Edited: 07.05.2019 - 10:28

Keywords: Collective agreement

Cost impact of a collective agreement

The ‘cost impact of a collective agreement’ refers to the costs incurred by employers due to any pay increases and other amendments included in the agreement.

In addition to pay increases, many qualitative improvements also create costs for employers. These and pay increases make up the cost impact of the collective agreement.

For further details, watch the video clip below.

‘Cost impact’ is a broader concept than a ‘pay increase’. In addition to pay increases, it also covers any amendments to the collective agreement that increase or decrease the pay claim made to employers.

In terms of pay increases, for example, any adjustments to allowances will also have some cost impact.

Amendments to terms and conditions of employment may or may not involve a cost impact. By way of example, one additional paid day off has an effect on costs. Conversely, there is no cost impact involved in an obligation to inform employees of work shifts four weeks in advance instead of two.

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