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Private sector

Employer without a collective agreement

What should you think about when signing an employment contract with an employer without a collective agreement? 

Collective agreements provide security and good working conditions for employees. Some of the benefits they provide cannot be achieved without a collective agreement. If an employer does not have a collective agreement, it is therefore essential that you review the employment contract carefully before commencing employment. You must also check the employment contract carefully to ensure that you do not agree to unfavourable terms.  

If you are in the process of agreeing an employment contract with a private sector employer that does not have a collective agreement, you can contact the SULF members’ support team for help and advice.  

Below is a list of what must be included in your contract, as well as matters that can be covered in this type of employment contract:  

  • Your title or position must be stated.  
  • It needs to be clear who the parties to the contract are, i.e. who the employer and employee are. Contact details of each party and information about the employer, such as your personal identity number and the company registration number, should also be included.  
  • The employment contract needs to include information on the location of the workplace or whether the work is to be performed remotely.  
  • Stipulate the date the employment begins. This information may be relevant when calculating the period of notice and whether a fixed-term contract is to be converted into a permanent contract.  
  • The employment contract should specify the type of employment. Unless otherwise stated, the employment contract is for an indefinite period.  
  • The employment contract should specify the agreed working time. Unless otherwise stated, 40 hours full-time employment is applicable.  
  • The agreement should regulate overtime compensation. Compensation can be paid when work in excess of full-time hours has been performed when ordered or authorised retrospectively. If the employee waives their right to overtime compensation, this should be reflected either in the salary or in the number of days of annual leave.  
  • The salary that you and your employer have agreed should be clear. It should also be clear whether there are variable components to the salary and how and when the salary is paid. In the absence of a collective agreement, employees have no automatic right to professional development and salary dialogues. This must be regulated to ensure the right to a salary review. The contract must also include information on how the salary review is conducted and which year's salary applies at the start of the contract. 
  • Unless otherwise stated, the period of notice stipulated in the Employment Protection Act applies. It is not permitted to agree shorter notice periods than those regulated by law. It is common for collective agreements to stipulate longer notice periods.  
  • The employment contract may stipulate that higher compensation is paid in the event of illness and parental leave than that applicable by law. Unless otherwise stated, compensation is paid only by the Social Insurance Agency.  
  • By law, employees are entitled to at least 25 days of annual holiday leave per year. However, it is possible to agree on more days. The number of days agreed between the employee and the employer must be specified in the contract.  
  • Collective agreements regulate occupational pensions and insurances. When you enter into an employment relationship with an employer who has not signed a collective agreement, you therefore need to reach agreement on these matters separately. For pensions, the compensation may be in the form of separate pension contributions. If this is not the case, it needs to be reflected in your salary.  
  • Include information on employee benefits in the contract. The benefits could be in the form of a company car, health care etc.  
  • If you are to be compensated for business travel, this also needs to be regulated in the contract. For example, the compensation may be in the form of subsistence payments and mileage allowances.  
  • It is common for employers to include non-compete clauses in employment contracts, to prevent employees from starting, running and working for competing businesses for a specified time after their employment ends. This can severely limit your scope for entering into a new employment relationship. The employer therefore needs to compensate for the loss of income the clause entails. Before signing a contract with a non-compete clause, it is vital that you understand what it means.  
  • Confidentiality clauses are common in employment contracts. In such cases, the employer and the employee agree on rules in addition to the provisions contained in the Protection of Trade Secrets Act that are by nature favourable for the employer.  
  • Normally, labour law disputes are settled in court. However, if an employment contract includes an arbitration clause, the right to take a dispute to court is waived. Arbitration court proceedings can be costly.  
  • It is important to understand whether the employment contract contains provisions on penalty payments. If this is the case, you may be required to pay large sums to the employer. This may be linked, for example, to confidentiality clauses or other provisions.