As mentioned above, labour law legislation plays a comparatively modest role in Denmark. Instead, there is an extensive system based upon collective agreements. The foundations for this system were laid in 1899 when LO and DA came to a compromise after a long and bitter dispute. The compromise, which forms the basis of the General Agreement between the two central organisations (and similar agreements between other central organisations on the labour market), establishes, inter alia, the right to organise and a requirement to the effect that no work stoppages must take place during the term of a collective agreement (the so-called "peace obligation" clause). The general agreement also contains rules concerning employer prerogatives, such as the right to direct and control work, and to keep supervisors out of the ordinary organisations of workers. Finally, the general agreement contains rules to protect the employees against unfair dismissal. As a supplement to the general agreement a special agreement has been concluded concerning co-operation in the enterprises between management and workers (cf. below). A further supplement to the general agreement covers the standard rules for handling labour disputes which form the cornerstone of the machinery set up to settle industrial disputes.
Collective agreements are concluded between an employee organisation, on the one hand, and an employer organisation or an individual employer, on the other. As regards the state, the conclusion of collective agreements is supported by the public conciliation service. This service consists of three conciliators and a number of assistant conciliators (13 at the present time) appointed by the Minister of Labour on the recommendation of the central labour market organisations. They are not representatives of the Government. Their sole function is to assist the parties in reaching an agreement. If these efforts fail, the conciliators step back and industrial action may then be taken, normally in the form of a strike or lock-out. In principle an industrial dispute continues until the parties find a basis for new negotiations which will lead to the conclusion of an agreement.
During the term of the collective agreement, the parties are obliged to maintain the peace. This means that disputes of interest in the areas covered by the agreement shall be settled by means of negotiation and arbitration, but not work stoppages. Nor do breaches of agreements normally justify work stoppages, but must be settled through negotiation and the Industrial Court. The Industrial Court is like other courts of law in Denmark, but the judges are elected by both sides of the labour market, with a Supreme Court judge as president. The Industrial Court may impose a "penalty" on the organisation or members acting in breach of the agreement, i.e. a sum of money which serves as a "punishment" to the party acting in breach as well as compensation to the injured party.
The system for settling industrial disputes means that work stoppages will for most of the labour market be concentrated in the period when bargaining takes place over the renewal of the most important agreements on pay and working conditions. This bargaining process has so far taken place every second year in the months of March and April. The collective agreements reached in the industrial sector 1995 were concluded for a 3-year period. It is still uncertain whether this will spread to the rest of the labour market. In this situation public interest focuses on the negotiations, assisted by the conciliator, between LO and DA on matters which are common to all the affiliated organisations. These matters mainly concern pay levels, but may also deal with other important issues such as general working time, holidays, pension schemes, etc.
If the central organisations fail to arrive at a result before the collective agreements expire, the conciliator is empowered to postpone the industrial action twice for fourteen days. If the parties still have not reached an agreement or at least come so close to each other that the conciliator finds that there is a basis for preparing a compromise on which a ballot can be taken among the employers and employees, respectively, then industrial action can be taken.
A work stoppage may, however, be of such a scale or it may hit such vital sectors of society that the Government finds the situation unacceptable. For this reason the Folketing (the Danish Parliament) and the Government have on some occasions intervened in industrial disputes of this kind to prevent or put an end to the work stoppage. This is done by adopting legislation which reviews the collective agreements concerned for a new period of normally two years' duration. This means that the duty to keep industrial peace is reintroduced and that continued work stoppages will be in breach of the agreements. Employees are required to return to work and employers have a similar duty to re-hire the employees without retaliatory measures.
The legislative renewal of the collective agreements will normally, as far as possible, be based upon the conditions contained in the compromise drafted by the conciliator.
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