When an organization expands into a new market, one of the most important factors to consider is also among the most immediate: labor. Each market has its own unique employment laws and regulations, and Europe is certainly no exception. In fact, there are some very important details to know about collective bargaining agreements (CBAs) firms across virtually all industries must be aware of before expanding into Europe.
What are Collective Bargaining Agreements in Europe—and are they Similar to Labor Unions?
A collective bargaining agreement is a written (read: legally enforceable) contract for a period of usually one year between the leadership of a business and its employees. It’s very similar to the way labor unions function in the United States and the United Kingdom.
These types of agreements are designed in compliance with local employment laws, and outline terms of employment conditions like wages, working hours, overtime payments, and other essential considerations. Moreover, collective bargaining agreements also outline the very specific procedures that are to be followed in any type of dispute resolution situation.
When a business enters into a collective bargaining agreement in Europe, it must follow everything outlined in that agreement. Otherwise, the firm opens itself up to financial and regulatory penalties if the terms are not followed—and could also suffer significant damage to its reputation.
Covered Groups Under Collective Bargaining Agreements in Europe
Overall, the most important factor to consider when hiring an employee (or more critically, when acquiring an employee through a merger or acquisition) is that it is, in most cases, absolutely in a company’s best interest to affiliate them into a CBA.
However, transferring an employee from one CBA to another can be problematic; the benefits of that new agreement should at the very least be equal to those of the previous agreement. If they are not, the employer has a duty to fairly compensate the employee for any shortfall. In some cases, the employee will accept the new CBA or be paid severance.
CBAs have the potential to be a minefield if employers are not careful—particularly as there can be many specific CBAs based on either the industry in which an employee works, the experience of that employee or, in certain situations, both.
This is especially true in Italy, where there are myriad different rules about redundancy, holiday entitlement, working overtime, occupational pensions, collective dismissal, and other considerations—each of which becomes an employer’s responsibility.
There are also added issues for the employer in other areas, too. Some CBAs require employers to hold elections for their staff and have representatives that sit on the board. If firms are unprepared for this, it can come as quite a shock, to say nothing of how time-consuming the whole enterprise can really be.
Ensure You’re Meeting All Local Employment Laws and Regulations with an Experienced Expansion Partner
Complex collective bargaining agreements in Europe are perhaps one of the biggest endorsements for enlisting the help of a partner like an International Professional Employer Organization (PEO) during your expansion efforts. Rather than grappling with these intricacies on your own, you can leverage someone else’s expertise to ensure compliance.
Through our International PEO solution, Velocity Global’s expansion experts can help you compliantly establish a presence in Europe—in more than 185 countries. We leverage our global expansion capabilities to ensure that taking all necessary steps to comply with collective bargaining agreements in Europe does not distract from your primary focus: running the tightest global operation possible.
If you have any additional questions about how International PEO can simplify your global expansion efforts, or if you’d like to discuss your unique needs and goals with one of our expansion experts, contact Velocity Global today.
