Collective Agreement and the obligations arising therefrom

Definition and purpose of collective agreement

We can often hear on TV or read in other media about employees of larger companies or institutions, such as a hospital, negotiating a collective agreement with their employer. What is actually understood under collective agreement and when is it concluded?

Collective agreement is a special type of agreement in labour law. It is concluded in writing by the organised trade union, representing the employees on one hand and by one or several employers on the other.

The main purpose of the collective agreement is to regulate rights and obligations arising from and related to the labour relation.

Reasons for concluding collective agreements are of economic and practical nature. Namely, it is much more convenient for the employers employing a large number of persons to negotiate with a couple of them representing the trade union. Another advantage of collective agreement is that they are created by both interested parties (employer and employees), as opposed to the company labour relations by-law, which is drafted unilaterally by the employer.

Content of collective agreements

Article 141 (1) of the FBiH Labour Law describes the content of collective agreements in generalized terms as follows:

(1) Collective agreements shall regulate rights and obligations of the parties, which concluded the collective agreement, and rights and duties arising from labor relations or related to labor relations, in accordance with the law and other regulations.

(2) Collective agreements shall also regulate the rules of the procedure of collective bargaining, the procedure for the termination of a collective agreement, and reasons and time limits for its termination, the composition and the method of operation by the bodies authorised for peaceful resolution of collective labor disputes.”

Types of collective agreements

According to Article 137 of the FBiH Labour Law, a collective agreement may be concluded as one of the following:

1) general,

2) industry-wide and

3) individual (with the employer).

A general collective agreement shall be concluded for the territory of the Federation of BiH, whereas an industry-wide collective agreement shall be concluded for the territory of the Federation or one or more cantons.

* The article is of an informative nature for the purpose of understanding a specific legal problem. It's not allowed to use the content without the permission of the LJUBIC Law Firm.

The main purpose of the collective agreement is to regulate rights and obligations arising from and related to the labour relation.

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Ivan Ljubić

As the firm leader, our lawyer Ivan specializes in corporate law with international characteristics. He places special emphasis on the issue of multiple taxation, given the pronounced economic trends of both natural and legal entities. Areas of activity: Bosnia and Herzegovina, Croatia, Austria and Germany.

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