When must you comply with a collective labour agreement (CAO)?
If you hire staff, you will likely have to comply with a collective labour agreement (CAO). Around 80% of employees in the Netherlands are covered by such a collective agreement. This is according to figures from the Ministry of Social Affairs and Employment (SZW). But when exactly are you obliged to follow a collective agreement? Four situations are explained below.
What is a CAO?
A collective labour agreement (CAO) regulates the terms of employment for a large group of people within a company or sector. The CAO is an agreement containing, for example, arrangements on wages, working hours, notice periods, and pensions. Employers, employers’ organisations, and employees’ organisations make these agreements with each other during CAO negotiations. In doing so, employers’ organisations represent the interests of affiliated employers. Examples of such organisations are VNO-NCW and MKB-Nederland. The employees’ organisations speak on behalf of employees. These are often trade unions, such as FNV and CNV.
Check if you have to comply with a CAO
You are obliged to follow a collective agreement in the following situations:
This is called a sectoral collective agreement. It contains agreements that apply to a specific activity. Examples are the collective agreements for metalwork and ambulance healthcare. Such a CAO applies to all employers and employees within that sector.
This collective agreement always applies to all employers and employees in a specific sector, even if you are not a member of an employers' organisation. Almost all sectoral collective agreements have been declared generally binding. As a result, many employers and employees are covered by a CAO.
Find out if a CAO has been declared generally binding
You can find an overview of all collective agreements on the website of the Ministry of Social Affairs and Employment(in Dutch).
The terms of employment from your chosen collective agreement will then apply to your employees. This decision must be mentioned in all of your employment contracts. This is called an incorporation clause.
Mention the CAO in the employment contract of your employee
Do you comply with a collective agreement? If so, always mention this in your employees’ employment contracts. Good to know: if a CAO and an employment contract contradict each other, the CAO takes precedence.
Check if you can deviate from a compulsory CAO
You may deviate from a minimum collective agreement, but only if this is to your employees’ advantage. You may never deviate from a standard collective agreement. The CAO will state if it is a minimum or standard collective agreement.
Agree on terms of employment if a collective agreement is not compulsory
If a CAO is not compulsory, you make your own agreements with your employees. You can set these down in regulations, such as a staff handbook. Or in an individual employment contract. However, Dutch labour law always applies. Details can be found, for instance, in the Minimum Wage Act, the Working Hours Act, and the Dutch Civil Code (Book 7, from Article 610 onwards, in Dutch).
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Questions relating to this article?
Please contact the Ministry of Social Affairs and Employment, SZW