Collective Labor Agreement (CAO) Law
A collective labour agreement (‘CLA’) is an agreement entered into between one or more employers (or employers’ organisations) and one or more employees’ organisations. The collective agreement serves to compensate for the individual employee’s weak negotiating position.
A collective agreement mainly sets out terms and conditions of employment, such as pay levels, working conditions and working hours. A collective agreement can therefore be regarded as a supplementary arrangement to the individual employment contract. The collective agreement may apply to an individual employment contract in various ways:
- being bound by membership of one of the parties to the collective labour agreement;
- incorporation clause;
- collective agreement declared generally binding (AVV);
If the employer is a member of the employers’ organisation that has concluded the collective agreement and the employee is a member of the employees’ organisation or trade union that has concluded the collective agreement, the parties are bound by the collective agreement. However, for the collective agreement to apply, it is important that the parties fall within its scope. The term ‘scope’ refers to the company or companies and the employees to whom the collective agreement applies. Every collective agreement contains a provision setting out its scope.
A collective agreement also applies if the employer and the employee have agreed to this in the individual employment contract and ‘incorporate’ the collective agreement into it. If an incorporation clause is included in the employment contract, both parties are obliged to comply with the rights and obligations arising from the collective agreement.
A collective agreement may also be declared generally binding by the Minister for Social Affairs and Employment (SZW). If the individual parties then fall within the scope of the collective agreement, they are bound by its provisions.
