Universally applicable collective agreements

A collective agreement may be universally applicable. Universal applicability means that all employers operating in the relevant agreement sector must comply with the provisions of the collective agreement. The provisions included in collective agreements are minimum requirements.

Thanks to universal applicability, all companies operating in the same sector are on an equal footing on the market in terms of personnel costs. They cannot compete by undercutting employees’ terms and conditions of employment.

The universal applicability of a collective agreement is determined both by the number of organised employers (i.e. members of the relevant employer organisation) and by the number of organised employees (i.e. members of the relevant trade union).

Collective agreements that are considered to be sufficiently representative are confirmed to be universally applicable. In this respect, a key assessment criterion is the relative proportion of the sector’s employees who work for employers that are members of the relevant employer organisation. The universal applicability of collective agreements is confirmed by the Advisory Board for Ratification of the Validity of Collective Agreements, operating under the Ministry of Social Affairs and Health.

A collective agreement that is not universally applicable is referred to as normally applicable. The provisions of a normally applicable collective agreement are binding for those employers that have either entered into such an agreement directly or that are members of the employer organisation that concluded the agreement.