Collective bargaining

The individual trade union and the employer or the employer’s confederations are, under TUI Act, the legal contracting parties to collective agreements. It is different according to the CAPS Act for the public sector as the unions or their federations are the legal contracting parties and the counterpart can hence only be the state or municipalities Despite the aforementioned article 3 in the CAPS from 1986, which stipulates that minister of Finance holds the collective bargaining negotiation mandate on behalf of the Icelandic government, there is certain disagreement regarding interpretation of the term “who the industrial action is directed at” (Art 14) and (Art 15) in the CAPS and in recent Labour Court findings as well.

The unions on the private market can also give that mandate to their respective federation or share it with another union, or unions, as they see fit. Such mandates can be withdrawn at all times before the signing of a collective agreement. Employers in the private sector however transfer their mandate to negotiate to their federation of employers upon becoming a member.

The constituency of a trade union can never be smaller than one municipality under the TUI Act. The constituency can cover more than one municipality and for some trade unions the constituency is extended to the whole country.

The first chapter of the CAPS Act stipulates on the scope and the right to make collective agreements. According to the Act, the trade unions in the public sector have to meet certain criteria to have the right to bargain collectively. The first thing that sets the public sector aside from the private sector in this regard is due to that the Act stipulates that only one trade union shall have the right to negotiate agreements with the same employer for the same class of employers. This however, due to a court decision of the Labour Court in 2007, is subject to some exemptions.

 Within the private sector the law is silent on the content of collective agreements. It is however stipulated in the CAPS Act regarding the public sector. The common practice is that the main chapters in collective agreements generally regard wages, working hours, meal and coffee breaks, minimum rest and maximum working time, travelling cost, (annual) holiday/vacation, facilities, safety and health, tools and working clothes, payment of wages in cases of accident and illness, payments to various funds, pension fee, insurance and termination of employment. The last part usually contains clauses regarding dispute resolution of the negotiating parties and how to deal with changes that occur in the underlying economic factors that affect the expected outcome of wages (e.g. inflation) during the validity of the agreement. In some cases, in the public sector, some of these rights are set by law and are therefore not set by the applicable collective agreements.

The main types of collective agreements are:

  • General collective agreements (see appendix A)
  • Special agreements are collective agreements supplementing a general agreement regarding specific issues.
  • Enterprise agreements are in some cases negotiated for larger industrial companies and can be negotiated on behalf of a number of trade union.
  • Institutional agreements, supplementing collective agreements. Such agreements are made between particular employer and its employees.

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