A 'collectieve arbeidsovereenkomst' (CAO) is a written agreement containing arrangements on employment conditions. For example, on wages, bonuses, payment of overtime, working hours, probationary period, notice period, travel costs or pension. A CAO applies to a large group of people. 

A CAO often gives you more days off, a regular pay rise, a bonus for overtime or continued payment in the event of illness. A CAO also often regulates your pension. A CAO brings peace of mind to the labour market. Employers and employees know where they stand and oblige each other to keep their agreements.

A CAO is often valid for a number of years. Before the CAO ends, negotiations between employees parties and employers parties take place to adjust the CAO. A CAO can be up to 100 pages long and cover many issues. That is why the negotiations for a CAO often last for months.

There are 2 types of CAO:

Sector CAO

This is a collective agreement that applies within a sector. An industry-wide CAO is concluded between one or more employers or employers' organisations and one or more employees' organisations. The collective agreement only applies to the companies and employees represented by the parties who have concluded it.

Company CAO

This collective agreement applies within a company. A company CAO is concluded between an employer and one or more employee organisations.

What is the difference between an employment contract and a CAO?

A CAO is an agreement between associations of employers and associations of employees that mainly regulates the terms of employment. The employment contract uses the rules from the CAO. Therefore, every employee has to deal with a CAO. It does not matter whether you work directly for an employer or for a job agency. 

Benefits of a CAO

The agreements in a CAO are often more favourable than agreements on employment conditions in the law. For example, the wage in a CAO can be higher than the minimum wage. Or employees may get more holiday days than the legal minimum. 

Disadvantages of a CAO

For some, a CAO also has some disadvantages: If you are not satisfied with the CAO, it is often more difficult to get an exception in your employment contract.