A collective agreement is an agreement between two parties on the working conditions for employees that will apply in a business or industry. In Denmark, there is no legal requirement for Danish or foreign companies to follow or enter into a collective agreement.
The parties to a collective agreement are a trade union or employee organisation representing employees, and an individual employer, business or employers' organisation representing employers.
The collective agreement contains a broad range of agreed conditions and parameters covering employer and employee rights and obligations. Collective agreements may include rules for the length and scheduling of working hours, pay, rules on any overtime payments, holiday, pension and other working conditions.
There may also be rules on working environments, for example, or dispute resolution. A collective agreement contains both independently agreed provisions and provisions that are also found in Danish law. A collective agreement may be supplemented by a number of appendices and supporting agreements. The primary agreement between The Trade Union Confederation (FJ) and The Confederation of Danish Employers (DA) is a good example of a supplementary protocol that is linked to a collective agreement.
The options for entering a collective agreement
As a foreign enterprise you should be prepared for Danish trade unions contacting you to enter into a collective agreement covering your workers posted to Denmark. You can choose to negotiate a collective agreement with a traded union yourself. But you can also choose to join an employers' organisation to negotiate with the trade union on your behalf.
For a collective agreement to be valid in Danish labour law, it is essential that the agreement has been entered into by two parties that are independent of each other.
There are many examples in Denmark where unions have taken industrial action to achieve collective agreement. This applies to both Danish and foreign employers. In relation to foreign employers, the right to take action has been especially relevant in the building and construction sector.
Example 1: A trade union instructs its members not to supply goods, not to dispose of waste or to perform work for the main contractor or employer that the union is trying to reach agreement with.
Example 2: Electricians working on a construction project refuse to carry out work for the main contractor because a foreign company performing other construction tasks has not entered into a collective agreement.
Trade union use of industrial action
A fundamental principle in Denmark is that trade unions have the right to negotiate a collective agreement with employers and employers' organisations. Trade unions can make use of various industrial actions against an employer to reach an agreement. As a foreign employer with employees posted in Denmark you may also encounter this.
Industrial actions a union can take (following a warning)
- Strikes, in which the union instructs its members to cease working at the enterprise affected by a dispute
- Recognitional picketing, in which the union instructs its members to refrain from taking a job at the enterprise affected by a dispute
- Sympathy action, in which the union or other unions in the same umbrella organisation support the main industrial action by instructing members to strike or refrain from performing work for the enterprise affected by a dispute
Danish labour organisations can use industrial action to support their demands for payment of wages in accordance with a collective agreement against foreign enterprises with workers posted in Denmark. Industrial action may be aimed at the company a labour organisation wishes to enter agreement with, or it may take the form of sympathy actions aimed at other companies that provide services or goods to the company at the centre of the dispute. A sympathy action is undertaken in support of an ongoing conflict.
The regulations covering industrial action are not fixed in law but are based on the long-standing practice of the Danish Labour Court. In Denmark, there exists an extensive right to take industrial action and sympathy action.
A primary action is only legal if the work that the trade union is attempting to enter agreement on, normally belongs to that union's area of interest. But it is not a requirement that members of the union are employed in the business. Notice of industrial action must be given.
Use of collective industrial action, payment etc.
§ 6 a. In order to ensure posted workers receive payment equal to that which Danish employers are obliged to pay for the performance of similar work, collective industrial action may be used against foreign service providers in the same manner as against Danish employers in support of a demand to enter into a collective agreement, see however paragraph 2.
Para. 2 A condition for the implementation of industrial action referred to in paragraph 1 is that the provisions of the collective agreements concluded by the most representative labour market parties in Denmark, and which cover the entire Danish area, have been brought to the attention of the foreign service provider. These collective agreements must state with sufficient clarity what wage must be paid according to the agreement.
Requirements for industrial action against foreign companies
The Danish Posting of Employees Act § 6 a lists a number of special conditions that must be met to allow Danish trade unions to use collective industrial action against foreign companies. This also outlines a limit for the wage and wage components that may maximally be demanded in the collective agreement.
A condition of instigating industrial action to achieve a collective agreement is that the labour organisation has previously brought the provisions of the applicable collective agreement for the sector to the attention of the foreign service provider. This must be a nationally applicable collective agreement that has been agreed between the most representative employer and employee organisations in Denmark.
The foreign company must themselves bring a case before the Labour Court to ascertain whether the collective agreement claims are legal and whether a strike or recognitional picketing is legal.
The Labour Court will quickly reach a decision on this.
The Labour Court may rule both on the legitimacy of sympathy actions and the individual parts of the collective agreement demand, including the limits for wage components as well as holidays and pensions.
A company that is affected by a sympathy action may also receive a ruling on the legitimacy of an announced sympathy action from the Labour Court.
The Labour Court also conducts a proportionality assessment to determine whether the objective sought by the action is proportionate to the means used.
The main organisation for 14 employers' organisations in the private sector within industry, trade, services and construction.
Telephone: +45 33 38 90 00
The umbrella organisation for trade unions and cartels. Represents 1.4 million members across various sectors.
Telephone: +45 35 24 60 00
Contact the Ministry of Employment
Monday to Thursday 8.30-16.0
+45 72 20 50 00