The agreements between employer and employee organisations are called collective agreements. In collective agreements, the terms of employment are set out in more detail than in the law.
The terms specified in the collective agreements for such matters as annual holidays and working hours may be more generous than those provided in the law. It is also specified in the collective agreements which matters can be determined between employers and employees at workplace level.
The employment contract states which collective agreement applies to the employees in a workplace. If there is no mention of the collective agreement in your employment contract, you can also ask your shop steward or supervisor about the matter.
The following are some of the matters specified in the collective agreements:
- pay, pay rises and bonuses
- shifts and working hours
- holidays and holiday bonus
Collective bargaining
A collective agreement is an agreement between trade unions and an employer or between trade unions and an employer organisation on the terms of employment applicable to employees in a particular sector or company. Collective agreements are usually concluded for between one and three years. The length of the agreement period is determined in the negotiations between the employee and employer organisations.
The collective agreement is terminated as the agreement period draws to a close, and the negotiations on a new collective agreement start before the end of the agreement period. The period between the agreements is called the no-deal state.
Trade unions represent employees in the negotiations and they pursue the goals set by the membership in the process. As a trade union member, you can have a say in which matters are discussed in the negotiations.
If the parties cannot reach an agreement, trade unions can put pressure on the employers by taking industrial action. They are never the first option as they are always preceded by several months of unsuccessful negotiations. Industrial action may include strikes, overtime bans and bans on shift changes.
Collective agreements and general applicability play a major role in working life as instruments ensuring compliance with the minimum terms of employment.
A trade union is the best expert
Trade unions monitor compliance with agreements and help their members in conflict situations. You should therefore join the trade union that negotiated the collective agreement applying to your employment relationship. A trade union knows the terms of employment in the sector best and looks after employees’ interests.
Agreements at workplace level
It may be stated in a collective agreement that certain matters can be agreed at workplace level. They may include flexible working hour arrangements within the limits set in the collective agreement.
The rules on workplace-level agreements set out in collective agreements have been relaxed in recent years.
The following are some of the matters that can be agreed at workplace level:
- pay schemes
- assessment of the difficulty of work
- performance-based bonuses
- working hour arrangements
Some of the wage increases specified in collective agreements can be left for workplace-level bargaining. Labour legislation, such as the Working Hours Act and the Annual Holidays Act provide extensive opportunities for workplace-level agreements.
Agreements at workplace level require knowledge of collective agreements and labour law, and the union-trained shop stewards and other employee representatives have the required expertise.
Concluding agreements at workplace level requires:
- Concluding agreements at workplace level requires:
- Trust and equality between employers and employees and between employers and personnel representatives
- Negotiating skills
- Knowledge of collective agreements
- Knowledge of labour legislation
Generally applicable or normally binding?
Collective agreements and general applicability ensure that minimum terms of employment are observed in the workplace and that employees are treated fairly and on an equal basis.
A collective agreement can be generally applicable or normally binding. General applicability creates stability in the labour market and prevents distorted competition as companies cannot compete against each other by undermining terms of employment.
The minimum terms of employment specified in generally applicable collective agreements also apply to the employees whose employers are not members of the employer organisations.
There are about 160 generally applicable collective agreements in Finland.
The collective agreement is generally binding if more than half of the employees working in the industry are employed by member companies of the employer associations that have signed the agreement. General applicability means that the collective agreement must also be adhered to by companies that do not belong to the signatory employer association.
According to the Employment Contracts Act, the employer must comply with at least the provisions of the collective agreement (generally binding collective agreement). The General Applicability Confirmation Board confirms by its decision whether a national collective agreement is generally binding.
A collective agreement is referred to as normally binding if it is not generally binding. If the collective agreement is not generally binding, it only binds employers organized in the relevant industry employer association.
The employer is obliged to comply with a normally binding collective agreement if it belongs to the association that concluded the agreement or if the agreement is specifically made to apply to that particular company.