Extensions of collective agreements enable the application of agreements to workers and companies that are not affiliated to the social partners responsible for their negotiation, whether trade unions or employer organisations. In this way, they provide important support for collective bargaining in the European Union. Extension mechanisms ensure common working conditions throughout the whole sector, and not only among the participating companies.
The extension of the application of collective agreements is widespread in Europe, particularly in terms of the coverage of non-unionised workers of a company covered by a collective agreement (erga omnes – meaning ‘towards everyone’) and with regard to companies not organised in employer organisations that signed the agreement. In addition, regarding the coverage of non-unionised workers, even in countries where agreements are legally binding only for trade union members (Bulgaria, Germany, Lithuania, and Sweden), in practice employers often provide the same or similar conditions for all employees in the company. According to Eurofound:
in terms of sector-wide extensions, there are only seven EU Member States where no legal mechanism exists for the extension of collective agreements to the whole sector: Cyprus, Denmark, Ireland, Italy, Malta, Sweden and the UK. In Italy, however, the constitutional obligation of employers to pay a ‘fair wage’ has been a strong functional equivalent of a legal extension mechanism, because judicial practice has traditionally identified minimum collectively agreed wages as a reference for assessing the fairness of wages.
While many countries have a legal framework for applying extensions, the right to extend a collective agreement may be subject to specific requirements (relating to the minimum coverage rate of the agreement or the representativeness of the signatories) or to the involvement of state authorities. In contrast, there are countries where it is common for collective agreements to be extended (such as Finland and the Netherlands) and others where collective agreements are automatically or almost automatically extended (Austria, Belgium, France and Spain).
According to the 2015 Eurofound paper cited above, the practice had remained stable from 2008 to 2014 and increased slightly since then, as new legislation positively influenced extension practices in Czechia, Estonia, Germany, Hungary, Italy, Latvia and Slovakia. However, the overall EU trend since the late 1990s in terms of the widening of the scope of collective agreements through various extension mechanisms is quite clear: in general, the application of widespread extension practices is becoming less frequent, while there has been little or no change in countries that very rarely apply extension mechanisms.
As high collective bargaining coverage is a major precondition of a more equal distribution of wages and incomes, as well as the promotion of a more inclusive growth strategy, it is clear that more frequent use of the extension of collective agreements could be a major instrument to this end, which should be supported at both national and EU level.
Collective bargaining ; coordination of collective bargaining ; derogation ; right of collective bargaining ; social dialogue
Eurofound (2022), Extension of collective agreements, European Industrial Relations Dictionary, Dublin
https://www.eurofound.europa.eu/en/european-industrial-relations-dictionary/extension-collective-agreements