It is important to note that once a KNA is reached, both the employer and the union are required to abide by this agreement. Therefore, an employer should hire a lawyer before participating in the collective bargaining process. Collective bargaining developed with the growth of trade unions, especially from 1890 on. It has had an impact on labour markets, where the wage trend has increased: during years of good business, monetary wages have generally risen, and although they have often been reduced in years of decline or low activity, the cuts have generally been smaller than previous increases. Collective agreements are signed for certain periods, usually between two and four years. A collective agreement is binding both for the employers` organisation and its members, on the one hand, and for the trade union and its members, on the other. In addition, in practice, if not theoretically, a collective agreement binds non-unionized and unionized workers belonging to unions other than the union that is part of the agreement, provided that (i) the worker works with tasks covered by the contract and (ii) the union to which the worker belongs, he is not bound by another collective agreement with the employer. The findings verified to date indicate that extensions of collective agreements reduce wage dispersion to the detriment of some job loss. For workers who keep their jobs, renewing collective agreements helps preserve income. Income stability – even if it only benefits dense employment – is particularly valuable in times of recession.
The definition of a collective agreement is contained in the Participation Act, which stipulates that a collective agreement is a written agreement between employers` organizations or an employer, on the one hand, and a workers` organization, on the other, which governs the conditions of employment or relations between employers and employees. An agreement is considered written if its contents have been recorded in approved protocols or if a contract proposal and acceptance have been recorded in separate documents. Oral agreements or agreements which do not concern relations between employers and employees are not considered to be a collective agreement. The working conditions imposed by an extension of the collective agreement could be particularly strict for small businesses whose views might not be reflected in the bargaining process. . . .