Collective Bargaining Agreements
Alongside employment legislation, collective bargaining agreements are of key significance in employment. Before signing a contract, a prospective employer should work out which collective bargaining agreement employees will be covered by. It is also possible that no collective bargaining agreement applies.
If a collective bargaining agreement can be applied, its provisions must be followed. The collective bargaining agreement thus has primacy with respect to laws. Even if the content of a collective bargaining agreement differs from that of the law, the agreement must be complied with.
A collective bargaining agreement generally defines the working conditions to be met during employment in more detail than legislation. The most important concern employment and wor king hours. Collective bargaining agreements generally define in detail how employees’ salary is arrived at. In terms of working hours, there are generally detailed provisions for arranging regular working hours in different ways.
Finnish law does not provide for minimum wages. However, an employer cannot define an employee’s wages freely. He or she must always pay at least the minimum set by the collective bargaining agreement. The salary level is generally affected by the employer’s position and duties and experience in the sector. Because pay arrangements can be complicated, study them carefully, or ask for professional advice.
Collective bargaining agreements often provide for working time-based surpluses, such as evening pay. The conditions for and levels of each working time surplus are set out in the collective bargaining agreements. There may be many various kinds of working time surpluses.
It is important to remember that higher pay must by law be paid for overtime and Sunday work. Other surpluses are based on the collective bargaining agreements. It is important for an employer to work out the cost of salary and surpluses under the collective bargaining agreement to understand the total cost of hiring an employee. For example, if an employee mainly works in the evening, the surpluses may be a significant expense on top of basic salary.
The salary provisions of the collective bargaining agreement must be obeyed in full. For example, an employer may not include surplus pay in an employee’s basic salary or include holiday bonus in the employee’s monthly salary. The payslip provided to an employee must clearly specify the components of the salary.
The Employment Contracts Act provides for the “generally binding” nature of collective bargaining agreements. This means that all employers in a given sector must comply with the gene[1]rally binding collective bargaining agreement in that sector. This obligation does not depend on whether the employer is the member of an employers’ confederation that negotiated a collective bargaining agreement.
12 A generally binding collective bargaining agreement thus sets the minimum employment conditions for a certain sector. An employer may not set worse conditions for employees than those defined by the relevant generally binding collective bargaining agreement. To decide whether a collective bargaining agreement is generally binding, the authorities assess how many employees work in employers’ confederation member companies that have negotiated the agreements.
The sector the employer operates in determines which collective bargaining agreement applies. Whether the employer is a member of an employers’ confederation and whether the work of several sectors is performed in the company.
The main rule is the sectoral principle. This means that the company must uphold the collective bargaining agreement of the company’s primary sector of operations. If the company’s primary operations are for example work in the construction sector, the construction sector collective bargaining agreement must apply. This does not change even if some of the company’s operations are in construction material transport, for example, as long as the company’s primary operations are clearly work in the construction sector.
Defining the sector is not always simple. The company may have operations in several sectors and the work done in the company may not necessarily relate to a single sector. The regulations concerning the relevant sector of collective bargaining agreements sometimes describe the types of tasks to which the agreement is applied. These provisions of scope help define a sector, but they are often unavailable.
There are approximately 160 generally binding collective bargaining agreements. In unclear cases, it is a good idea to ask for advice, such as from the Suomen Yrittäjät advice service. You can also ask the occupational safety and health authorities about the applicable collective bargaining agreement.
If there are more than one applicable collective bargaining agreements, the employer has the right to choose the applicable one. The employee’s membership in a trade union does not affect the choice of applicable collective bargaining agreement. Only the employer’s sector of operations affects it.
Example: You are an entrepreneur and set up an online store. You become an employer. The conditions for your employee’s employment are the provisions of the retail sector’s collective bargaining agreement. This must be upheld even if you do not, as an employer, belong to the employer’s confederation Kaupan Liitto ry, which was involved in drafting the agreement. From the perspective of following the collective bargaining agreement, it is of no significance whether the employee is a member of a trade union.
If you operate in a sector to which no collective bargaining agreement applies, no provisions of any such agreement apply. In this case, employment legislation and the employment contract are obeyed. You can consult our website to see if your sector has a normally binding or generally binding collective bargaining agreement.