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Favourability principle

Published:
12 January 2022
Updated:
12 January 2022

In countries with multilevel collective bargaining systems, the favourability principle has established a clear hierarchy in bargaining levels. According to this principle, if the terms and conditions in the individual contract are more favourable to the employee than the provisions of the relevant collective agreement, then the former prevail.

European Industrial Relations Dictionary

Definition

In countries with multilevel collective bargaining systems, the favourability principle has established a clear hierarchy in bargaining levels. According to this principle, if the terms and conditions in the individual contract are more favourable to the employee than the provisions of the relevant collective agreement, then the former prevail. Standards concluded at a higher level can be improved on (for employees) but not worsened at a lower level. In most cases, legislation enshrining this principle also specifies that collective agreements at every level may not include any provision that does not meet legal standards.

Background and status

According to a report published by Eurofound in 2015, legal changes began to address the favourability principle in 2008, most notably in the countries affected significantly by the economic crisis of that year.

The principle was weakened, however, in the context of labour market reform packages introduced in response to the 2008 economic crisis. For instance, in 2009, a reform in Lithuania stipulated that collective agreements could provide less protection for employees than laid down by law in areas such as dismissal notice periods and severance pay. And, after 2010, Greece and Portugal introduced new rules that allowed company-level agreements to derogate from higher-level agreements. In France, while the favourability principle was strictly respected until 2000, several reforms have since weakened this principle. Following the 2016 labour law reforms, Ordinance No. 2017-1385 on strengthening collective bargaining, adopted on 22 September 2017, has generalised shared competencies between the law and sectoral- and company-level agreements. To enable company agreements to play a greater role, this legislation eliminated the application of the favourability principle in relation to a wide range of issues.

With the weakening or abolition of hierarchies of bargaining levels and the dilution of the favourability principle in countries where these have been powerful instruments, the decentralisation of collective bargaining has reached a point where an increasing number of countries allow the adoption of ‘tailor-made’ bargaining agreements at company level.

Related dictionary terms

Collective bargaining coordination of collective bargaining derogation right of collective bargaining social dialogue

Eurofound (2022), Favourability principle, European Industrial Relations Dictionary, Dublin