Allgemeinverbindlicherklärung

Allgemeinverbindlicher Tarifvertrag (AVV) is a tariff agreement in Germany that, once extended, applies to all employers and employees in a sector or region, not only to the parties who negotiated it. The extension occurs through an Allgemeinverbindlicherklärung (AVE) under the Tarifvertragsgesetz (TVG).

Typically, the AVE is requested by the negotiating parties or initiated by a federal or state authority. If granted, the provisions of the tariff contract become generally binding for all employers and employees in the covered sector or area. The terms commonly include minimum wage levels, working hours, overtime rules, vacation entitlements, and other working conditions.

Scope and effect: The extension creates a wage floor and standardizes conditions across the sector, preventing undercutting by individual employers. It does not prevent better terms in private contracts; in practice, higher wages and more favorable conditions negotiated locally may still be possible, but must comply with the extended tariff as a minimum.

Duration and limits: AVEs are typically granted for a defined period and may be renewed or revoked. They can be geographically limited (national or regional) and sectorally limited. Compliance is monitored by public authorities and, if necessary, enforcement actions can follow.

Criticism and context: Supporters argue AVEs promote fair competition and prevent a race to the bottom; critics point to reduced flexibility in bargaining and potential burdens on employers, especially small businesses. The AV mechanism is a key instrument of the German system of collective bargaining to set common standards.