“Good, if general applicability of the collective agreement goes away, we negotiate locally.” Indeed, in the future collective agreement of IT service sector does not necessarily apply to all the employers. In order to be prepared at the negotiating table of a local agreement, please read below what this means in practice for those who either work as employees or as employers in companies that do not intend to join the new Technology Industry Employers of Finland.
Representatives of the members the Federation of Professional and Managerial Staff YTN (e.g. Insinööriliitto, TEK, Tradenomit, Suomen Ekonomit and YTY) and Association of IT sector Employees Tietoala ry negotiate with the employer side on the Collective Agreement of the IT service sector every couple of years. The collective agreement regulates key terms of employment, which are often taken for granted, such as paid parental leave, sick pay, holiday bonus, compensation for overtime and travel expenses and general pay rise. In other words, these matters are not regulated by the legislation, but by the collective agreement.
This autumn, a new employers’ association, the Technology Industry Employers of Finland, will act as the employer’s representative in the negotiations. In order for the new collective agreement to be generally applicable, i.e. apply to all companies operating in the sector and their employees, at least half of the employees of the sector should work in the member companies of the Technology Industry Employers of Finland. At the moment, it seems that there are not enough companies that have joined and general applicability of the collective agreement in this field will be lost while the current collective agreement expires on 30 November 2021. However, the situation may still change if several large IT employers decide to join the new employers’ association.
Do you work as an employee or employer in a company that has not joined the Technology Industry Employers of Finland? Read below (for employees / for employers) about how a possible loss of general applicability can affect both the employee and the employer in such companies.
How would the loss of general applicability change an employee’s life in a company that does not belong to the Technology Industry Employers of Finland?
- If there would not be post-contractual protection, important terms of employment such as paid parental leave, sick pay, holiday bonus, compensation for overtime and travel expenses and general pay rises, as mentioned above, will no longer oblige your employer. The employer could pay for these, but does not have to. The employer could, for example, stop paying holiday bonuses with a unilateral declaration. The employee and employer unions are currently at odds over the existence of post-contractual protection after 30 November 2021. YTN’s and Tietoala ry’s position is that the post-contractual protection will continue the current terms and conditions of employment for those whose employment began before 1 December 2021.
- Many of the things previously agreed in the collective agreement should be agreed either in the individual employment contract or through local bargaining. It is definitely worth consulting the lawyers of YTN unions when concluding both individual employment contracts and local agreements. In contracts, the employer’s lawyers look after the company’s interests, not the employee’s.
- Employees will no longer be subject to the commitment to industrial peace. During general applicability of collective agreement, employees do not organise strikes as laid down in the agreement. If the collective agreement no longer applies to the company, employees can, if they wish, protest against the employer’s unilateral declarations against the weakening of working conditions by organising, for example, company-specific strikes.
- What can the employee now do to secure their position? You can join a trade union in your field if you do not yet belong to one. You can find a suitable union for you here: www.jaseneksi.fi (The site is currently only in Finnish, but it will be available also in English already next week). In addition, you should discuss the situation with the employee representatives, for example a shop steward, at your workplace and your colleagues, and also communicate this situation to the employer. You can forward the link of this article.
How would the loss of general applicability change the employer’s life in a company that does not belong to the Technology Industry Employers of Finland?
- The employer will fall out from the scope of the collective agreement to the scope of labour law on 30 November 2021. The company’s management and HR will have to find out how the company operates, as working conditions will in future come from labour law instead of the collective agreement.
- In many companies, there will be a need to start building and negotiating a company-specific collective agreement, the tailoring of which may require a lot of time and effort from management, HR, shop stewards and lawyers. When drafting a company-specific collective agreement, it must be taken into account that the law does not allow for local bargaining to the same extent as the national collective agreement. For example, a company cannot copy the collective agreement that is currently in force and continue to operate in full accordance with it. A local collective agreement can be agreed upon in a much more limited way, only in accordance with the law. For example, the daily limit and the maximum balance of flexitime are more limited. In addition, according to the law, the reference period for monitoring working time is 4 months, whereas in the current collective agreement it is 6 months and can be agreed upon for 12 months.
- Local agreements based on general applicability of collective agreement will expire on 30 November 2021 in the worst case. The Collective Agreement of the IT service sector provides for very wide possibilities for local bargaining beyond or complementary to labour law. These local bargaining opportunities will no longer be used, even in company-specific collective agreements.
- With the introduction of similar terms of employment throughout the sector, general applicability has led companies to compete, for example, with the quality of a product or service, security of supply and customer satisfaction, instead of reducing terms of employment. In the future, international competition from lower-cost countries, in particular, may put pressure on costs. For example, Indian companies currently operating in Finland adhere to generally applicable collective agreement that includes, for example, a minimum wage. There is no minimum wage laid down by the law.
- Recruitment and engagement of current employees can be more challenging if there is uncertainty about terms of employment and their continuity in the company. In addition, the negotiation of personal contracts of employment may require more time and resources because many matters that were negotiated in the collective agreement need to be agreed now in the personal contracts.
- The commitment to industrial peace will expire on 30 November 2021. In future, employees of the company will be able to organise local strikes to protest if the employer undermines the terms of employment. Before generally applicable collective agreements became more common, there were considerably more company-specific strikes.
- What can the employer do to ease their situation? The employer can join the Technology Industry Employers of Finland and, thereby, outsource the negotiation on the terms of employment to the association. If enough employers join the association, the collective agreement will also become generally applicable. By joining the employer association, your company is involved in influencing the content of the collective agreement and terms of employment throughout the industry. It is also possible for the members of the employers’ association to agree on more extensive local bargaining. In this case, the commitment to industrial peace also takes effect in your company at the same time as the national collective agreement has been concluded.
Why is the law hampering local bargaining? What’s wrong with local bargaining?
Local bargaining is limited because it easily turns into a local dictation, because the power relationship between the employer and employees is not, in principle, equal. Finland does not currently have the necessary legislation to guarantee the same level of local bargaining as, for example, German Works Councils and the Co-Determination Act in Sweden. The law therefore protects the position of employees by limiting the existence of a local bargaining that would weaken the position of employees. On the other hand, there are no obstacles, or have been no obstacles, to local agreements that improve the position of employees or their terms of employment until now, contrary to what the media may say. Agreeing on better terms is always possible!