What is a business association?

In this case study we explain what business associations are and some of their most common functions.

 

What types of associations are there?

The right of association is considered a basic human freedom.

An association is created when several people with common interests decide to register their willingness to cooperate and develop initiatives together, as a collective.

That is why there are many types of associations:

  • consumers and users,
  • religious denominations,
  • trade unions and employers’ associations,
  • professional organizations,
  • of constitutional relevance (political parties),… the list is very long, and continues to grow.

In addition to the purpose of an association, which defines the type and in some cases its specific regulatory framework, its territorial scope of action also serves to classify them as:

  • regional (municipal, regional, county, provincial and autonomous)
  • national or state
  • European (international but limited to the European Union or the European continent) and international (may include partners from countries in different continents).

How are associations regulated?

The regulation of the right of association is quite consistent at the international level, and apart from some very peculiar aspects, in general we find that associations operate in a similar way in many countries, especially within the European Union.

In the specific case of Spain, the right of association is regulated by Organic Law 1/2002, which updates and consolidates previous legislation, including references to the Spanish Constitution.

Although the framework legislation is similar, there are various types of groups that have their own regulations, such as:

What is a business association?

The quick answer is that a business association is a meeting point and common working tool for companies united by common interests.

But the long answer is a bit more complex.

Depending on the reason that leads the companies to join together and their scope of action, even if it is a business association, it must be registered in a regional or state register, in the registers of associations of a Regional Ministry or the Ministry of the Interior or Labor, or even directly in the commercial register, as is the case of economic interest groupings, which have their own regulatory framework.

A business association (or association of companies) is a legal entity that can take many different forms.

And this can be even more complicated, since in many occasions the concepts of association of companies as legal persons (although they are represented by their owner, administrator, manager, a delegate,…) and association of businessmen (as natural persons, who are associated in their own name) are often confused.

The same company or manager can be a member of several associations with different regulations. The following are some very common examples of direct participation:

  • The association of owners in which their own facilities are located, which in turn will be part of the Compensation Board to share expenses with the corresponding city council.
  • The association of businessmen of your city council, region or province. At this point it should be clarified that in addition to the associations of businessmen or managers of general character in recent years there has been a boom of associations of businesswomen and self-employed (business administrators are also self-employed).
  • The provincial sectoral association, which regulates the application of the agreement of its sector with the holidays and salary conditions of the province in which its workers are registered.
  • The regional or state trade association, which brings together companies specializing in a particular activity. Generally, if there are regional trade associations, they usually seek to cooperate through a state trade association or federation.
  • The appropriate official chamber (of commerce, industry, services, ….) in its territorial scope.

And through the direct participation in these diverse associations, all of them complementary, it can be present indirectly in other associations, such as:

  • The state sectorial confederation that regulates the application agreement, and through it the state business confederation and of international scope, generally European.
  • The business confederation of its autonomous community.
  • The state trade association or federation of your specialized activity, and through it the international trade association or federation, if it exists.

 

What is a employer association?

As we have explained, there are many types of business associations. But depending on its functions and the register in which it is registered, an association can become an employer’s association.

The current concept of employers’ association refers mainly to business associations that negotiate labor conditions with workers’ associations (usually known as unions) through sectoral or regional agreements.

In the specific case of Spain, the employers’ association par excellence is CEOE, which represents all business associations, federations and confederations.

CEOE is a social agent that, together with the majority trade unions, negotiates and agrees with the competent public administrations on issues such as minimum wages, calendars and working conditions.

In turn, under the umbrella of CEOE, there is a wide range of territorial business organizations and also sectoral organizations, which are generally statewide.

It is precisely the sectoral business organizations (generally federations and confederations) that negotiate, in turn, with the majority unions, the agreements for each sector (construction, metal, chemicals, etc.).

Some sectors are very well organized and structured, under the umbrella of a state sectoral confederation and with a broad-spectrum agreement. This sectoral agreement usually includes most of the guilds and in turn is adapted in each province to complement the calendar of holidays and wage tables.

In other sectors, it is very difficult to establish agreements that apply to all trades and related companies, so specific agreements are developed by activity through business associations or federations that negotiate them with the rest of the social agents, also acting as employers.

 

What is a guild or vertical union?

To answer this question we have to go back a few decades or centuries, depending on where the reader lives.

The historical concept of guild has been used for centuries in much of Europe to refer to guilds of masters, journeymen and apprentices of the same profession (stone guild, blacksmiths’ guild, bakers’ guild, etc.).

The function of the guild was to promote differentiation and recognition, while serving as a vehicle for transmitting specialized knowledge, resolving internal conflicts and dialoguing or negotiating with other guilds or with the authorities.

This concept of the guild, as an association bringing together entrepreneurs and workers of the same trade, was maintained in some regions of Europe and in certain highly differentiated specialized activities, which are still very corporate.

However, the variety of new companies, sectors and specialties that emerged throughout the 20th century strengthened another historical concept called union.

The concept of vertical unions refers to specialized associations of employers and workers.

This type of union was aimed at the joint negotiation between all agents (employers and employees) of working conditions, working hours and work schedules.

And in Spain this terminology was also adopted, so that the first modern law (of February 17, 1971) to be able to form associations of companies or workers, was called precisely Ley Sindical, and regulated the various varieties of professional associations.

On April 1, 1977, it was updated by the publication of a new law, the title of which was still “Law regulating the right of trade union association“, and which remained in force for almost 40 years.

However, in Spain over the years the terminology of trade union was used more and more to refer only to horizontal unions, especially class unions.

Today, the majority of Spanish society, when using the term union, understands that we are referring to associations of workers from different companies, which may or may not be of the same specialized activity.

This would give rise to another case study, explaining the types of unions that exist in Spain (sectoral, general and with the right of representation).

In order to avoid confusion and to differentiate from sectoral and employers’ associations, the term “guild” has been used more and more in recent years, taking up its historical meaning.

As an example, in Spain CNC is the confederation that brings together the entire construction sector (being an example of a very well organized sector), negotiating the sectoral agreement, which in turn is represented and updated by the federations and associations of territorial scope, acting as employers’ associations.

In turn, the specialized associations of the sector are called construction guilds, and are represented by an organization that represents them, called the Federation of Construction Guilds, GREMIOS, and under the same general agreement of the construction sector.

At Rabuso we represent GREMIOS and most of its member associations.

As a curiosity, and to conclude this case study, in neighboring countries, such as France, the term syndicat is still used to refer to both workers’ associations and trade associations or vertical unions.

And at the European level, the English terminology trade association is used to refer to trade associations and trade union to refer to workers’ unions.

 

How can we help you?

If you are interested in creating or developing a business association and need more information, you can consult the services we offer or contact us.