Article 11 April 2016

Should companies have more freedom to negotiate local bargaining?

There is currently ongoing debate on the Competitiveness Pact and the need to improve local bargaining. One important issue up for discussion is whether the Finnish legislature should give more freedom to private companies to negotiate labour arrangements on their own.

The Competitiveness Pact is a proposal from the labour market organisations that aims to replace the Government's coercive statute proposals. Unfortunately, labour organisations have found it difficult to reach consensus on the substance of the pact.

While significant issues remain unsettled on a number of issues in the pact, it is possible that reforms may be forthcoming on so-called "local bargaining" – effectively, the ability of companies to more extensively negotiate labour arrangements with employees.


Promoting local bargaining is one of the key points in the Competitiveness Pact. Currently, local bargaining is largely based on collective bargaining agreements. The trade unions and employers' federations are negotiating new national collective agreement provisions to improve conditions for local bargaining.

The current possibilities for local bargaining are relatively minor.

Typical things companies can decide on their own include deciding on regular working hours, duration of the daily lunch break, specifying the pay day, procedures for changing of holiday pay to actual vacation (i.e. time off from work) and maintaining a shift schedule.

Furthermore, the provisions of the collective bargaining agreement allowing local bargaining are currently applicable mainly to employers in the employers' federation. Under the current draft of the Competitiveness Pact, local bargaining would be extended to non-union employers.

The Finnish government is, generally speaking, in agreement with allowing more freedom in negotiating local bargaining but has, among other things, stated that non-union employers must be guaranteed the same rights as regards to local bargaining as exists for union employers.

It is possible that, in the future, non-union employers and union employers both can negotiate more freely, amongst other things, wages, salary raises and allowances on their own with employees directly.


The negotiations between the employees' and employers' organisations are still on-going, but the deadline for the negotiations is by the end of May 2016.

Some of the suggested changes will require legislative changes, which is why the new provisions would still have quite a long journey to become effective after the negotiations end.

Krogerus organised an Employment Afternoon event on 17 March 2016. This year timely topics included the current ongoing debate on the Competitiveness Pact and the need to improve local bargaining. A panel discussion was held consisting of a representative from the Ministry of Employment and the Economy and a representative from both the employees' and employers' organisations.

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