Employment legislation lays down the framework for the regulation of terms and conditions of employment on the labour market. Employers’ and employees’ organisations enter into public and private collective agreements that specify terms and conditions of employment in more detail than the law.

A collective agreement may be confirmed as universally binding by the Board for the Ratification of Validity of Collective Agreements. Universally binding collective agreements are binding in their respective sectors also on unaffiliated employers, i.e. employers that do not belong to an employers’ organisation. Any clause in an employment contract that violates the corresponding provision in a universally binding collective agreement is null and void.

In Finland there are about 160 universally binding collective agreements. The exact amount may vary slightly. When an employer wants to know which universally binding collective agreement he/she shall apply, the answer depends usually on the sector (industry) where the employer company operates in. An employer company’s sector is being compared to the scope of a universally binding collective agreement. Labour inspectorates and social partners can help to find the right collective agreement.

In addition to collective agreements, the central labour market organisations may agree on other matters concerning working life. How such agreements should be complied with alongside collective agreements is specified in each collective agreement.

‘Local agreement’ means that the employer and employees may enter into an agreement concerning certain terms and conditions of employment. Collective agreements may impose restrictions on local agreement; proper procedure must be ensured before concluding a local agreement.