A side letter or side agreement is a collective bargaining agreement that is not part of the underlying or primary collective bargaining agreement (CBA), and which the parties to the contract utilize to reach agreement on issues the CBA does not cover, to clarify issues in the CBA, or to modify the CBA (permanently or temporarily). One may distinguish side letters from "side settlements" or "settlement agreements", which settle a dispute arising from the underlying CBA. In rare cases, bargaining parties may use a side letter to adjust the focus of the contract if the parties are not yet ready or willing to adapt the contract formally.
Under the law of contracts, a side letter has the same force as the underlying contract. However, the courts may invalidate side letters in conflict with the main collective bargaining agreement. The terms of the CBA govern interpretation of side letters. In the U.S., several courts of appeals have held that in disputes where side letters do not contain conflict resolution procedures, the parties must use the underlying collective bargaining agreement's dispute resolution mechanism (in these cases, arbitration) to resolve the dispute.
The range of issues side letters covers is wide. In some cases, side letters have driven national labor law policy. For example, in the United States, a side letter guaranteeing employer neutrality during union elections in newly acquired plants, subsidiaries or divisions led to a federal lawsuit over the legality of the agreement in 2002 and a major decision by the National Labor Relations Board revising federal labor policy in 2007.
In Australia, side letters are becoming increasingly common due to the changes in federal labor law the WorkChoices Act created. WorkChoices limits the collective bargaining agreements that parties can register for eligibility for workplace tribunals enforcement, and also requires CBAs be strictly limited to work-related issues. The inclusion of even minor non-workplace-related clauses (such as dues check-off) can render a CBA unenforceable. In response, many unions and employers are using side letters to reach agreement on non-workplace-related matters, and not registering these side-letters with the federal government—relying on common law to enforce the side letters.
- United Steelworkers of America v. Cooper Tire & Rubber Company, 474 F.3d 271 (6th Cir. 2007).
- Kaboolian, Linda, and Sutherland, Paul. Win-Win Labor-Management Collaboration in Education: Breakthrough Practices to Benefit Students, Teachers, and Administrators. Bethesda, Md.: Education Week Press, 2005. ISBN 0-9674795-4-1.
- "Eighth Circuit Invalidates Side Letter Agreement Conflicting With Collective Bargaining Agreement". Benefits & Compensation Legal & Legislative Reporter. October 2004; Trustees of the Graphic Communication International Union, Local 1B Health and Welfare Fund "A" v. Tension Envelope Corporation, 374 F.3d 633 (8th Cir. 2004).
- United Steelworkers v. Trimas Corporation, No. 07-1688 (7th Cir. July 3, 2008).
- Dube, Lawrence E. "Court Orders Arbitration on Neutrality Pact, But Says NLRB May Have to Decide Legality". Daily Labor Report. September 10, 2007.
- Int'l Union v. Dana Corp., 278 F.3d 548 (6th Cir. 2002); Gross, Jared S. "Recent Developments: International Union v. Dana Corp." Ohio State Journal on Dispute Resolution. 2003; Moody, Kim. "'Card Check' Takes a Hit". Labor Notes. January 2008; Barker, Joseph A. "Keeping Neutrality Agreements Neutral". Michigan Bar Journal. August 2005; McGolrick, Susan J. "Attorneys for Dana Corp., Unions Criticize NLRB Decision on Voluntary Recognition". Human Resources Report. March 3, 2008; "NLRB 3-2 Modifies Recognition Bar". U.S. Law Week. October 9, 2007.
- Stewart, Andrew and Riley, Joellen. "Working Around WorkChoices: Collective Bargaining and the Common Law". Melbourne University Law Review. 2007.
- Coalition of University Employees (CUE) and the Lawrence Berkeley National Laboratory (LBNL). "Appendix E: LBNL Wages Side Letter Compensation Agreement." 2001.
- Boston Globe Employees Association/Local 245, The Newspaper Guild, Communications Workers of America and the Boston Globe. "Supplemental Agreement: Clarification of Job Guarantee side letter." February 5, 1997.
- University of Toledo Chapter of the American Association of University Professors (UT-AAUP) and the University of Toledo. "Memorandum of Agreement." Collective Bargaining Agreement. July 14, 1993.
- Office of the Comptroller. State of Connecticut. "Memorandum No. 96-13a: Correction to Memorandum 96-13, for the payment of Vehicle Usage Fees, Equipment and Clothing, and to correct the language for Recruitment and Retention Stipends, for the P-4 bargaining unit." April 26, 1996.