Cao

A collective agreement (collectieve arbeidsovereenkomst), commonly abbreviated as cao, is a written agreement that governs the terms and conditions of employment for a specific sector or undertaking. It sets out, inter alia, arrangements concerning wages, working hours, holiday entitlement and pensions.

Collective agreements are of considerable importance as they supplement, and where declared generally binding may even prevail over, the individual employment contract. Consequently, employees in the sector concerned benefit from minimum standards of protection and legal certainty.

In practice, trade unions and employers negotiate the terms of a collective agreement. Such an agreement typically has a duration of one to three years and may be extended or renewed upon expiry.