If more than half of the companies in the technology industry do not join the new employers' association, the collective agreement will no longer be generally binding.
Near the end of March, Technology Industries of Finland, which represents the employers’ associations of many TEK members, announced that it will give up its collective bargaining activities and transfer the task to a newly established employers’ association this autumn. In practice, companies can choose whether they want to be included in the scope of national collective bargaining or not. If more than half of the companies in the industry do not join the new employers’ association, the collective agreements in the industries will cease to be generally binding. Finnish Forest Industries also announced already back in October 2020 that it will withdraw entirely from national collective bargaining activities.
Did you know that the following employment terms, among others, stem from collective agreements negotiated by TEK and other unions and not from the Finnish law?
- 7.5-hour working day instead of eight hours
- Paid sick leave even after nine days, usually for three months
- Three months of paid leave for a new mother
- One week of paid paternity leave
- Possibility to care for a sick child at home for a few days without loss of salary
- Right to elect an employee representative (shop steward)
- Holiday bonus, half a month’s salary in practice
- Annual overall increases in wages
- Work-related travel cost compensation
- Stand-by arrangements and compensation
The collective agreements negotiated by unions play a key role in whether we have the means, time and energy for family, friends, hobbies, love and other life outside work.
The legislation related to work and employment is fairly flexible in Finland. Legislators have wanted to leave plenty of room for negotiation and agreements between employees’ and employers’ associations. Industry negotiations produce agreements known as collective agreements. Collective agreements are often valid for 2–3 years, which means that the terms of employment are renegotiated every couple of years.
Since collective agreements are negotiated separately in each industry, TEK has joined forces with other Akava trade unions operating in the same industries, such as the Union of Professional Engineers in Finland, Professionals of Business and Technology, and The Finnish Business School Graduates. The employment terms of the members of Akava trade unions are negotiated in the private sector by The Federation of Professional and Managerial Staff YTN and in the public sector by the Negotiation Organisation for Public Sector Professionals JUKO. In practice, the negotiators are employees working for TEK and other unions.
The next round of negotiations is just around the corner, because major collective agreements in the technology industry will expire on 30 November 2021:
- Collective Agreement for Senior Salaried Employees in Technology Industries
- Collective Agreement of the IT Service Sector (concerns employees in the IT industry)
- Collective Bargaining Agreement for Senior Salaried Employees in the Consulting Sector
Now if ever is a good time to be a union member
We negotiate and support our members, whether it be with their personal employment contracts, local bargaining or collective agreements. Negotiating the terms of employment requires extensive knowledge of labour legislation, and both our lawyers and our work life experts are here to support you.
The more members TEK has, the more leverage we also have to pursue the goals that are important to us, whether it be negotiating collective agreements or, say, developing innovation policy.
Talk to your co-workers, acquaintances and employers about the significance of collective agreements and their generally binding nature. The future of the labour market in Finland depends on us all.
Answers to the most common questions:
- Why may the terms arising from collective agreements be at risk?
- What does the generally binding nature mean?
- If the agreement ceases to be generally binding, what will the employment terms be like in companies that do not belong to the employers’ association?
- What long-term effects can there be if the agreement ceases to be generally binding?
- What does local bargaining mean?
- Will local bargaining become easier or more common without a collective agreement?
- Why are unions opposed to local bargaining?
Why may the terms arising from collective agreements be at risk?
Technology Industries of Finland and Finnish Forest Industries, representing employers, have announced they will give up collective bargaining. Technology Industries of Finland has previously negotiated the collective agreements in the technology industries, the IT industry (IT service sector) and the consulting sector. As unions representing employees, we cannot negotiate collective agreements if there is nobody to negotiate with.
However, Technology Industries of Finland has established a new employers’ association, Teknologiateollisuuden työnantajat ry, for negotiating agreements. It is not yet known which and how many employers will join the new association. This should become clear in the course of autumn. This is significant for the continuation of the terms of employment. If many companies choose not to join the new association, the agreements in the industries will cease to be generally binding. If the collective agreements cease to be generally binding, they will only apply to the employees whose employers belong to Teknologiateollisuuden työnantajat ry.
What does the generally binding nature mean?
More than half of the employers in the technology industries, the IT industry (IT service sector) and the consulting sector have previously been members of Technology Industries of Finland. For this reason, the agreements in these industries have been generally binding. When a particular industry has a generally binding collective agreement, the agreement is applied in all companies in the industry, including the ones that are not members of the employers’ association that signed the collective agreement in question. If a collective agreement ceases to be generally binding, it will only be applied in the companies that are members of the employers’ association that signed the agreement.
If a collective agreement ceases to be generally binding, it will only be applied in the companies that are members of the employers’ association that signed the agreement.
If the agreement ceases to be generally binding, what will the employment terms be like in companies that do not belong to the employers’ association?
If the agreement ceases to be generally binding, employers that do not belong to the employers’ association will comply with the labour laws related to work and employment. The law dictates the minimum, i.e., the employer can always provide better terms for the employee, but not worse. Matters that are not governed by law are agreed upon either through personal or workplace bargaining, also known as local bargaining or local negotiating.
Current collective agreements allow companies high flexibility, more leeway than the law gives, e.g., in terms of working hours arrangements. If there is no collective agreement or if it is not generally binding, a company that does not belong to the employers’ association will have to abide by the law, which is much more rigid when it comes to working hours arrangements.
Collective agreements also contain other direct benefits for employers, such as employee cooperation negotiation times that are shorter than prescribed by law and exemptions from the rehiring requirement. These will naturally be removed from the range of options available to companies that choose not to be covered by collective agreements in the future.
What long-term effects can there be if the agreement ceases to be generally binding?
The generally binding nature sets at least some kind of minimum price for work in the industry and therefore urges companies to compete on the quality of products or services, security of supply, speed etc. If the agreement ceases to be generally binding, companies may be tempted to seek competitiveness, for instance through forcing down salaries or cutting other benefits of monetary value, such as holiday bonuses, sick pay etc.
What does local bargaining mean?
Local bargaining or local negotiating refers to the employment terms agreed in an individual company or workplace. The contracting parties are the employer and the employee representative who represents the personnel, or the entire personnel together. Local bargaining is based on the law or the collective agreement. The collective agreements of YTN allow for fairly extensive local bargaining. Under the collective agreements currently in force, various terms can also be agreed personally directly with the employee, without an employee representative. The agreements therefore contain hardly any “employee representative locks”, where local bargaining is prevented by not appointing an employee representative.
Local bargaining can always provide better terms for the employee than the law or the collective agreement. Therefore, collective agreements have not thus far stood in the way of, e.g., salary increases, although they have ultimately prescribed a minimum level for the issued increases. The purpose of this is to ensure the purchasing power of salary earners, so that it does not decrease due to inflation.
Will local bargaining become easier or more common without a collective agreement?
Labour legislation enables free bargaining to decide differently on certain matters under the collective agreement. Unlike the boundaries of the law, the collective agreement gives the opportunity to agree differently, more expansively or even more poorly in terms of the employee. So, in fact, collective agreements particularly for senior salaried employees, such as TEK members, have provided extensive local bargaining opportunities.
If the employer is not part of the employers’ association that has negotiated the effective collective agreement, it will also give up the local bargaining opportunities enabled by the collective agreement, also in terms of the above-mentioned expansions. Similarly, if a company has existing local agreements, they will cease to be valid once the collective agreements expire. If the collective agreements cease to apply, a significant number of rights and local bargaining opportunities will also be lost. The opportunities provided by legislation alone are extremely limited.
Why are unions opposed to local bargaining?
TEK is not opposed to local bargaining, quite the opposite. However, we want local bargaining to be genuine and fair, based on the law and collective agreements. It should not be local dictation. If there is no collective agreement and therefore no employee representative, the problem still remains that we in Finland do not currently have the necessary legislation in place to guarantee equal local bargaining, such as the works councils in Germany or the Co-determination Act in Sweden. The bargaining position between an employer and an individual employee is not equal to start with. The genuine, fair nature of the negotiation will therefore vary depending on the company and the situation.