Introduction to collective agreements and how to create them

In this article, you can read about the practical use of collective agreements after being created.

We have gone through the process of creating a new collective agreement earlier and given a general explanation of most of the fields and options concerning collective agreements in this help center article Collective agreements explained. You may see an example of collective agreement at the end of this article.

In this article, we will delve deeper into the practical application of such agreements. This includes the entire process from the moment the agreement is created and completed until you have a well-functioning working agreement that you can link to jobs and register worked hours without doing extra work afterward.

Calculation of hourly salary

The collective agreement module functions as an advanced calculator that consists of several rules. One such rule could be, for example, that a substitute is registering hours on Saturdays after 22.00 in the evening, so he will receive an addition of 45,- per hour until 06.00 the next morning. Another rule could be that each day when a person works more than 7.5 hours, they will receive 1.5 times the base salary, while the customer will be billed for 1.35 of the base amount etc.

Rulesets like these can be set on top of each other, and this can be made relatively advanced. Each such ruleset is once more split in two, where one calculates the base salary, and the other calculates the base invoice.

This method of calculation gives a myriad of exciting opportunities, e.g., does the invoice calculation completely separate from the salary calculations? For example, the system can compute that the customer should be billed based on daily salary on a fixed rate, while the substitute registers hours and gets paid accordingly, but this will not affect the invoice for the customer.

The module differentiates between three main types of remuneration: Salary, overtime, and addition/deduction. These will be related to the different main rules you have added to the agreement. These three main types of remuneration will be detailed below.

Salary

Salary can be hourly, daily, piece wage etc. Either one or several of these combined. A person can, for instance, have a daily wage, with a piece wage on top and a guaranteed salary. It is the rule that makes up the foundation, which is the starting point for the calculation of overtime and addition rules.

In the example below, we will create a typical salary rule. As you can see, we have set the salary rule to be valid from 00.00 – 24.00. It is generally a good idea to let the rule be valid all day since it will be this rule that will be prevalent until another one replaces it (overtime) or adds to it (addition).

Salary articles are created in System settings → Staffing → Salary articles. Then, we need to add them to the collective agreement in the Salary articles section.

Create a salary rule

After creating a salary rule, you can see it included in the agreement itself in the overview of the rules. Here, all the rules you have attached to this agreement will stay as you complete it.

In the example below, we see the following:

1. We have a main rule called Weekdays, and this rule is valid for Monday-Friday.
2. Under this main rule, we have a SALARY RULE created with the salary article Fixed salary. It defines the salary and billing amount per hour between 00.00-24.00. We see that there is neither paid break (PB) nor an invoiceable break (IB); however, social costs (SC) should be paid.
3. You can have several salary rules with different rates, but it's important to ensure that the hours do not overlap each other. Double hours can, in that case, be registered.

Addition

The Addition is a ruleset that allows you to add salary/invoice price to the base salary/invoice price when some criteria are met. For instance, when work is logged on specific hours of the day, like an evening addition for any work logged between 18:00 and 24:00. To create addition rules, you will first have to add the addition article under Addition and deduction articles near the bottom of the agreement.

Hourly addition

We will continue with our example to show how this is done in practice. After the rule that sets the base hourly salary is created, we will add an ADDITION RULE. This will tell us that there should be a fixed addition of 200 NOK per hour in the time period from 18.00 to 24.00. For these hours, we can note that we should bill the customer 230 NOK, and we see that both PB and IB are set to YES, which means that the substitute should also receive this addition in this period when they have their break.

Day addition

Day additions function the same way that regular additions do but are activated once per day on the days the person has registered worked hours.

Overtime

Day overtime

Overtime is a set of rules that Switch out / replace the base salary on certain criteria, fx. if you work 16.00 – 24.00, you will receive an additional 50% overtime salary meaning that this rule does not fit with the base rule but replaces it entirely. Example: If an employee registers hours from 08.00 – 19.00, they will receive a normal salary from 08.00 – 16.00, but after 8 hours of continuous work, they receive 50% overtime pay (which replaces the normal rule). This means that the employee is paid for overtime from 16.00 – 19.00.

As seen in the rule above, this has a salary article called 50 % overtime. In this case, the rule says that, regardless of the time of day, after 8 hours at work, the factor will increase to 150%, and this rule is valid for up to 24 hours of continuous work. There is neither a paid break nor an invoiceable break, but social costs are registered. The salary calculation is made with a factor of 1,5 (150%), meaning ordinary hour wage * 1,5 (factor) = hourly wage. The invoice calculation is made with a factor of 1,45 (145%), meaning ordinary invoice price * 1,45 (factor) = invoice price.

Setting up more complex overtime rules by using "Start time period" and "Time interval"

Weekly overtime

In the system, you can also add overtime pr. week, meaning that the employee will be paid overtime after having worked a certain amount of hours pr. week. When you need to add a rule for weekly overtime, the window will look like this:

In the overview picture below, we have created two weekly overtime rules. One says that after an employee has worked more than 40 hours and up to 50 hours in a week, that person will be paid overtime (50%). We have also added a rule that dictates that after 50 hours and up to 70 hours, the employee will be paid overtime (100%).

When you have created the calculation foundation for the agreement, you are about ready to start linking the agreement to jobs/employees that need to register hours.

Absence rules

The absence rules can be created and set in the collective agreement. This function builds a logic around absence registration and can be applied to suit your needs. When you make the decision to use absence rules the workflow for your employees will differ from how it can work when you don't use absence rules, as the employee may not select what article they wish to use when registering an absence.

When creating collective agreements, you have the flexibility to establish additional rules that are tailored to your specific needs, particularly with respect to absence articles. To do so, you will first need to select a name and the appropriate type for the rule, as well as the specific article to which the rule should apply. You can also determine the interval during which the absence rule should be implemented, for instance, from day 2 until day 14.

In the salary calculation field, you have the option to set up a specific salary calculation as either a factor, addition, or fixed price. Moreover, you can choose whether the rule should be applied only if an absence has been logged in the preceding three months.

Similarly, for the invoice calculation, you can set up the calculation in the same manner as the salary calculation but with the added option of including a markup. Additionally, you can create a rule that specifies the maximum period or number of days that your customer will be invoiced. This can be set up with a standard interval of three months or customized to a specific duration, as illustrated in the image below.

Overall, these features provide a high degree of customization and flexibility for creating effective collective agreements that align with your organization's unique needs and requirements.

More in-depth articles on how to set up absence rules in the form of the Swedish Karensavdrag and Norwegian Fraværsregel will be linked below.
Karensavdrag
Fraværsregel

Linking the agreement to projects/jobs

This can be done from the Salary- and project data box in the project. If you press Edit here, you can choose a standard collective agreement for the project, and the same is the case for hour salary and invoice price. What these boxes do is fill in the information automatically when you need to set an employee to work on the project, so you are relieved of having to go through all collective agreements and write the prices for every new employee. However, you will always have the option of overriding these settings when you create the job.

Automatic matching of collective agreements

You have the option of linking one or several collective agreements to a candidate and customer. Then, when you create a job associated with that customer or candidate, the system will try to match them to a collective agreement. Example: A customer is linked to the agreements: L&K1, L&K2 and L&K10; these are saved on the customer card. The employee that needs to be put to work on a project with this customer is linked to the agreements L&K2 and L&K3. Then, when you create a job with this employee, the system will search for a match on the customer- and candidate card. In this example, the match would be L&K3; therefore, this is the agreement that will be suggested when you create the job.

When you then press +Add in the box named Jobs, you will be presented with a list of employees, i.e., it is from here that you put an employee to work. To find the employee you want to put to work, you press +Add and choose the relevant employee. Then, you will be presented with this window. As we can see, all the standard information we added above has already been filled in. You also have the option of changing the information from this window. If you press Create jobs, you will be directed to the employee- / work agreement.

Create a job

Responsible co-worker	The employee responsible for your company.
Name of job	Project name by default, but can be changed.
Description	Description of the project.
From date	What date the job starts (the employee can register hours from this date).
To date	The date the job ends (the employee can register hours until this date).
Log work	Here you have the option of giving the candidate permission to register hours online.
Salary	What salary the job will have (per hour, day or month).
Invoice	What invoice price the job will have (per hour, day or month).
Salary type	Whether it is hour salary, month salary, piece work etc.
Collective agreement	Which collective agreement is valid for this job.
Employment	Select the relevant employment, which is created beforehand on the candidate card.
Salary type	Choose one of: Undefined, Hourly Salary, Day Pay, Month Pay, Piecework, Consultant, or Shiftwork.
Salary matrix	Select one from the existing matrices (System settings → Staffing)
Separate invoice	A separate invoice is relevant if you have divided the project into subprojects (project invoicing).
Holiday salary	Which holiday pay rate the job should have.
Position percentage	The position percent of the specific job, where, e.g., 100% is considered full-time work within the start and end date of the job.
Social Cost	Social cost is something that is calculated from salary and is used to reflect any additional costs (employer fee, etc.). Also added in System settings → Staffing.
Service type	Can be added in System settings → Projects.

If you press Create, you will, as mentioned, be directed to the employee- / work agreement. Since we chose the example agreement as our collective agreement, a copy of it will be made.