Collective Bargaining Agreement

What does Collective Bargaining Agreement mean?

The Definition

Collective bargaining agreement is also called a labor agreement, union agreement, or union contract. It's defined as a legal and enforceable contract between an organization and its employees, set for a specific period of time of employment, and collectively agreed upon between the company and the employee. It gives specifics on the employee's terms of employment with the company, including terms on:

  • Wages, salary, or commission
  • Working hours
  • Working conditions
  • Possible overtime wages
  • Benefits
  • Holidays
  • Vacations
  • ...and so on

In a collective bargaining agreement, it also outlines specifics on what would happen in case of a dispute, and the proper procedures for finding a resolution of the dispute. It is necessary to follow every term and agreement outlined in the collective bargaining agreement, otherwise risking your job or risking your reputation within the workforce. Normally, these kind of agreements are non-negotiable once signed by the employee.

Collective Bargaining Agreements in the United States

The United States recognizes collective bargaining agreements as a valid contract between companies and their employees, where the law and the organization can enforce and regulate proper conduct and performance from the employee who signed the contract. Most companies who hire employees for a set period of time, like employment contracts set for a year or more, exercise this kind of agreement with their newly hired employees on a regular basis. If an employee chooses to break the conditions of the contract, it can be settled with fines, termination, or other types of punishments, which are all normally outlined clearly in the contract.


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