A CLA declared universally applicable: what does this actually mean for the employer and employee?
31 August 2022
The purpose of a declaration of universal applicability (in Dutch and hereinafter referred to as: ‘AVV’) is to support the employers' and employees' associations in creating labour peace by way of collective agreements and to prevent competition on employment conditions. Pursuant to the AVV Act, the Minister of Social Affairs and Employment (in Dutch and hereinafter referred to as: 'SZW') is authorised to declare a CLA universally applicable. In this blog you will read what an AVV exactly entails and what the consequences are for employers and employees.
The CLA declared universally applicable
A CLA is a written agreement setting out terms and conditions of employment. The CLA Act stipulates that a CLA can only be concluded by one or more employers' associations and one or more employees' associations with full legal capacity. If the parties involved in the conclusion of the CLA also wish to bind parties other than their own members to the CLA, they may submit a request to declare the CLA universally applicable to the Minister of SZW. In short, by submitting a request for a declaration of universal applicability, the parties ask the Minister whether the CLA may apply to the entire business sector. In practice, the request is handled on behalf of the Minister by the Implementing Tasks Terms and Conditions of Employment Legislation department (in Dutch and hereinafter to referred to as: 'UAW') of the Ministry of SZW.
The consequences of a CLA declared universally applicable
An AVV issued by the Ministry of SZW is a decision of general application which - once published in the Government Gazette - has legal consequences for all employers and employees falling within the scope of the CLA. The AVV-CLA has automatic and coercive effect. This means that the provisions of an AVV-CLA apply to all these employers and employees, even if they are not bound by the CLA (i.e. are not members of an employers' or employees' association involved in the conclusion of the CLA). As a result, the provisions in the individual employment contracts that are contrary to the AVV-provisions are null and void and the provisions of the AVV-CLA will replace them. Also when matters are unregulated in the employment contract, the AVV-provisions will become automatically part of the individual employment contracts.
The AVV-decision cannot be appealed against. If an employer wants to escape the effect of the AVV, because it wishes to continue to apply his own company CLA, the employer can apply for dispensation from (the provisions of) the AVV-CLA to the Minister of SZW. This means that - if dispensation is granted - the employer is exempted from (the provisions of) the AVV-CLA and is no longer obliged to comply with it. The Minister of SZW will check, on the basis of the Assessment Framework Declaration universal applicability CLA provisions (hereinafter referred to as: ‘the Assessment Framework'), whether the employer has compelling reasons so that application of the AVV-CLA cannot reasonably be required. Compelling reasons shall be deemed to exist in particular if the specific company characteristics differ in essential respects from the companies that fall within the scope of the AVV-CLA. In addition, the Assessment Framework requires independence of the parties who have agreed to their own legally valid CLA and request dispensation (i.e. independence in relation to each other). This means that the employers’ and employees’ associations must be free from interference in the affairs of the other regarding the establishment, the pursuit of activities and management of their organisations. In practice, it is very difficult to obtain dispensation, because the employer has a heavy burden of proof to demonstrate the existence of compelling arguments.
Furthermore, many CLA’s nowadays contain their own dispensation scheme which describes how a request for dispensation can be submitted to the parties to the CLA. These schemes describe, among other things, the criteria used by the parties to the CLA to assess whether dispensation can be granted. If these dispensation provisions have also been declared AVV by the Minister of SZW, the employer can request dispensation from (the provisions of) the AVV-CLA in the manner described in the dispensation scheme. Also on the basis of such schemes, dispensation is not readily granted. Some CLA’s even explicitly state that the parties to the CLA are cautious in granting dispensation.
The expiry of the period of declaration of universal applicability
A CLA can be declared universally applicable for a maximum of two years, with a one-off extension of another year (at maximum). If an AVV is not extended, the maximum extension period or the end date of the CLA has been reached, individual freedom of contract resumes. In addition, an AVV does not have aftereffect. This means that the provisions of the AVV-CLA will no longer affect individual employment contracts after the AVV-period has expired. However, rights acquired during the AVV over a certain period of time, form an exception to this rule. These rights are not affected by the end of the AVV. Furthermore, please bear in mind an employer who is member of an employers' association is bound twice during the AVV-period: by the AVV-decision and by its membership. Consequently, after the AVV-period has expired, this employer will still be bound by virtue of its membership. Even when the term of the 'regular' CLA has expired, these CLA provisions will continue to have an effect. After all, the ‘regular’ binding of a CLA does have aftereffect.
An overview of all AVV-decisions and pending AVV procedures can be found on the website of the UAW: www.uitvoeringarbeidsvoorwaardenwetgeving.nl.
Do you have questions about a CLA that has been declared universally applicable and the consequences for your organisation? Feel free to contact one of our lawyers.