A collective agreement (Tarifvertrag) is a written agreement between trade unions on one side and employers or employers’ associations on the other. It regulates pay, working hours, holiday entitlement, notice periods and other working conditions. For new graduates, the term usually appears in the employment contract and on the payslip.
Short answer: A collective agreement sets working conditions and generally binds the members of the parties to it. Employees who are not union members can also be affected if their employment contract refers to the collective agreement. You can usually tell whether it applies to you from your employment contract or your payslip. The legal basis is the Collective Agreements Act (Tarifvertragsgesetz, TVG), accessed October 2026.
The essentials at a glance
- The parties to a collective agreement are trade unions and employers or employers’ associations.
- Members of these parties are bound first (§ 3 TVG).
- An employment contract can refer to the collective agreement. Then it applies even without union membership.
- Employment contracts may generally only change collective rules in your favour (more favourable principle, § 4 para. 3 TVG).
- A collective agreement can be declared generally binding (§ 5 TVG). Then it applies to all employees in the sector.
What a collective agreement regulates
A collective agreement contains rules for individual employment relationships, for example on pay, holidays and notice periods. It also obliges the parties towards each other, for example to keep the industrial peace (Friedenspflicht) during its term. The table classifies the main terms.
| Term | What it means |
|---|---|
| Collective agreement (Tarifvertrag) | Agreement between a trade union and an employer or employers’ association |
| Employment contract (Arbeitsvertrag) | Individual agreement between you and your employer |
| Works agreement (Betriebsvereinbarung) | Agreement between the employer and the works council, applying to the workplace |
Who is bound by a collective agreement?
Bound are the members of the trade union and the employer, if the employer is itself a party to the agreement or belongs to an association. Many employers, however, also apply the agreement if you are not a member. This is usually ensured by a reference clause (Bezugnahmeklausel) in your employment contract. Without such a reference, the agreement generally does not apply to you.
How to check whether a collective agreement applies to you
- Read your employment contract and look for wording such as “collective agreement”, “collective bargaining” or “pay grade” (Entgeltgruppe).
- Ask HR which collective agreement applies to your employment and ask for its exact name.
- Check your payslip. A pay grade is a sign that a collective agreement applies.
- If you want the full text, ask the relevant trade union or employers’ association.
Why this matters at the start of your career
The collective agreement often defines which pay grade you are placed in and which steps you move up. It can also deviate from the statutory notice periods (§ 622 para. 4 BGB). Knowing the rules helps you negotiate with more confidence. For more on the probation period, see the glossary entry on the probation period.
Frequently asked questions
Does a collective agreement automatically apply to all employees?
No. As a rule, the members of the parties to the agreement are bound. Only if a collective agreement has been declared generally binding does it apply to all employment relationships in the sector (§ 5 TVG).
What happens when a collective agreement expires?
Its rules generally continue to apply until they are replaced by a new agreement (aftereffect, Nachwirkung, § 4 para. 5 TVG). That gives you security while new negotiations are under way.
Can my employment contract be worse than the collective agreement?
Basically not to your disadvantage. Deviations are only permitted if they are more favourable to you, or if the collective agreement expressly allows it. Check every deviation before you sign.
Who helps with questions about my collective agreement?
The responsible trade union and, if there is one, the works council are the first points of contact. For a personal assessment of your contract, contact a lawyer who specialises in employment law (Fachanwalt für Arbeitsrecht).
Related reading
- Glossary: Probation Period Explained
- Glossary: Employer Subsidy Explained
- Glossary: Salary Sacrifice Explained
- Starting Your Career After Graduation: How to Get Off to a Good Start (in German)
Sources: Collective Agreements Act (TVG) § 1, gesetze-im-internet.de, accessed October 2026, Collective Agreements Act (TVG), full text, accessed October 2026, Civil Code (BGB) § 622, accessed October 2026.
Last updated: October 2026. This guide provides general information, not individual advice.
