Subcontracting — the practice of using intermediaries to contract workers, whether through temp agencies, manpower agencies, franchise, or other multilayered contracting — is an increasingly popular pattern of employment worldwide. Whether justified from a business perspective or not, subcontracting has dire implications for workers’ rights: it insulates the beneficiary of their labor from direct legal obligations to the workers’ wages and working conditions and drastically reduces their ability to effectively unionize. This Article explores the impact of subcontracting on unionization of subcontracted labor. It argues that labor law in most postindustrial developing economies is structured around the Fordist model of production and employment and therefore provides insufficient protections to workers whose employment arrangements deviate from that model.
The Article maps the various hurdles subcontracting poses to unionization. It identifies three main challenges to the basic assumptions that animate traditional labor law: first, that a union has leverage and significant bargaining power vis-à-vis an employer; second, that the union and the employer are repeat players in negotiations, and that accordingly the labor contract is a relational contract in which both parties consider the short and the long term in their calculations; and third, that the bargaining unit represented by the union is relatively easily discernable and relatively stable. The Article argues that subcontracting disrupts all of these assumptions. Accordingly, in order to remain relevant to subcontracted workers, labor law requires adaptations. The Article sketches a preliminary list of existing and potential legal responses to subcontracting that better guarantee subcontracted workers’ rights to unionize. Its main suggestion is to move away from a bilateral towards a multilateral structure of collective agreement bargaining in subcontracting situations. Finally, the Article questions whether law can provide a once-and-for-all solution to the problems posed by subcontracting, and explores the dynamic role of law and unionizing in this context.
© 2016 by Theoretical Inquiries in Law