Understanding Collective Bargaining Agreements

May 3rd, 2018 by The Imagination Factory

Today’s guest blogger is Eric Snethkamp, global channels & strategic alliances manager for SafeGuard World International. For nearly a decade, organizations around the world have relied on SafeGuard World for their global HR needs, specifically around payroll and employee compliance. SafeGuard World is an Alliance Partner of NPAworldwide.

When setting up a business or an office in a foreign market, one of the most important issues to consider is how far laws and regulations in that country differ from the way things work in your home market. One crucial aspect of this relates to the legal requirements around worker rights and collective bargaining agreements.

For some, collective bargaining invokes the image of manufacturing employees organizing under a union for better work conditions. However, collective bargaining is much more extensive in foreign markets, applying to multiple job classifications and may even be a national statutory requirement.

Misunderstanding the requirements could subject your company to substantial penalties as well as impact your total compensation costs in the market.

Collective Bargaining Agreements (CBA) contain the terms and conditions setting standards and HR & payroll rules for the workers under the CBA. The standards and rules give a minimum set of terms and conditions under which the employer has to operate and compensate workers. CBAs can vary widely by country – they can be nationally defined by industry and then modified through company negotiations. When recruiting in foreign markets, it’s essential to understand these differences.

For example, in Italy, all collective bargaining agreements are sanctioned by the Italian government and are uniformly national. There are 85-90 CBAs across Italy representing a variety of industry sectors. Because the CBA is uniform nationally, there is no interpretation required to determine any impact on payroll. However, in Germany, negotiations usually happen at the regional, rather than the national, level. Contrast this with CBAs in France where it can become extremely complex. There, unions have the power to deviate from national and industry agreements, which can be as granular as the job classification level within individual companies. So complexity can occur at the national, industry, company, union, and job classification levels – resulting in thousands of CBAs.

Across the whole of the European Union (EU), it’s estimated that around 62% of all employees are affected by collective bargaining agreements. But each of these agreements will contain very specific differences. An awareness of variations within countries, as well as across what may appear to be relatively homogeneous areas such as the EU, is essential when negotiating a collective bargaining agreement for offices in new territories.

Future posts will look at the elements that can influence collective bargaining agreements across a range of territories— and how your organization can create the best framework for drafting compliant and effective agreements with the workforce in your foreign offices.

Independent Recruiter Blog