Working Life > Codetermination > Collective Agreement

Collective Agreement

Definition, Explanation

A collective agreement is usually made in written by the collective agreement parties of an employer association and a labour union. No works council can negotiate any collective agreement. Legal basis is Collective Agreement Act (Tarifvertragsgesetz, TV). A contracted collective agreement is valid only if the company is within the professional and regional scope of the collective agreement and the employer is a member of the respective employer association and some employees are members of the respective labour union.

The collective agreement distinguishes several wage rates. Emplyoees with special qualification and tasks, executives and executive employees are additionally remunerated apart from the collective agreement. Respective agreements are in spearate contracts, independent of collective agreements.

Kinds of collective agreements:

• Company agreement
  contracting parties are the employer in a company (e.g. Volkswagen) and a union of employees
• Association-level agreement
  contracting parties are an employers’ association and a trade union. Contract applies to a whole sector, or region. Companies providing temporary workers are in temporary work sector
• Framework agreement
  regulates general working conditions, but not remuneration
• Sector agreement
  applies to sectors in a regulated region, e.g. employees in local public transport. Such contracts are made in the style of collective agreements for public service, but are different in parts
• Wage and salary collective agreement
  regulates remuneration / remuneration rating
• Special, or complementary collective agreement
  regulates issues like apprenticeship, semi-retirement, further education and can take into account company-internal circumstances

Contents of collective agreements:

• Normative part
  regulates rights and entitlements of members of the contracting parties
  • range of application in terms of time, space and individuals
  • definition of remuneration rating groups
  • foundation of the employment relationship
  • working hours
  • semi-retirement
  • working remuneration
  • over-hours regulation
  • regulations on shift work, night and Sundays work
  • working conditions, also durations of probation periods, definition od working breaks
  • vacation
  • vacation money and Christmas money
  • Cancellation and dismissal
• Obligational and obligatory part
  regulates legal relations between contracting parties
  • peace-obligation, or no-strike clause (no striking allowed droning life of the collective agreement)
  • Duty of execution
  • Arbitration agreements
  • Terms of the contract (normally 1 to 3 years), period of cancellation

Validity of a collective agreement:

• Valid for employees and in parts for apprentices
• Company must range in the professional and regional scope of the collective agreement
• Both contracting parties must be members of the employers’ association, respectively of the trade union
• Range of application of collective agreements have been agreed for every single agreement
• The collective agreement applies not only to trade union members, but also to all employees in the same manner, if it is part of the employment contract

Procedure:

The contracting of a collective agreement is preceded by negotiation of the conditions. Such is only possible when any prior applying collective agreement has been cancelled, which is mostly done by the employees, or if that prior agreement is limited-term. The negotiations are held in the so-called tariff commission If no agreement can be achieved, there may be involved some arbitrators. Often, work stoppages are exerted simultaneously, to emphasize the demands of the employees. Employers can react to that with lockout. Because of their autonomy in wage bargaining, the negotiating parties have the right to negotiate free from any governmental influences.

The individual employment contract normally is based on collective agreements, by reference. Particular referential clauses, the so-called agreement of equal treatment, non-trade-union-members are guaranteed to be treated equally to trade union members.

The collective agreements are registered in tariff registers that are free to be viewed at any time. The register is held by the Federal labour and social ministry.

Tips, Checklist

• Collective agreements must be contracted in written
• Both of the collective agreement parties must sign
• The collective agreement is valid as long as it is ended by cancellation by the employer or by the trade union. The employer’s quitting the employers’ association does not affect that condition. Until cancellation of the collective agreement has been executed, both parties are bound by the peace-obligations, or no-strike clauses. Labour actions are illegal
• As long as no new collective agreement has been made, the working conditions of the old agreement will apply, even if the old one has been cancelled already
• In case of major company changes such as outsourcing (§ 613), applying collective agreements become parts of the individual employment contracts
• As an employee, consider in how far a collective agreement is applying to you. If you are a trade union member, or if it is a company agreement, it will apply to you automatically. It also applies if your employment contract is referring to it, or if the Federal labour and social minister declares it to be generally binding (so-called application due to general bindingness), e.g. for minimum wages in various sectors
• Deviations from the collective agreement that disadvantage employees are only legal if there is an extra, complementary collective agreement, or an explicit savings clause providing for them
• The employer can free himself from the bindingness of a collective agreement, by performing dismissals with the option of altered conditions of employment. Prerequisite for this is, that the collective agreement is merely a part of the employment contract and does not apply genrally
• Collective agreements must be displayed by the employer in a suitable place on company location
• The works council has no rights of co-determination regarding issues regulated by collective agreements

Last update: 06/17/2010