By means of an official procedure called "Allgemeinverbindlichkeitserklärung" (Order Imposing Extension, issued by the Minister for Labour), the applicability of an existing collective agreement can be extended to include employees and employers not bound by the agreement (Collective Agreements Act § 5). Such a generally applicable agreement then has the same direct and mandatory force for these employees and employers as it has for the employment relationships bound by the agreement by virtue of membership of a contracting organization. Without this incorporation of non-union members into the scope of normative provisions , there would be a situation where many employees were not covered by any collective agreement, especially in sectors such as the building industry or retail distribution with a large number of small enterprises whose owners are not members of any association.

The precondition for an Order Imposing Extension is that the employers bound by the collective agreement in question should together employ at least 50 per cent. of all the employees working within the occupational and geographical area covered by the agreement (counting both those already bound by the agreement plus non-union members). In addition, the procedure must be deemed to be in the public interest, notably because terms and conditions of employment in the area concerned would otherwise fall below the generally prevailing level.

Of the 24,000 or so association-level agreements in force in 1989, only some 540 in various branches of the economy were made generally applicable by extension, mainly in the building industry, retail trade, textiles industry and metalworking trades. The majority of the agreements concerned were framework agreements on employment conditions , with only a small proportion of actual pay agreements . In all, in 1989 there were about 4 million employees working in industries covered by collective agreements made generally applicable by extension.

Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.