What is a CAO?
A collective labour agreement (CAO) regulates the terms of employment for a large group of people within a company or sector. The CAO is an agreement containing, for example, arrangements on wages, working hours, notice periods, and pensions. Employers, employers’ organisations, and employees’ organisations make these agreements with each other during CAO negotiations. In doing so, employers’ organisations represent the interests of affiliated employers. Examples of such organisations are VNO-NCW and MKB-Nederland. The employees’ organisations speak on behalf of employees. These are often trade unions, such as FNV and CNV.
Check if you have to comply with a CAO
You are obliged to follow a collective agreement in the following situations:
This is called a company collective agreement. This is usually done by larger companies, such as Philips and NS.
This is called a sectoral collective agreement. It contains agreements that apply to a specific activity. Examples are the collective agreements for metalwork and ambulance healthcare. Such a CAO applies to all employers and employees within that sector.
This collective agreement always applies to all employers and employees in a specific sector, even if you are not a member of an employers' organisation. Almost all sectoral collective agreements have been declared generally binding. As a result, many employers and employees are covered by a CAO.
Find out if a CAO has been declared generally binding
You can find an overview of all collective agreements on the website of the Ministry of Social Affairs and Employment (in Dutch).
The terms of employment from your chosen collective agreement will then apply to your employees. This decision must be mentioned in all of your employment contracts. This is called an incorporation clause.
Carefully formulate your incorporation clause
An incorporation clause can refer to one particular collective agreement, up until it expires. This is called a static clause. But it can also refer to all collective agreements that follow in the future, after the original agreement expires. This is called a dynamic clause. The risk of the dynamic clause is that you do not yet know what it will include. Therefore, formulate your incorporation clause carefully.
Mention the CAO in the employment contract of your employee
Do you comply with a collective agreement? If so, always mention this in your employees’ employment contracts. Good to know: if a CAO and an employment contract contradict each other, the CAO takes precedence.
Check if you can deviate from a compulsory CAO
You may deviate from a minimum collective agreement, but only if this is to your employees’ advantage. You may never deviate from a standard collective agreement. The CAO will state if it is a minimum or standard collective agreement.
Agree on terms of employment if a collective agreement is not compulsory
If a CAO is not compulsory, you make your own agreements with your employees. You can set these down in regulations, such as a staff handbook. Or in an individual employment contract. However, Dutch labour law always applies. Details can be found, for instance, in the Minimum Wage Act, the Working Hours Act, and the Dutch Civil Code (Book 7, from Article 610 onwards, in Dutch).