A collective agreement is an agreement between two parties about the working conditions that apply to workers in a specific company or industry. In Denmark neither Danish nor foreign companies are legally required to comply with or conclude a collective agreement.
The parties to a collective agreement are, on the one side, either a trade union or a collective bargaining unit, and on the other side, an individual employer, a company or an employers' organisation.
The collective agreement contains a wide range of agreed terms and conditions and a framework for the rights and obligations of employers and workers. The agreements may contain rules about working hours and workplace, pay, overtime pay if relevant, holidays, pension and other work aspects. They may also include rules for the working environment and dispute resolution. The agreements may be accompanied by different appendices and supplementary agreements. The agreements generally contain both independent rules and provisions found in Danish legislation.
A set of supplementary rules also form part of the agreement, such as the so-called General Agreement between the Danish Employers’ Confederation (DA) and the Danish Federation of Trade Unions (LO) (Hovedaftalen).
Conclusion of collective agreements
As a foreign company, you should expect Danish trade unions to contact you to enter into an agreement for workers posted in Denmark. You can choose to negotiate a collective agreement with the trade union on your own, or you can join an employers’ organisation that can negotiate with the trade union on your behalf.
Trade unions and their use of industrial action
It is a fundamental principle in Denmark that trade unions are entitled to try to conclude collective agreements with employers and employers’ organisations. Trade unions may take different kinds of industrial action to reach an agreement with an employer. You may also experience this as a foreign employer with people posted in Denmark.
The rules of industrial action are not embodied in legislation but based on extensive case law from the Danish Labour Court. In Denmark, workers have extensive rights to take industrial action and solidarity action. Solidarity actions are launched in support of an existing dispute. The industrial action is only legal if the work that the trade union is trying to regulate by an agreement falls within the trade union’s scope. However, it is not a requirement that the trade union has members working for the company in question.
Danish trade unions may take industrial action to support the demand for payment of wages or salaries in accordance with a collective agreement with a foreign company posting workers to Denmark. Industrial action may be directed at the company with which the trade union is trying to conclude a collective agreement, or it may be a solidarity action aimed at other companies that supply products to the company in question. Industrial action is subject to a notice period.
Industrial action which a trade union may take, subject to notice, include:
- Strikes, where the trade union instructs its members to stop work at the company in question.
- Blockades, where the trade union instructs its members to refrain from accepting work for the company in question.
- Solidarity actions, where the specific trade union or other trade unions under the same umbrella organisation will support the main dispute by instructing its members to strike or refrain from accepting work for the company or perform any tasks related to the company affected by the main industrial dispute.
To be legal, industrial action requires, in principle, that the trade union involved has a reasonable professional interest in demanding a collective agreement. This means that the work which the trade union is trying to regulate by concluding an agreement must fall within the trade union’s scope.
The Labour Court also performs a proportionality assessment to determine whether the objective which the trade union is trying to achieve by means of the dispute justifies the industrial action taken.
Pursuant to Section 6 a of the Act concerning the Posting of Workers, a number of conditions must be complied with for Danish trade unions to take industrial action against foreign companies. The section also describes the maximum wage and wage components that may be demanded under the collective agreement.
It is a condition for taking industrial action in order to reach a collective agreement that the trade union first notifies the foreign employer of the provisions in the current collective agreements on which its demands are based. The collective agreements in question must apply nationwide and have been concluded between the most representative employee organisations and employer organisations.
It is up to the foreign company to refer a dispute to the Danish Labour Court to determine whether the demands for a collective agreement are legal and whether a strike or blockade is legal. The Danish Labour Court will make a prompt decision on such questions.
The Labour Court can therefore take decisions about both the use of solidarity actions and the individual components of the demand for a collective agreement such as limits to demands for wage components, holidays and pension.
A company affected by a solidarity action may also refer the decision about the legality of the notified solidarity action to the Labour Court.
A company may also contact a Danish employers’ association and apply for membership so that it becomes covered by the same collective agreement(s) as the employers’ association in question and its members.