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Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (No. 173) - Albania (RATIFICATION: 2005)

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In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on wages, the Committee considers it appropriate to examine Conventions Nos 95 and 173 (protection of wages) together.

Protection of Wages Convention, 1949 (No. 95)

Article 4 of the Convention. Payment of wages in kind Further to its previous comments, the Committee notes with interest that following the entry into force of Act No. 136/2015, a new paragraph was added to section 118(2) of the Labour Code pursuant to which the value of the wages in kind should be fair and reasonable and shall not exceed 20 per cent of the monthly wage.

Article 8(1). Deductions from wages. The Committee notes that section 122(2) of the Labour Code provides for certain deductions that the employer may make from the employee’s wages, including obligations stemming from a deliberately caused damage which would be compensated without restrictions. It recalls that deductions from wages shall be limited in accordance with Article 8(1). It also recalls that the Protection of Wages Recommendation, 1949 (No. 85), provides that: (i) deductions from wages for the reimbursement of damage to the products, goods or installations of the employer should be authorised only when loss or damage has been caused for which the worker concerned can be clearly shown to be responsible; (ii) the amount of such deductions should be fair and should not exceed the actual amount of the loss or damage; and (iii) before a decision to make such a deduction is taken, the worker concerned should be given a reasonable opportunity to show cause why the deduction should not be made. The Committee requests the Government to provide information on the application of section 122(2) of the Labour Code in practice and in particular on how it may be determined that a damage has been deliberately caused in this context.

Protection of Workers’ Claims (Employer’s Insolvency) Convention, 1992 (No. 173)

Applicable legislation. Further to its previous comments on the conflicting provisions addressing workers’ claims in case of the employer’s insolvency in various pieces of legislation, the Committee notes the amendment of section 605 of the Civil Code, following the adoption of Act No. 113/2016, which clarifies that section 605 does not apply to bankruptcy proceedings. The Committee further notes that: (i) section 124 of the Labour Code, which provides that, in case of insolvency, the employer’s obligations to the worker have priority over all other debts, also provides that such priority is not suspended by the procedure of bankruptcy; (ii) the new Bankruptcy Act (No. 110/2016) which repealed the previous legislation on bankruptcy (No. 8901/2002) contains provisions on workers’ claims which appear to be inconsistent with section 124 of the Labour Code; and (iii) the new Bankruptcy Act appears to give workers’ claims the same rank as claims for unpaid taxes (sections 38 and 144 of the Bankruptcy Act read together), which would not be in conformity with Article 8(1). In this context, the Committee notes that in its report submitted in 2011, the Government had indicated that under the Constitutional Court case law, laws which are adopted by three-fifths of the Members of the Parliament of Albania (such as the Labour Code) are ranked higher in the hierarchy of norms that the laws which are adopted by simple majority (such as the Bankruptcy Act No. 8901/2002 that was then in force). The Committee therefore understands that the relevant provisions of the Labour Code would prevail over those of the Bankruptcy Act. The Committee requests the Government to confirm whether section 124 of the Labour Code prevails over the abovementioned provisions of the Bankruptcy Act, and if so, to take the necessary measures to review the Bankruptcy Act in order to remove any conflicting provisions.

Article 6 of the Convention. Claims included in the privilege. In its previous comments, the Committee requested the Government to specify the claims covered under the wage claims privilege provided for under section 124(2) of the Labour Code. The Committee notes with interest that section 124(2) of the Labour Code has been amended by Act No. 136/2015, to specify that the first rank privilege granted to wage claims under that section covers the following claims: (a) workers’ claims for wages, for a period of not less than three months before the termination of employment; (b) workers’ claims for payment of unpaid leave, for the corresponding part of the year of the termination of employment, as well as during the previous year; and (c) severance payment upon termination of employment.

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Articles 6 and 8 of the Convention. Minimum coverage of privileged protection. Rank of privilege. The Committee notes the Government’s statement that section 124(2) of the Labour Code grants first rank privilege to all service-related claims of employees, including but not limited to claims for unpaid wages, holiday pay, justified absence such as maternity leave or sick leave, and severance pay. It also notes the Government's explanations that section 605 of the Civil Code setting out the distribution order overrides the relevant provisions of the Bankruptcy Law so that employee claims deriving from a labour relationship take priority over claims of the State, the Social Insurance Institute and secured creditors. The Committee requests the Government to consider at the next suitable occasion measures to: (i) specify the different claims covered by privileged protection under section 124(2) of the Labour Code; and (ii) remove any uncertainty as to the rank of privilege afforded to employee claims because of the conflicting provisions in the Civil Code and the Bankruptcy Law.

Part IV of the report form. Practical application. The Committee would be grateful if the Government would provide up-to-date information concerning the practical application of the Convention, including for instance the number of workers covered by measures giving effect to the Convention, and copies of judicial decisions involving questions of principle relating to the application of the Convention.

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The Committee notes the Government’s first report on the application of the Convention and wishes to draw its attention to the following points.

Article 6 of the Convention. Minimum coverage of protection by means of a privilege. The Committee notes that section 605 of the Civil Code (Law No. 7850 of 29 July 1994) grants first-rank privilege to claims deriving from labour relationship whereas claims of the State and claims of the Social Insurance Institute come fifth in the order of distribution. It also notes that section 124(2) of the Labour Code (Law No. 7961 of 12 July 1995), as amended, provides that in case of the employer’s insolvency, employees’ claims up to a total amount equal to five months’ minimum wage take priority over all other claims including those of secured creditors. Noting that the national legislation refers to employees’ claims in general without specifying whether these include, apart from wage debts, also claims for holiday pay, severance pay and claims in respect of other types of paid absence (e.g. sick leave, maternity leave, etc.), the Committee would appreciate if the Government would specify how effect is given to the specific requirements of this Article of the Convention.

Article 8. Rank of privilege. The Committee understands that, contrary to the provisions of the Labour Code and of the Civil Code referred to above, which give absolute priority to employees’ service-related claims, the Bankruptcy Law (Law No. 8901 of 23 May 2002) appears to grant first-rank privilege to claims of secured creditors. The Committee accordingly requests the Government to provide additional explanations on this point.

Part IV of the report form. Application in practice. The Committee would be grateful if the Government would provide in its next report general indications as to the manner in which the Convention is applied in practice, including information concerning the number of workers covered by measures giving effect to the Convention and any other particulars which would enable the Committee to better assess the implementation of the provisions of the Convention.