Collective agreements are contracts between the so-called parties to a collective agreement. Facts about the collective agreement.

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A collective agreement is a good way for employees to benefit from particularly favorable conditions. Under certain circumstances, these replace the provisions of the employment contract.


A Collective-agreement is a agreement between the so-called parties to a Collective-agreement. On the one side is an employer or an association of different employers. The other party to the agreement is a trade union or a collective association of employees. Both parties regularly negotiate certain working conditions for employees.

The agreements regulate the rights and obligations of both parties. They serve to strengthen the employee’s avoidably weak position vis-à-vis the employer. For example, if a contract specifies certain wages, the employer is not allowed to deviate from this to the disadvantage of the employee.

Membership in a Trade Union Necessary?

In order to benefit from the regulations, it is no longer necessary in principle for the employee to be a member of the trade union or employee association. If employers were to grant collective bargaining terms only to members of a union, they would drive all non-members into the arms of the union. Which, again, would rumily strengthen their position in negotiations.

Conclusion of a Collective-agreement

For a Collective-agreement to be concluded, the parties must have what is known as social power. This is the case if they can enforce their demands. This requirement is met, for example, if a trade union has enough members to carry out an effective strike.

The individual regulations for collective agreements can be found in the Collective Bargaining Act.

Content of Collective-agreement

The content of collective agreements is very diverse. According to Section 1 (1) of the TVG, these include, for example, termination provisions, working hours, vacation entitlements or wage levels. Individual working conditions are also often part of the agreement. A necessary component is also the term of the agreement.

Types of Collective-agreement

There are numerous types of collective agreements, which differ in scope and content.

General Collective-agreement

The so-called collective agreement contains basic regulations concerning the employment relationship. The subject matter of the agreement is, for example, working hours, the length of the notice period or the number of vacation days.

Regional Collective-agreement

Regional collective agreements are limited to certain regions. They apply, for example, to the whole of Germany or only to a specific federal state.

Company Collective-agreement

Company collective agreements are only applicable in one company. The union concludes a collective agreement with exactly one company.

Sectoral Collective-agreement

A so-called sectoral collective agreement is characterized by the fact that it applies to a specific sector of the economy. A good example of a trade union that negotiates such collective agreements is IG Metall.

Collective Pay Agreements

Collective pay agreements focus on the level of wages paid to employees. They ensure that the employer does not fall below certain wage limits.

What Are Pay Groups?

In order to regulate the pay for employees, it is common to include a pay table in a collective agreement. This specifies that a certain group of employees receives different pay than other groups. The subdivision into pay groups is made, for example, according to different fields of activity. In addition, there are usually several levels for the individual groups, which employees pass through. For example, the salary increases after a certain period of employment.

Collective Agreement for the Public Service of the Municipalities and the Federation (TvöD)

The TvöD is a special group of collective agreements. These apply to employees in the public service of the municipalities and the federal government. An example of this is employees of an administration. However, it does not apply to civil servants, as they are not employed in a normal employment relationship.

Advantages of Collective Agreements

With a collective agreement, employees can influence their own working conditions. While employment contracts are often unilaterally stipulated by the employer, collective agreements can also integrate ideas from employee representatives.

For employers, collective agreements also bring some advantages. Since many of the agreements apply to several companies, a uniform competitive situation is created. Due to the mandatory peace obligation, they also prevent strikes from occurring. In addition, individual employers save time because the associations conduct the often-difficult discussions about wages or working hours.


We would like to point out that our website provides non-binding information, which under no circumstances constitutes legal advice. This also, and especially, applies to topics within the sphere of legal HR advise. The content of this contribution cannot and is not intended to replace individual and binding legal advice. For this reason, all information provided is without guarantee of correctness and completeness, but always researched with the utmost care.

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