What to Know Before Hiring Into a Collective Bargaining Country

In several Latin American and European countries, a sector-wide agreement, negotiated between unions and employer associations for an entire industry, applies to every company in that sector, whether or not the individual company is party to the negotiation. In other cases, applicability depends on company size, region, or whether the company voluntarily joined an employer association. Getting this wrong at the start means offering terms that don't actually comply with the mandatory baseline.

Ask your EOR or local counsel directly which agreement applies to your specific role and location before writing an offer, not after a candidate raises a question about pay scale.

A collective bargaining agreement typically sets minimum terms, pay scales by role category, working hour limits, mandatory bonuses, notice periods, that function as a floor you can exceed but not undercut. This is different from a US-style at-will offer where nearly every term is individually negotiable within legal minimums.

Read the specific agreement's pay scale for the role category closest to what you're hiring, since job titles don't always map cleanly and the wrong category assignment can mean offering below the mandatory floor without realizing it. Some agreements also mandate specific benefits beyond pay, a meal allowance or a transport stipend, that a US-style offer letter wouldn't naturally include unless someone checked for it.

For example, a US company hiring a customer support lead might assume the role sits in a general office category, when the agreement actually places it in a higher classification tied to supervisory duties. The difference shows up as a higher mandatory pay floor and possibly extra bonuses. To avoid this, write a short summary of the role's real duties, reporting lines and required experience, then ask local counsel or your EOR to map it to the agreement's categories in writing before any offer goes out.

Notice periods, severance calculations, and the process for a compliant termination are frequently set or influenced by the applicable collective agreement, on top of the country's general labor law. A termination process that would be routine in an at-will US context can require specific procedural steps, and skipping them can turn a straightforward termination into a costly dispute.

Confirm the termination process with local counsel or your EOR before a difficult conversation happens, not during it, since the procedural requirements are often more rigid than US managers expect.

A short list of questions to resolve before extending an offer:

• Which collective bargaining agreement, if any, applies to this specific role and location
• What the mandatory pay scale, working hours, and bonus requirements are for the applicable role category
• What the specific notice and severance requirements are for termination
• Whether the agreement includes any works council or employee representation requirements that affect how certain decisions get communicated or consulted on

Getting clear answers to these before the first offer goes out avoids a costly correction after a hire has already started.

Even where a collective agreement sets mandatory terms, the individual employment contract should document clearly which terms come from the agreement and which are company-specific additions, so there's no ambiguity later about what was actually promised. Process Street is useful for standardizing this documentation process across roles and countries so nothing gets missed when a new hiring manager runs the process for the first time.

Foxit eSign handles execution of the resulting employment documents across signatories, useful once the terms themselves have been confirmed as compliant with the applicable agreement, particularly when a hiring manager, an in-country counsel, and the candidate all need to sign from different locations.