Collective bargaining agreements and arbitration in industrial disputes

Collective bargaining agreements

A collective bargaining agreement is one which is made by one or more employers or an employers’ association with one or more employees’ unions concerning conditions which must be complied with in contracts of employment or employment relationships. The collective agreement has two important roles: it guarantees a minimum level of working conditions for employees, and it serves to represent a commitment to industrial peace (known as the ’peace obligation’).

If a contract of employment is in any respects in contradiction of the collective agreement for the relevant sector of industry the contract is null and void for these same sections and the equivalent provisions in the collective agreement are those to be followed instead.

Arbitration in industrial disputes

A system of arbitration in industrial disputes is in place to deal with conflicts of interest at work. It is based on the Act on Mediation in Labour Disputes. The state set up the arbitration system for the labour market organisations so that disputes might be resolved through negotiation.

In cases of arbitration in industrial disputes the negotiating partners are assisted by a national conciliator and conciliators. The labour market central organisations may also use a national conciliator to assist them in concluding a collective bargaining agreement .

Litigations over the content or breaches of collective agreements can be referred to a labour court. A labour court’s jurisdiction relates to a collective agreement’s legitimacy, validity, content, scope and the correct interpretation of any of its clauses. The labour court can also decide on how much in compensatory damages is to be paid out following unlawful industrial action. Its decision is final.

Legal disputes over an employment relationship not linked to a collective bargaining agreement binding on the employer by virtue of the Collective Agreements Act are dealt with by general court.

Finnish Labour Legislation and Industrial Relations, brochure, 2012

Collective Agreements´ Coverage in Finland in 2008 (2011, summary)Wage Earners´ unionization in Finland in 2009 (2011, summary)

Report on European industrial peace systems, 2011 (summary)

Shall we make an Local Agreement? (335:2007, mol.fi, summary)