Collective agreement: what it contains and how it applies

Do you know how the working conditions that affect you and other employees are established? How are salaries, working hours, and the benefits you receive determined? The answer lies in a fundamental instrument in the labor field that you’ve probably heard about: the collective agreement. 

In this post, we’ll explain what collective agreements are, the different types that exist, and their importance in the business world. Want to learn more about the topic? Keep reading! 

First, let’s see what a collective agreement is

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

In short, the collective agreement establishes the employment and working conditions for employees, such as salaries, working hours, benefits, working conditions, and procedures for resolving labor 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, it must at least include the following: 

• Negotiating parties of the agreement.

• It must specify to whom the agreement applies (personal), in which situations or functions (functional), in which location (territorial), and for how long (temporal).

• Steps to be followed to resolve disputes that may arise in the application of working conditions.

• How and when the agreement can be terminated or denounced before its expiration.

• A commission with representatives of both parties to interpret matters established by law and other assigned issues, as well as to set procedures and deadlines for action. It should also include the submission of disagreements to non-judicial systems for conflict resolution.

So, what does the collective agreement regulate?

It’s important to note that collective agreements may vary depending on the sector, company, and geographical scope. Below is a summary of some general aspects typically included in these agreements:  

• Salaries and benefits: establishment of minimum wages or pay scales; incentives, bonuses, and salary supplements; overtime and compensation.

• Working hours: duration of the workday (daily or weekly hours), work schedules and breaks, and rules for shifts and rotations.

• Vacations and breaks: allocation of annual vacation days and leave for illness, maternity/paternity, and other paid leaves.

• Working conditions: occupational health and safety, personal protective equipment, and rules for telework or remote work.

• Promotion and training: opportunities for internal promotion and professional development.

• Union rights: recognition and functions of union representatives, as well as consultation and negotiation procedures.

• Termination of contract: causes and procedures for dismissal, severance pay, and notice periods.

• Equality and non-discrimination: rules to prevent discrimination of any kind.

• Other aspects: job classification, policies on work-life balance, and social benefits such as health insurance or pensions.

Four types of collective agreements

The types of collective agreements may vary depending on the work environment and specific application circumstances. Below, we detail four types of collective agreements. Let’s go! 

Sectoral collective agreements

As the name suggests, this agreement applies to a specific economic sector, such as construction, hospitality, or the automotive industry. They are negotiated by representative unions and business associations within that sector and establish working conditions for all companies and employees in that field. 

They are divided into: 

• Regional: applicable within autonomous communities.

• Provincial: valid within provinces.

• Interprovincial: covering multiple provinces.

Territorial collective agreements

These apply to a specific geographical area, such as a province or autonomous region. They may cover several economic sectors and are negotiated by unions and business associations operating in that area. 

Company collective agreements

These refer to agreements reached within a specific company and its employees. Such agreements are negotiated between the company’s management and the workers’ representatives, either a union or a works council. 

They may be: 

• National: covering the entire nation, with their content published in the Official State Gazette.

• Regional: valid within autonomous communities and covering a business sector.

• Local: applicable at the local or district level.

Statutory collective agreement

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

Statutory agreements result from negotiations between employee representatives and the corresponding public administration. 

Importance of the collective agreement

You’ve probably already realized that collective agreements are essential in the labor field. They define crucial aspects such as salaries, schedules, vacations, and benefits, providing stability and certainty for workers.  

Moreover, they promote balance in labor relations by allowing employees to negotiate collectively with employers, helping to prevent abuse and ensuring fair treatment. They also serve as key tools to resolve labor disputes peacefully and promote continuous improvement of working conditions and the work environment. 

Do you think the collective agreement is important for workers? At Educa.Pro, we discuss this and other topics, such as the increase in the minimum wage or Social Security contributions for students in internships. Follow us so you don’t miss anything!