Collective Bargaining in Denmark
The Danish labour market regulation is characterised by the exclusive role of the social partners and is mainly defined by the sectoral collective agreements negotiated between them. Hence, wages and working conditions are primarily regulated through collective agreements concluded at branch, but also company level.
The collective agreement can include a minimum wage, but it is not a standard claim. The frameworks for negotiations on wage-setting and wage in-creases are set in the collective agreements at sector level. Further wages negotiations take place at company level.
The collective agreements define the regulatory framework for working conditions including:
• Pay during maternity/paternity and parental leave
• Pay during sickness and child’s sickness
• Occupational pension
• Working hours and flexible workdays
• Access to lifelong learning and ongoing development of competences
• Additional benefits such as bonus schemes, paid holiday or forms of compensation
“The main principles of collective bargaining in Denmark were established in 1899 with the so-called ‘September compromise’ (Septemberforliget). This general agreement, which is sometimes also called the ‘constitution of the labour market’, is still in force. It confers a prerogative on employers and legitimacy on the trade unions to represent the workers’ interests. It also laid the foundation for the voluntarism that still is the main principle of labour market regulation in Denmark. The key issues and basic relations between capital and labour are not regulated by the state but by the two sides in the labour market. The line of demarcation between state regulation and collective bargaining, however, is and always has been contested as regards other issues than pay and working time."
Collective agreements ensure a flexible framework for companies and employees in terms of working time, pay and other core working conditions. The company and the shop steward can enter local agreements that supplement or deviate from the framework conditions stipulated in the collective agreement. All employees in the public sector are covered by collective agreements, whereas 74% of employed persons in the private sector are covered.
There is no legal requirement for Danish or foreign companies to sign a collective agreement. Like Danish companies, foreign companies have a right to join a Danish employers’ association and through their membership obtain a collective agreement. Once an employer has signed a collective agreement or joined an employers’ association, the employer is obliged to follow and respect the collective agreement.
Collective agreements in the private sector are renewed sector by sector. It is the social partners in the key bargaining export sector who sets the pace and the framework for increases in wages and costs by concluding the first agreement. By the end of negotiations all agreements are linked and put to the vote in one single ballot by the two sides of industry. This ensures that all agreements are either adopted or rejected at the same time. The duration of a collective agreement is decided in each agreement. The current duration of a collective agreement is three years. The high organisation rate sets the frame for a strong sense of ownership. If the members of trade unions reject the agreements, industrial action will follow. This rarely happens; the last time the collective agreements were rejected in the private sector was in 1998.