The possibilities for local agreements were expanded by a legislative amendment that entered into force on January 1, 2025. Previously, the law prevented unorganized employers who adhered to a generally binding collective agreement from making local agreements that deviated from certain provisions of labor laws. As a result of this change, it is now possible to make local agreements more broadly at different workplaces, regardless of whether the employer is organized or whether the staff has chosen a representative according to the collective agreement. Due to the transitional provisions of the law, unorganized employers can only enter into local agreements based on collective agreements that have been negotiated after January 1, 2025.

What is meant by local agreements?

Local agreement in this context refers to the possibility of departing from certain provisions of a collective agreement (such as working hours, annual holidays or wages). This right is only within the limits set by the collective agreement itself. This is important to note. A local agreement made in accordance with the terms of the collective agreement is part of the collective agreement to be followed, and therefore has the legal effects set out in the collective agreement.

The most significant changes of the legislative reform

In the future, unorganized employers will also be able to make local agreements based on the collective agreement. The Employment Contracts Act states the following in this regard:

• A local agreement can be made with a shop steward if there is no elected union representative at the workplace and the collective agreement permits local agreements.
• The employer must ensure that the shop steward has sufficient skills to handle tasks related to local agreements. The agreement can be terminated by either party with a notice period of three months, regardless of its duration, unless specified otherwise in the collective agreement or a shorter notice period has been agreed upon in the local agreement.
• The local agreement must be made in writing and submitted to the occupational safety authority within one month of the agreement being made.
• If the obligation to submit is neglected, a penalty fee may be imposed. The amount of the penalty fee is at least 1,000 euros and at most 10,000 euros, depending on the size of the employer, intent, and the frequency of the neglect.

In addition, in the future, company-specific collective agreements can also deviate locally from labor laws, whereas previously this was only possible with a national collective agreement.

What does the change mean in practice?

It should be noted that the legislative amendment grants unorganized employers only the right to initiate negotiations on a specific matter and to agree on the matter. This means that it is important for the employer to carefully assess what outcome could be achieved in the negotiations and therefore consider whether it is worth engaging in negotiations at all and under what conditions. It is good to take into account the costs incurred by the negotiations and the potential benefits that can be achieved as a result, as well as the concessions. In addition, since local agreements can always be terminated, the employer and employees are back to square one after a potential termination. This is therefore largely an opportunity that can be tried to be exploited.

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