Collective labour agreement-legislation

The Law on Collective Labour Agreements* has been enforced since 1927 in The Netherlands. This law defines what a collective labour agreement (in Dutch: cao) is and determines that labour conditions that are included are legally binding. Almost two thirds of the professional population in employment falls under a collective labour agreement. Agreements about, among other things, wages and working hours are recorded in these agreements. Are you an employer or HR manager and do you have questions about the Dutch collective labour agreement-legislation? This article explains the basics you need to know.

What kind of collective labour agreements are there?

In the Netherlands, there a two kinds of collective labour agreements:

1. A so called ‘business sector collective labour agreement’ covers an entire business sector and therefore is applicable to one specific sector. A business sector collective labour agreement is agreed upon by one or more employer or employer organizations and one or more employee organizations (labour unions).

2. The ‘enterprise collective labour agreement’ applies for all employees within one company. An enterprise collective labour agreement is agreed upon between one employer and one or more employee organizations.

When is a collective labour agreement binding?

Only when a universally binding agreement (AVV) is applicable to a collective labour agreement, the collective labour agreement is binding. To get a universally binding agreement for a collective labour agreement, you will need to submit a request at the minister of Social Affairs and Employment. When this request is honoured, the employer can only deter from this when he requests and receives dispensation. On nearly all business sector collective labour agreements, a universally binding agreement is applicable.

Collective labour agreement-legislation

Agreements in the collective labour agreement can never contradict the legal labour conditions, as set in, for example, the law minimum wage and minimum holiday allowances* or the Law Balanced Labour Market* (Wet Arbeidsmarkt in Balans, WAB). Agreements in the collective labour agreement are often more favourable for employees than legal regulations. For some legal regulations it is possible to make deviating provisions. The only way for employers to deviate from legal regulations, is through the three-quarter compulsory law. The ministry of internal affairs says the following about this: we can speak of three-quarter compulsory law when a legal provision ensures that it is possible to make a deviating agreement in a collective labour agreement, both to the advantage and disadvantage of the employee. Deviating from a provision of three-quarter compulsory law is, therefore, only possible with a collective labour agreement. Deviating from these provisions inindividual labour agreements is not allowed. To deviate from these provisions in both individual and collective labour agreements, these provisions must fall under the semi-compulsory law.

Collective labour agreement-legislation and the labour contract 

The agreements in a collective labour agreement are considered to be more binding than the agreement in an individual labour agreement (or: labour contract). Provisions in an individual labour agreement cannot be disadvantageous for the employee. Employers can, therefore, only deviate from the individual contracts of the collective labour agreement if this is in favour of the employee. For example, employers can only deviate from the wages or holiday days if this is higher than the collective labour agreement.

No collective labour agreement 

When a sector or company does not have its own collective labour agreement, the legal provisions of the labour law are applicable to the labour relationship. In most cases, agreements are recorded in an individual labour contract. However, to sign such an agreement is not a legal requirement. When no collective labour agreement is applicable, employees and employers can determine the collective labour agreement-conditions themselves. This happens in collaboration with a union. Labour union De Unie made a video (in Dutch) about how to draft your own collective labour agreement.

Suggested reading on collective labour agreement-legislation

On the Dutch Government website you can explore your legal rights and obligations in regard to the collective labour agreement and labour contracts. Click here* for more information. The Ministry of Social Affairs and Employment publishes an online overview of all valid collective labour agreements and universally binding agreements: you can find the enclosed entrepreneurial and business sector agreements, universally binding agreement decisions and pending universally binding agreement procedures here*.