Collective agreements: definition and importance

Do you know how the working conditions that affect you and other workers are established? How are wages, hours of work, and benefits you receive determined? The answer lies in a fundamental instrument in the workplace that you have surely heard mentioned: the collective agreement. 

In this post, we tell you what collective agreements are, the types that exist and their importance in the business field. Do you want to know more about the topic? Keep reading! 

First, let’s see what the collective agreement is 

According to the Ministry of Labor and Social Economy, the collective agreement is an agreement signed by the representatives of workers and employers. Its objective is to establish working conditions and productivity based on the terms provided for in Title III of the Workers’ Statute, published in Royal Legislative Decree 2/2015, of October 23.  

Ultimately, the collective bargaining agreement establishes the conditions of employment and work for employees such as wages, hours of work, benefits, working conditions, and procedures for resolving labour disputes. These agreements are legally binding and usually have a set duration, after which they can be renegotiated.  

Regarding the content of the collective agreement, at a minimum, it must include the following: 

• Negotiating parties to the agreement. 
• It must be specified to whom the agreement applies ( personal ), in what situations or functions ( functional ), in what place ( territorial ) and for how long ( temporary ). 
• Steps that must be followed to resolve differences that may arise in the application of working conditions. 
• How and when you can denounce the agreement before its validity ends. 
• A commission with representatives of both parties to interpret issues established in the law and others attributed, as well as establish procedures and deadlines for action. The submission of discrepancies to non-judicial conflict resolution systems should also be included.

What does the collective agreement regulate? 

At this point it is important to highlight that collective agreements may vary depending on the sector, the company and the geographical area. Below, we summarize some general aspects that are usually included in these agreements:  

• Wages and benefits: establishment of minimum wages or salary tables; incentives, bonuses and salary supplements; overtime and its compensation. 
• Working hours: length of the working day (daily or weekly hours), work hours and breaks, and rules on shifts and rotation. 
• Vacations and breaks: allocation of annual vacation days, and sick leave, maternity/paternity and other paid leaves. 
• Working conditions: occupational health and safety, personal protective equipment and rules for teleworking or remote work. 
• Promotion and training: opportunities for internal promotion and professional development. 
• Trade union rights: recognition and functions of union representatives, as well as consultation and negotiation procedures. 
• Termination of contract: causes and procedures for dismissal, compensation and notice. 
• Equality and non-discrimination: rules to prevent discrimination for any reason. 
• Other aspects include professional classification, work-life balance policies, and social benefits, such as health insurance or pensions. 

Four types of collective agreement 

The types of collective agreements may vary depending on the work areas and specific situations of application. Now we give you the details of four types of collective agreements. Go for it! 

Sectoral collective agreements 

This agreement, as its name indicates, applies to a specific economic sector, such as construction, hospitality or the automotive industry. They are negotiated by unions and business associations representative of that sector and establish the working conditions for all companies and workers within the area. 

They are divided into: 

• Autonomous: applicable in autonomous communities. 
• Provincial: valid in provinces. 
• Interprovincial: they cover several provinces. 

Territorial collective agreements 

They apply to a certain geographic area, such as a province or an autonomous region. They can cover several economic sectors and are negotiated by unions and business associations operating in that area. 

Collective company agreements 

It refers to those agreed upon by a particular company and its employees. These agreements are negotiated between the management of the company and the workers’ representatives, whether a union or a works council. 

They may be: 

• National: they cover the entire nation and their content appears in the Official State Gazette. 
• Autonomous: valid in autonomous communities and covers a business sector. 
• Local: applicable at the local or regional level. 

Statutory collective agreement 

It is a type of specific labour agreement that applies to public sector employees, and follows the requirements of the Workers’ Statute. They regulate the working conditions of public sector employees, including aspects such as salaries, working hours, vacations, permits, professional promotion, performance evaluation and other labour rights and duties.  

Statutory agreements are the result of negotiations between workers’ representatives and the corresponding public administration. 

Importance of the collective agreement 

Surely you have already come to the conclusion that collective agreements are essential in the workplace. And they define crucial aspects such as salaries, schedules, vacations and benefits, providing stability and certainty to workers.  

Additionally, they promote a balance in labour relations by allowing employees to bargain collectively with employers, which helps prevent abuses and ensures fair treatment. Likewise, they function as key tools to resolve labour conflicts peacefully and promote the continuous improvement of working conditions and the work environment.