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What is a Collective Bargaining Agreement?

Collective bargaining agreements are very common on the Swedish labour market and to a very large extent regulate the relationship between an employer and its employees.

Some collective bargaining agreements pertain to the general relationship between an employer or and employer federation and the trade unions. Such agreements normally regulate such matters as co-determination, procedures for negotiations and the outlining of common objectives relating to the future development on the labour market and for the employers. Agreements with the above subject matters are normally entered into between the nation-wide employer’s federations and their nation-wide central trade union counterparts.

Other collective bargaining agreements provide rules governing the relationship between an employer and individual employees. Agreements of this type can be entered into both on a central level, by the parties described above, and on a local level between a specific employer and the local trade union present at the company. It is common that a central agreement pertaining to the individual employee’s terms and conditions of employment are complemented by local agreements. This is the standard procedure among the companies being members of The Swedish Association of Industrial Employers.

The Swedish Association of Industrial Employers is bound by thirteen collective bargaining agreements. Seven of them are blue-collar agreements. The blue-collar trade union Industrifacket Metall is counterparty in five agreements, Pappers (The Swedish Paper Workers Union), GS (The Swedish union of forestry, wood and graphical workers) in one each and SEKO (The Union for Service and Communications Employees) in two. The Swedish Association of Industrial Employers is also bound by four collective bargaining agreement for white collar employees. The counterparties to this agreement are the white-collar unions Ledarna (Sweden’s Organization for Managers), Unionen and Sveriges Ingenjörer (The Swedish Association of Graduate Engineers) . In addition, The Swedish Association of Industrial Employers is bound by one collective agreement that comprise both blue- and white collar counterparties in the same agreement with Pappers (The Swedish Paper Workers Union) as blue-collar counterpart.

All above mentioned agreements regulate such matters as terms and termination of employment agreements, working time, minimum wages, vacation compensation and sickness compensation etc. As mentioned above, these agreements are often supplemented by local collective bargaining agreements.

The definition of a collective bargaining agreement can be found in the Co-determination Act, which states that a collective bargaining agreement is an agreement in writing between employer’s organisations or an employer on the one hand and an employee’s organisation on the other hand, which regulates conditions of employment or the relationship between employers and employees. An agreement is deemed to be in writing if its contents has been recorded in approved minutes or where a proposal for an agreement and an acceptance thereof have been recorded in separate documents. Oral agreements, or agreements which do not concern the relationship between employers and employees are not deemed a collective bargaining agreement.

The two most important consequences of a collective bargaining agreement are:
 

  1. that departures in individual agreements from the terms of a collective bargaining agreement are invalid if both parties to the individual agreements are bound by the collective bargaining agreement and the departure is not expressly permitted by the collective bargaining agreement (This is called the “mandatory effect of collective bargaining agreements”).
     
  2. as a rule, it is not permitted to resort to industrial actions (e.g. strikes and lock-outs) during the term of an agreement with the objective of altering the agreement or exerting pressure in the event of a dispute over the implications of a collective bargaining agreement (this is called the “peace obligation”).


Collective bargaining agreements are signed for given periods, normally between two and four years. A collective bargaining agreement is binding both on the employer’s organisation and its members on the one hand and on the union and its members on the other hand. Furthermore, as a general rule, a collective bargaining agreement is also in practise, if not in theory, binding on non-unionised individual employees and unionised employees who belong to other unions than the union being part to the agreement, provided that (i) the employee works with tasks that are covered by the agreement and (ii) the union that the employee belongs to is not itself bound by another collective bargaining agreement with the employer.

A collective bargaining agreement is reached by means of negotiation. The Co-determination Act makes it clear that each union organisation and employer or employer organisation shall have the right to negotiate in all areas which affect the relation between employer and employee. This may be a question of regulating by means of an agreement issues remaining unresolved between the parties or of replacing previously existing regulations by new ones. A right to negotiate for one party means an obligation for the other part to participate in the negotiations. However, there is no legal obligation to come to an agreement (For further information, see under the section “”Co-determination at the workplace”).