Definitive Report - REPORT_NO286, March 1993

1. 24. In a communication dated 30 September 1992, the Danish Seamen's Union, the Danish Fishermen's Union and the Danish Artists' Union submitted a complaint alleging violations of freedom of association against the Government of Denmark. The Government sent its observations on the case in a communication dated 20 January 1993.
2. 25. Denmark has ratified the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87) and the Right to Organize and Collective Bargaining Convention, 1949 (No. 98).

A. The complainants' allegations

1. 26. In their communication of 30 September 1992, the complainants allege that the decision of the Minister of Labour to refuse to approve the complainants' application for an extension of the occupational field of an unemployment insurance fund (the Maritime Unemployment Fund) jointly operated by the complainants to include occupational fields covered by four other unions, infringes the provisions of Conventions Nos. 87 and 98, for the following reasons. Historically, the unemployment insurance funds were launched by the trade unions so that although in fact trade unions and unemployment funds are separate legal entities, cooperation between them is very close. For example, trade unions and unemployment funds often have the same official address, hold their general meetings together, have the same management and the same administrative staff. In many cases membership fees to unemployment funds and trade unions are collected together and the trade unions' agreements often call for membership of the associated unemployment fund. In the event of labour disputes within the area of an unemployment fund, the unemployment fund's right (and obligation) to pay unemployment benefits will cease. The complainants argue that this close cooperation between trade unions and unemployment funds is the principal reason why 75 per cent of all wage-earners in Denmark are members of a trade union. For all these reasons, in Denmark it is essential for a trade union to have an unemployment fund attached to it.
2. 27. According to the complainants, trade unions without an associated unemployment fund find it very difficult to operate on an equal footing with other trade unions catering for the same groups of members. First of all, a trade union with an associated unemployment fund is in a position to offer an extra attractive service. Secondly, it is a serious strain on a trade union without an associated unemployment fund to have to refer its members to membership of an unemployment fund which is attached to a competing trade union, where the members are often harassed because of their choice of trade union. Thus, for example, the Danish Watchmen's Union whose membership dropped from 2,550 to 1,350 from the end of 1988 to the end of 1991 considers that this drop was due solely to the fact that its members had been compelled to apply for membership of an unemployment fund attached to a competing organization.
3. 28. Moreover, the trade unions' collective bargaining powers are closely linked to their affiliation with an unemployment fund; any lack of affiliation will prevent trade unions from manifesting themselves sufficiently to negotiate collective agreements. Finally, the three complainant unions contend that unemployment insurance funds must have at least 5,000 members. However, none of the seven organizations (the complainants and the four other unions to which an extension of the Maritime Unemployment Fund was refused) have more than 5,000 members on their own; therefore cooperation on the unemployment fund is practical as well as necessary.
4. 29. As a result of all the difficulties encountered by trade unions without an associated unemployment fund, on 7 July 1990 the Maritime Unemployment Fund applied for an extension of the trade area of the unemployment fund so as to include the trade areas of the following four unions: the Danish Watchmen's Union, the Federation of Danish Waiters' Unions, the Salaried Employees' Cartel and the Technicians' Association. However, Danish legislation empowers the Minister of Labour to refuse to grant an unemployment fund permission to extend its area to other trades if an unemployment fund for the trade already exists, and on 27 May 1991 the Minister of Labour declined the application of the Maritime Unemployment Fund. The grounds given for the refusal were as follows: (1) all other affected unemployment funds had declared that permission should not be granted; (2) the working committee of the National Labour Board had declared that permission should not be granted; (3) any permission to extend the trade area of the Maritime Unemployment Fund to include the trade areas of the four above-mentioned unions would imply that a large number of members of various other unemployment funds could be admitted to the Maritime Unemployment Fund. Thus for example, any permission to admit the Danish Watchmen's Union would imply that all salaried employees engaged in security, control and supervision services could be admitted to the Maritime Unemployment Fund as well as to the Unemployment Fund for Salaried Employees and Service Trades; and (4) the extension of the Maritime Unemployment Fund is not a direct consequence of any prior organizational change accepted by the affected trade unions through truce agreements or demarcation agreements.
5. 30. The complainant unions state that they have the following comments regarding the various grounds for refusal. Regarding the first point, they point out that none of the affected unemployment funds or their associated trade unions are interested in a competing unemployment fund. The four trade unions that wish to be admitted to the Maritime Unemployment Fund have all emerged by virtue of dissatisfaction with the existing trade unions and their associated unemployment funds. The dissatisfaction is a consequence of the administration and policy of the established trade unions, including their support of specific political parties. Referring to the second point, they contend that the National Labour Board consists of 14 members, 12 of whom are appointed by employers' associations or the trade unions' central organizations, whose members include the trade unions that have competing unemployment funds attached to them. In response to the third point, they argue that there are numerous examples showing that wage-earners can choose among several unemployment funds. There are also examples where all members of an unemployment fund could choose membership of another unemployment fund, if they so wished. As regards the Government's final argument, they indicate that unemployment funds are not per se entitled to conclude demarcation agreements. This is within the realm of the associated trade unions only. Moreover, the organizational changes which the application from the Maritime Unemployment Fund reflects are not accepted by the old organizations. Because of the Minister's refusal to accept the Fund's application, they retain a monopoly and therefore, in actual practice, it will be impossible to obtain demarcation agreements.
6. 31. In short, the complainant unions conclude that the Minister's decision is contrary to the provisions of Conventions Nos. 87 and 98 in that it is of paramount importance to a Danish trade union that it has an unemployment fund attached to it; in that the decision of the Minister is tantamount to a quasi-monopolistic position for the established trade unions, so that the Minister unduly interferes in the organizations' mutual competition for members; and in that the decision amounts to discrimination between trade unions.

B. The Government's reply

1. 32. In its reply of 20 January 1993, the Government states that this case does not concern trade unions, but unemployment insurance matters. To support its contention, the Government describes the Danish unemployment insurance system and its relationship with trade union organizations.
2. 33. The Government explains that the administration of the Danish unemployment insurance system is based on the publicly regulated unemployment insurance funds which are private associations. The unemployment insurance funds - which must be based on a specific occupational field - have typically been set up at the initiative of trade unions and the occupational field covered by an unemployment insurance fund and by the trade union concerned will often be identical, but this is not a condition for state recognition.
3. 34. The Government contends that Danish legislation draws a clear-cut distinction between the activities of the unemployment insurance funds and other associations. Under section 30 of the Act on the public employment service and the unemployment insurance system, state-recognized unemployment insurance funds are associations which solely have the purpose of securing their members financial assistance in the event of unemployment. Section 32 provides that the income and assets of a fund shall be kept separately from assets of other associations and may not be transferred to the latter by way of loans or gifts or be used for unauthorized purposes.
4. 35. Moreover, on application the Minister of Labour grants recognition to unemployment insurance funds, but may under section 31 of the Act, refuse to recognize a fund if funds already exist within the occupational field concerned. Hence, according to the Government, it is not a matter of approving certain occupational organizations as authorized to administer or even operate an unemployment insurance fund, while this right is refused to others. The Government adds that the conditions which must be satisfied in connection with the recognition of unemployment funds must be seen in the light of the fact that the State finances a substantial share of the expenditure on the unemployment insurance system.
5. 36. In making a decision concerning recognition of an unemployment insurance fund and extension of the occupational field of such a fund, the Ministry of Labour makes efforts to ensure: (1) the establishment of the most appropriate insurance coverage for all employees; (2) a responsible and administratively rational and appropriate functioning of the unemployment insurance system; (3) an appropriate functioning of the individual unemployment insurance funds in the light of the responsibilities which are imposed by legislation with a view to assisting the unemployed in order to maintain their continued attachment to the labour market.
6. 37. The Government contends that unlike the rules applying to publicly regulated unemployment insurance funds, no rules have been laid down for the setting up of trade unions which can be established freely and which can lay down their own objectives freely. Trade unions may thus, without any requirement of state recognition, set up insurance schemes which grant members financial assistance in the event of unemployment but there will be no state reimbursement of the expenditure on such funds. According to the Government, against this background it is not a matter of public authorities granting certain trade unions privileges or financial assistance at the cost of others.
7. 38. Furthermore, all employees (or self-employed persons) within the occupational field covered by the unemployment insurance fund have the same right to membership. By way of example, a person cannot be required to be a member of a (specific) trade union as a condition for being a member of the relevant unemployment insurance fund. Also a member of another (competing) union has the right to be a member of the unemployment insurance fund. So while the Danish Government agrees that public authorities may not discriminate against trade unions with a view to influencing the employees' free choice of a trade union, it does not consider that the legislation in this field discriminates in any way against certain trade unions in this manner. In its view, refusal to recognize an unemployment insurance fund in occupational fields which are already covered in no way deprives the organizations concerned of their possibilities for safeguarding the interests of their members.
8. 39. In short, the Government concludes that as the legislation draws a clear-cut distinction between trade unions and unemployment insurance funds and prohibits any intermingling of their respective interests, this case does not concern trade unions but unemployment insurance matters. Since Conventions Nos. 87 and 98 do not regulate questions concerning a country's unemployment insurance system, the case which is the subject of the complaint does not fall within the field of competence of the Committee on Freedom of Association.

C. The Committee's conclusions

1. 40. The Committee notes that this case involves alleged discrimination by the Government against four trade unions by its refusal to approve an extension of the occupational field of the Maritime Unemployment Fund to include occupational fields covered by these four unions, namely the Danish Watchmen's Union, the Federation of Danish Waiters' Unions, the Salaried Employees' cartel and the Technicians' Associations. The Government submits that its decision is applicable to an unemployment insurance fund and thus in no way constitutes a discrimination against trade unions since unemployment insurance funds and trade unions are separate legal entities.
2. 41. The Committee notes from the outset that under Danish legislation, state-recognized unemployment insurance funds are regulated differently from other associations including trade unions. Indeed, under the terms of the Act on the public employment service and the unemployment insurance system, unemployment insurance funds have the sole purpose of securing their members financial assistance in the event of unemployment. Furthermore, this Act provides that the assets of such a fund shall be kept separately from the assets of other associations.
3. 42. While this legal distinction exists, the Committee observes from the complainants' submissions, which the Government does not refute, that there is in practice a close interaction between unemployment funds and trade unions. Often, these funds and trade unions have the same management and administrative staff and hold their general meetings together. Moreover, trade unions' agreements often call for membership of the associated unemployment fund which is one of the main reasons why 75 per cent of all wage-earners in Denmark are members of a trade union.
4. 43. While bearing in mind the practical importance for a trade union of having an unemployment fund attached to it, the Committee does not consider however that the Government's refusal in this case to extend the occupational field of the Maritime Unemployment Fund to include the occupational fields covered by the Danish Watchmen's Union, the Federation of Danish Waiters' Unions, the Salaried Employees' cartel and the Technicians' Association, constitutes an act of discrimination against these four unions. By the complainants' own admission, one of the main reasons why the Government refused this extension was that it would imply that members of various other unemployment funds could be admitted to the Maritime Unemployment Fund. In order to avoid a multiplicity of membership to different unemployment funds, the Government had recourse to section 31(2) of the Act on the public employment service and the unemployment insurance system which enables it to refuse to recognize an unemployment fund in occupational fields which are already covered.
5. 44. In this regard, it is clear to the Committee that the conditions which must be satisfied in order for the Government to recognize an unemployment fund must be seen in the light of the fact that the State finances a substantial share of the expenditure on the unemployment insurance system. The Committee also notes that trade unions may, without any requirement of state recognition, set up insurance schemes which grant members financial assistance in the event of unemployment, but that the State will not reimburse the ensuing expenditure.
6. 45. The Committee takes particular note of the Government's submission that in deciding whether to extend the occupational field of any unemployment insurance fund, the Government tries first and foremost to ensure that the most appropriate insurance coverage is established for all employees and that this unemployment insurance system is run in a responsible and administratively rational manner. It is not for this Committee to say whether the refusal of extension of the occupational field of the Maritime Unemployment Fund will actually result in a more rational and appropriate functioning of the unemployment insurance system in Denmark. The Committee is of the opinion, however, in view of the above considerations, that the Government's decision was not made in order to influence the trade union membership of workers belonging to the Danish Watchmen's Union, the Federation of Danish Waiters' Union, the Salaried Employees' cartel and the Technicians' Association and thus cannot be said to be discriminatory vis-à-vis the four unions concerned.