Collective agreement, temporary agreement or nothing at all?
What is a collective agreement?
A collective agreement is an agreement between an employer organization and a trade union that concerns rules and agreements. It can concern minimum wages, termination of employment, insurance or what is to be negotiated. Some of the rules in the Employment Protection Act are dispositive and these can be agreed upon by the parties in a collective agreement. Employers are bound by the collective agreement by becoming a member of an employer organization that charges you a certain percentage of your salary costs. But it is also possible to be bound by entering into the agreement directly with a trade union. In this case, it is called a hanging agreement.
What is a hanging agreement?
The collective agreement between the union and the employers' organization as described above can be concluded in a different way for the employer than by becoming a member of an employers' organization. The employer can sign the agreement directly with the union. This is called a suspended agreement. The agreement is "suspended". Legally, there are no differences. The employer is bound by the same rules as if they had a collective agreement.
Do employers have to have collective agreements?
No, you don't have to. On the contrary, there is freedom of contract in Sweden, a democratic right where companies and private individuals can choose whether they want to enter into a contract or not, regardless of what it is about. Exceptions apply to those who have a monopoly, such as Systembolaget, they must actually sell their products and thus enter into purchase agreements with individuals. No one should have to be forced into an agreement.
According to the Swedish Mediation Institute, 901% of all employees in Sweden are bound by collective agreements. So it is very popular among employers to be bound by collective agreements or collective agreements.
What does it mean for an employer to be bound by a collective agreement?
There are many collective agreements. You actually have to read the agreement in its entirety to find out. When you are bound by a collective agreement, you have to follow it. Otherwise, you risk having to pay damages to the union for breach of the collective agreement.
Below is an example of some of the clauses in the hotel and restaurant industry's suspension agreement:
- General terms and conditions of employment such as employment forms and termination of employment
- Working hours
- Salaries
- Holiday
- Rules of procedure
- Staff housing
- Insurances
- Work management
- Termination
- How documents should look like, such as employment contracts, salary specifications and work schedules
- Hiring of staffing agencies
Advantages for an employer to be bound by collective agreements?
There are clear advantages to being bound by a collective agreement as an employer.
- Being bound by a collective agreement also makes it easier to contact the Swedish Employment Agency if you want to receive support for certain workers.
- When participating in public procurement, there is often a requirement that the employer be able to demonstrate that they have conditions on par with collective agreements. It is not a requirement to have a collective agreement. But you must then be able to demonstrate that you have conditions as good as an employer who is bound by a collective agreement.
- You fall into the prejudice that you are a “serious” employer and don’t need to explain yourself
- There is a duty of peace while you have a collective agreement. This means that your staff may not strike or take other industrial action.
- If you are bound by a collective agreement, there is some possibility that the union may want to enter into individual local rules that will apply to your workplace without agreeing on it with all employees. A clear example is in connection with dismissal due to a shortage of work, where you and the union can agree on a contractual timetable.
Disadvantages for an employer of being bound by collective agreements?
There are also clear disadvantages to being bound by collective agreements.
- You and your employees cannot agree on terms of employment that may conflict with the collective agreement.
- To be able to comply with the collective agreement, you must be able to apply it. Employers often need help with this.
- Once you are bound by a collective agreement, it is difficult to terminate it and stop being bound. You are then known to the union, so to speak.
Good luck! Are you a manager or employer representative and have any questions? Don't hesitate to get in touch.
Christoffer Lewinowitz
Employer lawyer
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