Collective Agreements and the Terms of Employment Contract

Employer and employee unions agree among themselves upon collective agreements. Collective agreements are regulated by the Collective Agreements Act. Provisions of collective agreements usually restrict the parties’ rights to freely negotiate the terms of the employment contract. The starting point is that the employment contract may not set out less advantageous terms of employment for the employee than those provided for in the collective agreement. The collective agreement may also include provisions which the employer and employee may alter by agreement. In such a case, this will expressly be stated in the collective agreement.

For instance, the collective agreement applicable to the commercial sector provides that the daily rest period for employees is at least 11 hours. However, employer and employee can agree on a minimum daily rest period of 9 hours and also a shortened daily rest period of 7 hours on case-by-case basis. According to the Working Hours Act, the daily rest period may also be shortened to 7 hours on the employee’s initiative if flexible working hours or flexiwork are utilized.

The collective agreement guarantees labour market peace, as employees are prohibited from declaring a strike in order to demand better salaries or other benefits agreed upon in the collective bargaining agreement.

The Collective Agreements Act sets out the parties who are bound by the collective agreement, i.e. the employee and employer union and the employees and employers being members of the unions. Also those who have by consent of the agreement parties in writing agreed to become parties to the collective agreement are also bound by it.

Generally applicable collective agreements are also applicable to unorganized (“wild”) employers. If the collective agreement in question has been determined generally applicable, all employers in the relevant business sector are bound by it. Generally applicable collective agreements set out minimum requirements that employers must comply with.

Generally binding collective agreements are only applicable to employers, not their employees. Consequently, the employees have a full right to strike. Although the collective agreement is not applicable to employees, the employees may require that the employer complies with those of its provisions which are more beneficial to the employee than those in e.g. the employment contract or in legislation.

For example industrial safety districts offer advices for both employers and employees on applying the collective agreements.

See further [Collective Agreement with Normal Binding Effect], [Generally Binding Collective Agreement] and [Provisions of Collective Agreements].