Collective agreements are written, obliging agreements between an employer and a group of employees. Collective agreements can specify an employer or an industry sector. In the United States, employees can participate in labor unions that represent employees in negotiating the terms of collective agreements. Employers and employees alike gain significantly from collective agreements.
Collective agreements that oblige an industry sector provide unique advantages to employers. Such collective agreements reduce competition between employers themselves by reducing turnover and producing parity on wages. New hire transition time goes down as a result of uniform employment terms.
Collective agreements can benefit individual employers whether or not an industry-wide agreement is in place. Employers can better manage human resource budgets by establishing scheduled pay increases. Employers can plan for reallocation of staff through advancement and retirement schedules. Employers see gains in employee productivity as a result of collective agreement. Productivity gains result from greater staff morale, increased staff retention and lower absenteeism. Increased productivity for the employer leads to increases in profits and better competitiveness in the market.
Employees benefit significantly through collective agreements. Collective agreements promote the value of employees to the employer. Employees secure regular work hours and provide protections against unjust dismissals, lay offs and disciplinary actions. Employees can obtain flexible work arrangements where none existed previously. They gain better pay, scheduled pay increases, and paid sick leave. Career paths and standardized advancement procedures create a prospect for employment longevity. The expectation of employment longevity can significantly impact the employee's life outside of work, including encouragement to take out loans, buy homes, have children and make other life decisions. Collective agreements allow for employee representation in worker's compensation appeals and other employee interests.