How, if at all, are collective agreements relevant to the termination of employment?

Employment & Labour Law (3rd edition)

Argentina Small Flag Argentina

Argentine labour law has public policy nature, and therefore prevails over any collective or individual agreement. Additionally, the law provides for all termination procedures and issues. In general, CBAs do not have any provision regarding the termination of employment.

China Small Flag China

Collective contracts may agree on remuneration, working time, rest and vacations, conditions for termination and other matters. Such conditions are reached by employees and their employer via a process of mutual negotiation in accordance with legal procedure. In this way, the collective contract is binding on all the employees. To some extent, it will be relevant to the termination of employment. For example, if the employer fails to pay the remuneration stipulated by the collective contract and one employee resigns due to this fault of the employer, in that scenario the employer is at risk of being liable to pay economic compensations to the employees.

Additionally, the bargaining representatives on behalf of the employees are entitled to certain special protections in case the employment contracts expire during the period of collective negotiation. Generally, the term of employment contracts between employers and representatives of employees must be continued until the expiration of the negotiation period.

Ecuador Small Flag Ecuador

It is important to clarify that the collective agreements in Ecuador are negotiated by companies and not by branch of activity.

The collective agreement will be relevant if it includes an extend indemnity liability for agreement termination, as they often do.

France Small Flag France

Essentially with respect to the definition of notice periods (see question 4) and severance indemnities (see question 15).

Germany Small Flag Germany

Collective bargaining agreements can be relevant to the termination of employment relationships in many cases. Collective bargaining agreements may, e.g., prolong or shorten the notice period (cf. answer to question 4) or preclude the ordinary dismissal of elder employees with a certain length of service.

Collective bargaining agreements are applicable if the following requirements are met: both employer and employee are members of the union or employer’s association respectively, or a collective agreement has been declared to be generally binding, or the application of the collective agreement has been agreed upon in the employment contract.

Apart from collective bargaining agreements, works council agreements can be relevant for the termination of employment. They may even set up a ban on dismissals for operational reasons for a certain time period. In cases of an operational change, the social plan with the works council regularly contains the stipulation of severance payments for employees affected.

Chile Small Flag Chile

No. In Chile, employment relationship may only be lawfully terminated for the grounds listed in the Chilean Labour Code. Under collective agreements it may only be agreed severances over the statutory amounts or severances paid under legal grounds for termination which do not provide right to severance pay.

Indonesia Small Flag Indonesia

Under the Labour Law, a collective labour agreement is a document that sets out the terms and conditions of employment that have been agreed by the employer and a labour union or several labour unions. A collective labour agreement is relevant in relation to termination of employment as a collective labour agreement would usually sets out specific provisions on termination of employment and what actions of the employees can be grounds for termination of employment.

Italy Small Flag Italy

Generally speaking, national collective bargaining agreements:

  • provide for the duration of the notice period to be given by the employer to the relevant employee in case of dismissal not for cause;
  • set forth the duration of the notice period to be given by the relevant employee in case of resignation not for cause (which is generally lower than the one to be given by the employer in case of dismissal not for cause);
  • as far as procedure to serve dismissals relying on a cause for termination (“giusta causa”) or grounded upon subjective justified grounds (“giustificato motivo soggettivo”) are concerned, may provide for a term within which the relevant employee has to submit his/her justifications other than the 5-day one under Italian law (generally, these set forth a term which is longer than the statutory one);
  • as far as procedure to serve dismissals relying on a cause for termination (“giusta causa”) or grounded upon subjective justified grounds (“giustificato motivo soggettivo”) are concerned, may provide for a term within which the employer has to actually serve the dismissal following to the receipt of the employee’s justification (no terms hereof are set forth under Italian law).

Malaysia Small Flag Malaysia

A collective agreement (“CA”) commonly sets out the procedures applicable prior to embarking on a retrenchment exercise and the applicable formula for payments to employees in cases of retrenchment, voluntary separation schemes and prolonged illness.

In such instances, the category of employees specified in the CA will be accorded due protection and the employer is duty bound to comply with the terms of the CA.

Norway Small Flag Norway

Collective agreements will mainly be relevant to the obligation to inform and consult with elected employee representatives as “soon as possible” and before any decisions affecting the employees are made. Further, some collective agreements stipulate a stricter use of the seniority criterion and/or an extension of the preferential right when employees are made redundant.

Philippines Small Flag Philippines

Collective Bargaining Agreements (CBAs) may contain contractual undertakings relevant to employee terminations, in addition to the substantive and procedural requirements provided under the law. Examples include:

  • a union security clause (requiring union membership as a condition of employment), a violation of which may be ground for termination;
  • payment of separation even in cases of voluntary resignation;
  • providing for a grievance machinery for the resolution of termination disputes before resorting to the labor tribunals; and
  • requirement for the employer to inform the union if any employee is to be dismissed.

United States Small Flag United States

One of the distinctive characteristics of collective bargaining agreements in the US is that the employee, unlike in the customary “at will” employment relationship, is typically protected from termination without just cause, and may challenge a termination through an internal grievance process and arbitration.

Brazil Small Flag Brazil

Mattos: The collective bargaining agreement may provide for additional rights and rules for termination to which the employer is bound. For instance, the collective bargaining agreement may provide for stability on the job for seniors who are less than 24 months to complete the minimum time required for retirement or additional notice period for employees with more than 5 years of service.

Thailand Small Flag Thailand

Collective agreements would be relevant to the termination of employment if the collective agreement sets out benefits or entitlements of employees upon the termination of employment of employee (for example, a specific amount of payment in lieu of advance notice which exceeds the legal requirement).

Turkey Small Flag Turkey

Termination reasons and dispute resolution mechanisms may be stipulated under a collective agreement. In such case, for the termination to be valid, the employer shall terminate the employment relationship due to a termination reason stated under the collective agreement and also follow the procedure stated thereunder (if any).

Switzerland Small Flag Switzerland

Collective labour agreements may set forth specific rules with respect to the termination of employment agreements, including notice periods and procedures derogating from statutory law to a certain extent.

For example, certain collective labour agreements can provide that the employer must hear the employee before dismissing them, that it is mandatory for the employer to disclose the reasons for the dismissal or that any dismissal that does not follow a certain procedure is null and void.

Sweden Small Flag Sweden

The collective bargaining agreements may be relevant in a number of situations. It may set forth longer notice periods than those stipulated by law or the employment agreement. The occurrence of a collective bargaining agreement may also be a decisive factor for whether the employer is obligated to call for consultations prior to a termination. Additionally, a collective bargaining agreement also set out a particular order of negotiations or consultations applicable to the employer. Moreover, the collective bargaining agreement can permit exceptions from the rules regarding the order of terminations in redundancy situations through a special order of seniority agreement. Other than the areas mentioned above, a collective bargaining agreement may set out other terms, such as, inter alia, severance pay.

New Zealand Small Flag New Zealand

A collective agreement must comply with certain statutory requirements, including by being in writing, being executed by the employer(s) and union(s) that are parties to the collective agreement, and have a ‘coverage clause’ stating the work that the collective agreement covers. Other than the statutory requirements, the parties decide what is included in the collective agreement (unless the Authority is requested to, and agrees to fix the terms of collective agreement). A collective agreement will usually contain a provision which includes the process to be followed prior to the termination of employment.

There are no additional statutory protections or statutory requirements relevant to collective agreements.

Luxembourg Small Flag Luxembourg

Some collective bargaining agreements provide for specific provisions regarding the preliminary interview required for larger companies when they plan to terminate an employee’s contract.

Some collective bargaining agreements provide for longer notice periods or higher severance pay (‘indemnités de départ’) in specific circumstances.

Some collective bargaining agreements may include a prohibition to terminate the employment contract (for instance: redundancies are not allowed for a period of two years following a business sale or reorganisation in the banking sector or the insurance sector).

Romania Small Flag Romania

As a general note, in Romania, company-level collective agreements have witnessed quite a major set-back over the last couple of years, continuing to be enforced mainly in companies where trade unions are historically present and/or where it is a specific business context (for example, they are inherited in transfer of undertaking context and/ or linked to change of control).

On this basis, if a company-level collective agreement is indeed applicable, termination of employment via dismissal is the precise circumstance where it will be particularly relevant on matters such as:

  • setting severance pays and social protection rules,
  • adding steps to follow during the dismissal procedure, to the employees' benefit, or
  • adding cases of protection against dismissal (for example, no redundancy for as long as collective negotiations are pending) etc.

Peru Small Flag Peru

Collective agreements would only be relevant in case they include special protection clauses on behalf of the workers in case of termination of the employment; for example, specific benefits such as a compensations greater that the indemnification for unfair dismissal provided by law.

Japan Small Flag Japan

In the case where a collective agreement is entered into between an employer and a trade union regarding the termination of employment, the employer must follow the terms of such agreement.

A provision commonly seen in collective agreements regarding the termination of employment is one that requires the employer to consult with the trade union when the employer intends to dismiss an employee. If the employer fails to comply with this provision, the dismissal may be considered void as lacking reasonable grounds.

The Netherlands Small Flag The Netherlands

Collective agreements can contain deviating notice periods (question 4) and specific rules for collective redundancy. Collective agreements can also contain clauses for instituting Redundancy Committees and clauses regarding the transition payment.

Austria Small Flag Austria

In Austria, collective agreements are concluded, almost without exception at multi-employer sectoral level. Collective agreements govern the employer-employee relationship, including things like wages, benefits, working hours, and other terms and conditions of employment. Collective agreements contain a specific language that addresses termination of employment for just cause. This means that the employer must have a justifiable reason for terminating the employment relationship. Often, collective agreements also provide for mandatory termination dates at the end of a calendar quarter upon five years of employment.

Mexico Small Flag Mexico

Collective bargaining agreements are considered to be accords that go beyond the law, when beneficial to the employee. Many collective bargaining agreements contain clauses dealing with termination severances which are more generous than those established by law. Likewise, many collective bargaining agreements establish special procedures to sanction or even terminate employees, requesting the intervention and opinion of the union to go forward with it. In such cases, it complicates any unilateral decision by the company to terminate an employee.

United Kingdom Small Flag United Kingdom

Collective agreements will be relevant to the termination of employment if they contain terms relevant to procedures for the termination of employment, including in relation to redundancy selection, and/or to sums payable on the termination of employment. Outside of the public sector and privatised, labour intensive industries, collective bargaining is relatively uncommon in the UK.

Armenia Small Flag Armenia

Wide practice of signing collective agreements has not yet formed in the RA.

South Korea Small Flag South Korea

In the case where a collective agreement is entered into between an employer and a trade union regarding the termination of employment, the employer must follow the terms of such agreement. Collective agreements may contain procedures for disciplinary actions or special notice requirements. If an employer fails to adhere to its disciplinary procedures (including those stipulated in applicable collective agreements), the termination may be held invalid.

Updated: April 10, 2019