In 2001 the Finnish government decided that the state sector should develop a new salary system that would take more fully into account the actual outcomes and demands of particular posts. Subsequently, in June 2006, an agreement on a new salary system for the Finnish university sector was reached between the negotiating parties, the employers and the trade unions. The new salary system is based on assessments of 1) the overall demands of a post, and 2) the personal performance of the individual employee. Until 2007 the author of this article acted as one of the employers’ key negotiators in the bargaining process led by the Ministry of Education. This paper describes this major salary reform and the negotiation process connected with it. It sheds light on the central process of collective bargaining, which is often misunderstood by teachers and researchers in the broad field of higher education.