How binding are union/employer contracts

I was listening to the news last night, and there was a story about how General Motors was asking their labor union to take voluntary cuts to employee health benefits. The union said it was willing to consider that once the current contract was up (I believe that was in 2007). GM is trying to force through changes now.

So, is GM really able to force changes in the middle of an employee contract that they agreed to? Isn’t the purpose of an employment contract to prevent something like this?

Or is this more of a case of GM not being able to make these changes at will, but trying to convince the unions to renegotiate the contracts 2 years early?

My understanding of this is that GM is asking the unions to renegotiate early.

The latter, usually. A contract is a contract - GM must abide by what they signed, unless they go into bankruptcy or otherwise get the contract nullified. There may be some wiggle room in the contract, though - say, if they have tied any benefits to corporate profit (which I don’t think is the case, but there are undoubtedly some CYA clauses in there).

The union might consider changes because they have a stake in the company not going bankrupt, or to gain concessions of their own - some reduction in the 25,000 people GM just announced were being laid off, for example.

I’m no labor lawyer, but here’s my understanding. The contract is essentially sacrosanct unless both sides agree to a revision. However, a contract describes the conditions of the work. It doesn’t say that either side actually has to do the work. So GM could (I think – this is where I’m shaky) just lock the workers out and refuse to assign them work. Whereas the union could strike. This is the “nuclear option” for both sides because you can’t do it without hurting yourself a great deal. But you can do it. Of course, short of a lockout, GM can just lay people off. There’s nothing in the contract to prevent that (although the contract probably does govern who gets laid off first and reeployment rights). GM has to convince the union that if the union doesn’t renegotiate, there’s a real possibility of layoffs, bankruptcy, or a lockout. Any of those hurt the union membership, and if they hurt enough, and they’re likely enough, the union will take the cuts to avoid them.

GM itself is in a tough position there, though. It has a reputation for laying off a lot of people at the drop of a hat. So if the union thinks GM will lay a lot of folks off even if they’ve already taken a pay cut, there’s no reason for the union to deal – might as well let the layoffees get as much scratch in the interim to cover them while they look for new work.



Cliffy, while the contract is in force, strikes and lockouts are generally barred by the no-strike/lockout clause that is standard in most Collective Bargaining Agreements.

When the CBA expires, you’d think all bets were off, but that’s only true if a party has notified the FMCS sixty days before the expiration date.

There are also mandatory subjects of bargaining, including plant closings and relocation, and I think layoffs (whether they are necessary–the CBA usually provides for the order of layoffs, bumping rights, and the like).

As we have recently seen, Chapter 11 Bankruptcy gives an employer the power to avoid a union contract (or portions of it) under some circumstances.

Here is an outline of some of the other issues involved in a reduction in force.

This article pretty much sums it up.

GM asked to renegotiate the whole contract. Union said no thanks, but we can talk about changing the apportionment of health care costs. If they agreed to reopen the contract, GM would be able to bargain about hours, compensation, subcontracting, and anything else that it thought would help cut corners.

Here is a more detailed article.