights of its members by offering a structured disciplinary process and preventing dismissal without just cause. Seniority and long-term employment are rewarded under a collective agreement – layoffs may begin with the newest hire rather than the other way around. In some cases, clauses may be included to protect union member rights in the event of a sale, merger or takeover of the company.
Last but not the least, a well-known union tool is the “strike” that is used as a last resort by the union employees to protest existing conditions or to gain an upper hand in the bargaining process by stopping work to get the message across loud and clear. When the work stoppage is initiated by the management of a company, the corresponding term is “lockout” where they deny employment to the union workers.
Strikes can take different forms such as general, rotating, strategic, etc. In most cases, union employees are not paid their regular wages by management during this strike period (members on strategic strikes may be reimbursed a portion of their regular pay). There may be a strike pay (nominal amount) offered by the union that would be contingent upon performing strike-related duties (such as picket) for a prescribed number of hours per day. A decent-size emergency fund would help union employees wade through this period.
If you have had the chance to work in a unionized workplace, did you face a lockout or go on strike? Did a solid emergency fund help you through that phase? Any tips for fellow readers working in a unionized work environment?
About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).