Validity and Reduction of Contractual Penalties in Collective Bargaining Agreements

Facts

The dispute opposes the Swiss Union of Master Painters and Plasterers (the union) to [B.], a plastering contractor. The union imposed a contractual penalty of 25,000 francs on [B.] for violation of the applicable collective bargaining agreement (CBA) in the sector. [B.] contested this penalty before the courts.

The District Court of Sursee upheld the union's claim. However, the Cantonal Court of Lucerne reduced the penalty to 10,000 francs. The union then appealed this decision to the FSCA.

Considerations

According to Art. 357b para. 1 let. c CO, the parties to a CBA may provide for contractual penalties to ensure compliance with the contract, particularly with regard to the content of employment relationships and contributions to compensation funds. These penalties have a preventive effect and allow associations to sanction violations of their rights.

However, the FSCA considers that the amount of the penalty cannot be determined solely on the basis of the unlawful benefits obtained by the defaulting employer or the damage suffered by the workers. Indeed, the latter retain the possibility of asserting their individual rights against the employer. The penalty must therefore take into account the seriousness of the contractual breach, the fault of the…