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:
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).