Collective bargaining agreement

A collective agreement or collective bargaining agreement (CBA) is a special type of commercial agreement, usually as one negotiated "collectively" between management (on behalf of the company) and trade unions (on behalf of employees). The collective agreement regulates the terms and conditions of employees in their workplace, their duties and the duties of the employer. It is usually the result of a process of collective bargaining between an employer (or a number of employers) and a trade union representing workers.

In Finland, there is universal validity of collective labour agreements. This means that a collective agreement in an economic sector becomes a universally applicable legal minimum for any individual’s employment contract, union member or not. For this condition to apply, half of the workforce in that sector needs to be union members, thus supporting the agreement.

Workers are not forced to join a union in a specific workplace. Nevertheless, with 70 % average unionization, most economic sectors are under a collective labour agreement. An agreement does not prohibit higher wages and better benefits, but establishes a legal minimum, similarly to a minimum wage. Furthermore, a Comprehensive Income Policy Agreement is often, but not always reached, which includes all trade unions, employer’s unions and the Finnish government.

Collective agreements in Germany are legally binding, and this is accepted by the population, and it causes no alarm. Whereas in the UK there was (and arguably still is) a "them and us" attitude in industrial relations, the situation is very different in post-war Germany and in some other Northern European countries. In Germany, there is a much greater spirit of cooperation between the two sides of industry. For over 50 years, German workers by law have had representation on company boards. Together, management and workers are considered "social partners", a term that gives rise to bemusement in the UK.

At common law, Ford v A.U.E.F. [1969], the courts once held that collective agreements were not binding. Then, the Industrial Relations Act 1971, introduced by Robert Carr (Employment Minister in Edward Heath's cabinet), provided that collective agreements were binding unless a written contact clause in writing declared otherwise. After the demise of the Heath government, the law was reversed to reflect the tradition in British industrial relations policy of legal abstentionism from workplace disputes.

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