Why do we need collective agreements?
Legislation in Finland does not provide regulations on, for example, holiday bonus, minimum wage, salary raises, maternity leave pay or salary payment while taking care of a sick child at home. However, these financial benefits are included in the majority of collective agreements.
In Finland, the benefits related to an employment relationship as well as field-specific salary development are usually safeguarded by means of collective agreements, also known as the TES agreements.
A collective agreement defines the minimum level for the terms and conditions of employment applicable in a particular field. In addition, individual employees can negotiate further improvements to their own employment contracts. Basically, the collective agreements guarantee employees better terms of employment than those provided by legislation.
The collective agreement also ensures that, as a union member, an employee has access to the services of a trained personnel representative, such as a shop steward, who will assist employees at their workplaces in matters and issues related to working life.
Collective agreements usually provide better terms than the law for the following:
- Sick pay
- Salary payment during temporary absences (for example, to care for a sick child)
- Salary payment during family leaves (for example, the first months of a maternity leave or the salaried days during a paternity leave)
- Longer annual holidays
- Longer sick leaves with a pay
- Holiday bonus and its conversion to a leave
- General salary raises
- Payment system (field-specific minimum pay level!)
- Shop steward’s services at one’s own workplace
- Periods of notice and the related procedures
- Compensations for travel expenses
- Local bargaining systems
- Various compensations (for example, for travelling time)
- Working hours arrangements (including the overall working hours at universities).
Collective agreements and employment contracts are two different things:
A collective agreement, as indicated by its name, is a collectively bargained framework agreement that will supplement the individual employment contracts of all employees. An employment contract is an individually negotiated agreement between the employee and employer to define, among other things, the start date of the employment, nature of the employment relationship (permanent or fixed-term), title or position, salary and place of work.
A collective agreement includes details concerning the terms and conditions of employment that shall be equally applicable to all employees, unless otherwise provided by their employment contract. A collective agreement is used to agree on the terms and conditions of employment that are suited for a particular field, with consideration of its specific characteristics. Therefore, it affects much more than just salaries and wages.
A collective agreement is an agreement between the unions of employees and employers. The trade union representatives negotiate, on behalf of the employees, with the relevant employer organisation. At this level, negotiations are carried out by specialists with expertise in the terms and conditions of employment. At the level of individual workplaces, especially in smaller companies, this kind of expertise may be lacking. Unionisation serves to promote the interests and professional development of the field as a whole, while also contributing to the establishment of the common ground rules for each field.
Collective agreements are used to agree on, for example, field-specific minimum wage levels, working hours and other essential terms and conditions of employment. The collective agreements are usually sector-specific, but there are also corporate-level collective agreements. The most important private and public-sector collective agreements are nationally applicable. Within the public sector, all employers are covered by statutory collective agreements.
The collective agreement benefits both employees and employers
For individual employees, it would not be sensible to try to negotiate all terms and conditions of their employment with their employer on their own.
This is why a collective agreement is a necessity for employees. It provides a general framework for an employment relationship and automatically benefits each employee. An employment contract concluded with the employer is, therefore, not sufficient as such if the employee wishes to enjoy the established and accustomed terms of employment, including long annual holidays, a holiday bonus or a longer salaried sick leave, and to ensure a certain minimum wage level in the field.
Employers also benefit from collective agreements. They save plenty of time and effort in comparison to a situation where the terms and conditions of employment would have to be negotiated individually with each employee. Clear rules of the game are in the interest of both parties.
The system as a whole is very flexible since the collective agreements are field-specific. It makes sense that the terms and conditions of employment for university researchers and teachers are different from those applicable to, for example, orchestra musicians or medical doctors and take the special characteristics of the field into consideration. A high level of unionisation is a prerequisite for a good collective agreement as it provides the trade unions with a mandate to negotiate collectively on the terms and conditions of employment. Thus, being a member of a union is the best insurance for better employment terms. A sufficient level of unionisation will safeguard the opportunity to collectively negotiate the terms and conditions of employment for employees in the future as well.
Essentially, collective agreements foster a good working life where employees are not forced to compete with each other by accepting a lower pay or working on the minimum conditions set up by law. Rather, the terms and conditions for work should be agreed on together, with solidarity and specifically for each field. A key goal for trade unions is to safeguard the high degree of employment and job growth in their field. To support this goal, collective agreements are being negotiated jointly with the employers.
The idea of the trade unions is to promote a good working life for all, while ensuring a decent living for employees and sufficient free time outside of work for other aspects of life, such as family and leisure activities. It is also important that an individual employee’s earnings will not suddenly drop due to, for example, falling ill or having a child. There is no statutory provision for a minimum wage in Finland, so the collective agreements protect the salaries and wages from being dumped in many fields.
Through collective agreements, the trade unions defend the interests of all employees equally. The collective agreement system is the most efficient means for improving the terms and conditions of employment and increasing salaries and wages in the long run. If the collective agreement system ceased to exist, the threat for employees would be that the terms and conditions of employment would return to the minimum level determined in the Employment Contracts Act. In practice, this could mean, for example, that a parent would have to stay home without pay to care for a sick child. Or that the salaries and wages for some employees would never develop and working life would become increasingly unpredictable.
A universally or normally binding collective agreement?
A normally binding collective agreement binds the employers affiliated to the employer organisation that has concluded the agreement, or the agreement may have been made to apply to a particular company. A universally binding collective agreement means that even the unaffiliated employers in the field in question must comply with its provisions. In this case, all employers are obligated to comply with a general minimum level and they may rival as employers by the quality and innovativeness of activities, good leadership or good products or other similar acceptable criteria, but not by weakening the terms and conditions of employment for their employees, for example, by lowering salaries or wages.
The so-called representative collective agreements are confirmed as being universally binding by the Committee for confirming the general applicability of collective agreements, operating under the Ministry of Social Affairs and Health. A key criterion for evaluating the general applicability is the share of employees that is employed by employers affiliated to the relevant employer organisation. Universally binding agreements include, for example, the General collective agreement for universities, the General collective agreement for vocational adult education centres, the General collective agreement for the private teaching sector, and the Collective agreement for senior salaried employees in technology industries.
The applicable collective agreement is usually stated in an individual employee’s employment contract. If it remains unclear whether the employment relationship is subject to a collective agreement or whether the employer is affiliated to the relevant employer organisation and if the matter cannot be clarified within the workplace, an employee may contact the union for assistance.
Academics and collective agreements
The members of the Finnish Union of University Researchers and Teachers (FUURT) are employed in a wide variety of workplaces within the public and private sectors. Therefore, the Union members are covered by several different collective agreements.
The majority of the Union members are employed within the university sector. In the negotiations for collective agreements for universities, the State and municipalities, the Union members are represented by the Negotiation Organisation for Public Sector Professionals JUKO. The Union’s Director of Advocacy contributes to the university sector negotiations as one of JUKO’s negotiators.
For academics working in the private sector, the collective agreements are negotiated by the Federation of Professional and Managerial Staff YTN. As a member of YTN, the Union thus has an influence on collective bargaining in the private sector as well.
Since the Union is a member in both JUKO and YTN, all Union members are entitled to the services of the JUKO and YTN shop stewards both in the public and the private sector.
Although it primarily negotiates on the collective agreement for universities, the Union also closely follows the negotiations for other JUKO fields, including the municipalities, the State, the Church and the Avainta Employers, as well as the private teaching sector. Regarding the YTN collective agreements, the Union keeps a close eye on the non-profit organisation sector as well as the technology, ICT and chemical industries, which are among the major employers for the Union’s members.
In the collective agreement negotiations, the Union strongly advocates for the membership’s interests. Our key goals include, in particular, ensuring fair salary development, improving the status of fixed-term employees and developing well-being at work.
- The General collective agreement for universities, the Collective agreement for the Finnish National Gallery and the General collective agreement for the private teaching sector are available on the website of the Finnish Education Employers (FEE) Sivista.
- The currently valid collective agreements for the Federation of Professional and Managerial Staff YTN are available on the website of YTN.
- The general collective agreements for government are available on the website of the Ministry of Finance and those for municipalities on the website of the Local Government Employers
What about local bargaining?
The concept of local bargaining is extensively used in a variety of contexts and senses.
In the context of collective agreements, local bargaining usually refers to the local collective negotiations carried out by the employer and the representative of employees, usually the shop steward, on a particular condition of work. In these cases, the matter is being discussed by individuals with a broader understanding and knowledge of the terms and conditions of employment. The procedures for local bargaining are defined in the applicable collective agreement. Derogations from the relevant collective agreement may only be locally negotiated if the collective agreement contains an express regulation or authorisation to agree on derogations or when the local bargaining concerns a specific item included the collective agreement and its local application at the workplace.
It is not possible to bargain locally on any such terms or conditions that contradict the collective agreement, unless expressly permitted by the collective agreement. What kind of matters can be agreed on locally thus depends on the applicable collective agreement. Local bargaining would typically concern, for example, flexible working hours, travel expenses or salaries, but always within the limits set by the collective agreement. In the university sector, for example, Aalto University has a pay system of its own that has been agreed on locally within the framework of the General collective agreement for universities.
The term ‘local bargaining’ may sometimes be used by the media or the employer party to refer to the bargaining on working conditions without any protection provided by the collective agreement.
