Collective agreement negotiations

Collective agreement negotiations, or collective bargaining, refer to negotiations where a trade union representing employees and an employer organisation representing employers in a certain sector negotiate the minimum terms and conditions of employment for the sector, such as pay levels and working hours. A trade union may also negotiate these with an individual company.

The negotiations result in a collective agreement, which is concluded for a specific period of time, known as the collective agreement period. So, the minimum wages for different tasks have been negotiated for that time period. When the agreement period ends, new negotiations start from scratch.

Conclusion of collective agreements is governed by the Collective Agreements Act (436/1946). Other labour laws, such as the Working Hours Act (605/1996), the Annual Holidays Act (162/2005) and the Employment Contracts Act (55/2001), specify certain parameters for the content of collective agreements.

How PAM’s collective agreements are made

According to PAM Rules, the PAM Executive Committee leads the Union’s collective bargaining activities. Chronologically, negotiating new collective agreements progresses more or less as follows.

1. Requesting proposals for new contents of collective agreements from local branches
When a collective agreement period is drawing to a close, PAM invites local trade union branches to make proposals for the contents of collective agreements. PAM’s agreement experts prepare a summary of the local branch proposals for discussion by the Agreement Sector Commissions. Institutional members, workplace meetings and PAM Council members may also make proposals for the contents of collective agreements.
The PAM Agreement Sector Commissions, composed of active members from different sectors, discuss the proposals made by local branches and make further specifications. Likewise, they also discuss details such as proposals made to PAM’s Council to amend the contents of collective agreements.

2. Terminating valid collective agreements
Any valid collective agreements must be terminated. Decisions on termination of agreements are made by the PAM Executive Committee. Valid collective agreements are usually terminated two months before the end of the current agreement period. Based on the proposals submitted, the PAM Executive Committee sets objectives for negotiations.

3. Launching negotiations
Negotiations are already launched before the validity of the current collective agreement expires.
Negotiations are conducted by representatives of PAM and the relevant employer organisation, both of whom have their own objectives and premises. Reconciling these is what the negotiations are all about.
In most cases, negotiations start with discussing so-called qualitative agreement targets. In practical terms, these refer to any details not directly related to pay, i.e. the text of the collective agreement. Details on pay increases are generally left for the final stages of bargaining.
During the negotiations, the parties should reach an understanding about a whole made up of several different parts. This is why it is often said that nothing has been agreed in collective bargaining until everything has been agreed.
During negotiations, the Agreement Sector Commissions and the PAM Executive Committee discuss the status of negotiations.

4. Entering into an interval without collective agreements
When the term of notice for the collective agreements expires, the parties enter into an interval without collective agreements, unless new agreements have been concluded by that time. During any such interval, the provisions of an old collective agreement will apply until a new agreement has been concluded. This is known as the ‘after-effect’.
During an interval without a collective agreement, there is no obligation to maintain industrial peace, which means that there is a possibility of various types of industrial action, such as strikes – and they are also likely if this interval drags on.

5. Concluding negotiations
When the negotiating parties have reached an understanding about the collective agreement as a whole, this is called a negotiation result, which the parties will also sign. Each negotiation result is dealt with by the Agreement Sector Commissions, which will then submit it to the PAM Executive Committee for discussion.
The PAM Executive Committee accepts or rejects the final negotiation results based on the proposals by the Agreement Sector Commissions. The Executive Committee may also organise a consultative vote on the result among those members covered by the agreement being negotiated. It may also arrange for issues relating to collective bargaining to be discussed and decided by the PAM Council.
However, it is not enough for the negotiation result to be adopted by PAM; the relevant employer organisation needs to accept it as well. Once this happens, a new collective agreement has been concluded.

6. If negotiations fall through
In the event that the negotiating parties fail to reach an understanding about the new minimum terms and conditions and resort to industrial action – such as strikes or overtime bans declared by PAM or lock-outs imposed by employers – in order to achieve a collective agreement, the National Conciliator will step in.
The National Conciliator aims to put together a so-called conciliation proposal, building on the views of the parties. This proposal is also discussed by both the Agreement Sector Commissions and the PAM Executive Committee, as well as the employer organisation.
The parties may either accept or reject the conciliation proposal. In order to be adopted, both parties must accept the conciliation proposal. If either party rejects it, the proposal is dropped.

7. New agreements for members
The new collective agreements are printed and uploaded to the website. Members can order the collective agreement covering their own sector online. You can also download a mobile version of the collective agreement, called ‘PAM mobiili-TES’, from your phone’s app store.
When the agreements become valid, it is important to ensure that the improvements agreed will be implemented at workplaces, so as to benefit every employee.
Therefore, each employee should always check that their wages and salaries are paid correctly and in accordance with the new collective agreement. Otherwise, negotiations have been in vain.