No minimum pay rates in collective bargaining agreements for independent contractors
Independent contractors are business owners who decide for themselves at what price they accept assignments. Laying down minimum pay rates in collective bargaining agreements (or union contracts) for independent contractors undermines that basic principle. Minimum pay rates reduce competition between small business owners. That is why parties involved in the process of collective bargaining are not allowed to set collective minimum pay rates for independent contractors.
The number of independent contractors continues to grow. Independent contractors are crucial for labor market flexibility. However, there are also concerns about the incomes and social security of independent contractors. These concerns relate, for example, to the lack of social protection, such having an income in case of disability, unemployment, and retirement.
One solution that is sometimes proposed is laying down minimum pay rates in collective bargaining agreements for independent contractors. That is generally not allowed. Price-fixing agreements between business owners fall under the cartel prohibition.
Are there any exceptions to the cartel prohibition?
Yes, the cartel prohibition does not apply to independent contractors that have the same business relationship as employees have. Employees misclassified as independent contractors (or ‘false self-employed’) have less control over where, when and how they do their job than genuine independent contractors. The European Court of Justice made this exception in a ruling on substitute musicians in orchestras.
ACM has published the guidelines on competition rules for independent contractors. In these guidelines, ACM explains what rules apply in pay rate negotiations. ACM also explains under what circumstances independent contractors are considered to have the same business relationships as employees have. ACM gives parties involved in the process of collective bargaining several suggestions on how to prevent illegal arrangements from being included in collective bargaining agreements.