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Most labor union contracts — also called collective bargaining agreements — contain a step-by-step process for addressing and resolving employee grievances. The effect that a labor union has is that you generally can’t resolve employee issues without following the grievance process. For example, if an employee objects to a disciplinary warning he received and has documentation to support his position, the union contract won’t let you talk things over with the employee and arrive at a mutually agreed-upon resolution to retract the disciplinary action. Instead, you have to resolve the employee’s issue according to the grievance steps outlined in the union contract.


Companies that have a labor union contract in place need to be prepared for contract negotiations. The negotiation process involves labor and management presenting one proposal after another and agreeing to concessions until they reach common ground. HR must prepare for contract negotiations far in advance — often months for complex contracts — to calculate numerous wage and benefit scenarios to present to the labor union for collective bargaining negotiation sessions.

Management Discretion

A standard clause in most collective bargaining agreements is called a management rights clause. The management rights clause essentially says that the company’s management has the right to operate the business as it sees fit and make decisions in the best interest of the company. Overall, the management rights clause allows company leadership to use their own discretion in running the company — sort of. In a labor union environment, the collective bargaining agreement takes away management’s discretion in making decisions concerning performance, recognition and reward for union employees. For example, managers are prohibited from using their discretion in rewarding an employee’s exemplary job performance with a wage increase. The effect that a labor union has is that the union contract generally dictates when employees receive raises. Union employees all receive raises at the same time, in the same amount, regardless of whether they are star employees or the lowest-performing workers.


Labor unions create divisiveness. “Some unions win higher wages for their members, though many do not. But with these higher wages, unions bring less investment, fewer jobs, higher prices, and smaller 401(k) plans for everyone else,” writes James Sherk in his May 2009 article titled, “What Unions Do: How Labor Unions Affect Job and the Economy” for The Heritage Foundation. The article pits unionized work environments against nonunion work environments in describing the effects of two intertwined issues: jobs and economics. There are proponents for organized labor as well as those who support maintaining nonunion workplaces, and both groups generally are very passionate about their respective positions, which create a line in the sand between organized labor and management.

By Ruth Mayhew

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