Report in which the committee requests to be kept informed of development - REPORT_NO344, March 2007

1000. The complaint is contained in a communication from the Greek Federation of Bank Employee Unions (OTOE) dated 20 May 2006.

1. 1001. The Government replied in communications dated 29 September 2006 and 7 March 2007.
2. 1002. Greece has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant’s allegations

1. 1003. In its communication of 20 May 2006, the OTOE alleges that Act No. 3371/2005 allows for the unilateral cancellation of collective agreements concerning bank employees’ supplementary pension schemes. These supplementary pension schemes were composed of 13 private funds set up by virtue of collective agreements. As a result of the Act, the unilateral cancellation of the agreement by virtue of which the pension funds were set up entails the automatic transfer of all movable and immovable assets of the funds to the public social security scheme; the loss of all control by the workers over the administration of the funds’ property; and the retroactive loss of certain entitlements for those employees who were insured after 1 January 1993. Finally, an amendment introduced by Act No. 3455/2006 to article 62(6) of Act No. 3371, allows for the dissolution of the funds even if a dispute in this regard is pending before the courts.
2. 1004. More specifically, the complainant indicates that the supplementary pensions of bank employees were provided by 13 private funds which were set up and functioned in accordance with collective agreements reached between each bank and the relevant employees’ associations. Act No. 3371/2005 provides for the possibility of each party to a collective agreement by virtue of which a pension fund was established, to cancel unilaterally the agreement. This decision (to cancel the agreement) has been taken by some banks but not by the associations of employees who have no interest to proceed to such a cancellation. The result of the cancellation has been the transfer of all moveable and immoveable assets of the funds to a public social security scheme. This transfer is not in the interest of the employees because in this way, the funds’ private property will become public property and consequently, the employees will not have a say in the administration of the funds’ property.
3. 1005. The obligations and financial contributions of employers/banks are moreover taken over by a new public social security scheme which is substituted for the previous private pension fund. The exact amount of the financial contributions of the employers into the new scheme has been left to be determined in a future legislative act, on the basis of an economic study, which might also lead to a violation of the vested rights of bank employees.
4. 1006. According to the complainant, Act No. 3371/2005 runs contrary to fundamental principles of freedom of association as it interferes with the freely formed will of the two founders of the pension funds, i.e. the banks and the association of employees working in them. Not only does it allow for the unilateral denunciation of collective agreements and the dissolution of the pension funds established on the basis of these agreements, it also leads to the abolition of the private social security system which existed in the banking sector and renders it public.
5. 1007. Furthermore, a specific date was chosen for determining the transition towards this new social security system, specifically, 1 January 1993. On the basis of this date, bank employees are divided into two categories of beneficiaries: those who joined the scheme before 1 January 1993 and those who joined afterwards. The latter are less protected than the former, according to Act No. 3371/2005, because their pension fund contributions shall increase but their pensions shall diminish. According to the complainant, this is discriminatory as there is no reason for one group to suffer more unfavourable treatment in relation to another. Moreover, there is no justification for the selection of the particular date of 1 January 1993 as a ground for such differentiation. This discriminatory treatment is moreover retroactive and goes 12 years back, violating vested pension rights acquired after 1 January 1993.
6. 1008. Finally, following the enactment of this Act, employees’ associations and trade unions lodged appeals before the courts against some banks. Consequently, a new Act, No. 3455/2006, was enacted to amend an article of the previous Act No. 3371/2005 (article 62(6)). According to the initial provisions of Act No. 3371/2005, eventual legal disputes between banks and bank employees did not allow for the dissolution of the funds until the dispute was definitely settled. On the contrary, the new Act, No. 3455/2006, provides that the funds can be dissolved even if there are pending trials. By so doing, the Government violated, according to the complainant, the fundamental right of access to justice.
7. B. The Government’s reply
8. 1009. In a communication dated 29 September 2006, the Government indicated that the provisions of Act No. 3371/2005 (Official Gazette 178A’) and, in particular, its Chapter G (articles 57–69) concerning “social insurance issues of the staff of financial institutions” aim to restructure the main and supplementary pension funds of the staff of financial institutions and are included in the general regulations made to reform the social insurance system by virtue of Acts Nos. 1902/1990, 2084/1992, 2676/1999 and 3029/2002. State intervention in this specific field has been regarded as necessary so that the multiple inequalities among bank employees due to the fragmentation of their social security bodies as well as the deterioration of the rate of pensioners to insured persons, which directly affects the sustainability of these bodies, could be dealt with. Moreover, in accordance with the provisions of the Greek Constitution, any regulation of social insurance issues is permissible if it is justified by reason of general public interest.
9. 1010. The establishment of a special legal framework is seen as an effective solution for the integration of bank employees into wider groups of insured persons. Within this framework, the integration of the staff of financial institutions into the Single Fund for the Social Insurance of Bank Employees (ETAT) which operates as a public body corporate, has been carried out following the dissolution of supplementary pension funds, with which bank employees were insured (article 62). The ETAT aims to: (a) compensate for the difference between the amount of pensions calculated on the basis of the terms and conditions of the (previously existing) pension funds of the financial institutions and the pensions as presently calculated by the “Special Supplementary Fund for Employees’ Insurance” (ETEAM); this applies to employees insured by 31 December 1992; (b) grant early retirement pensions to those insured until 31 December 1992 in conformity with the terms and conditions of the previously existing pension funds; thus, the terms and conditions for the retirement of those insured until 31 December 1992 are not affected by the Act; (c) grant higher pensions in relation to those granted by ETEAM to those employees who were insured after 1 January 1993 only for the period during which they contributed amounts higher than those required by law for the ETEAM.
10. 1011. The Government adds that, within the framework of the constitutional obligation of the State to intervene with a view to safeguarding the general interest and protecting the rights of the members and pensioners of supplementary pension funds of financial institutions, it is provided that in case of prolonged litigation between employers and employees and in the absence of a joint decision with regard to the dissolution of the funds through private agreement, the ETAT will undertake to manage and settle any affairs of the supplementary pension funds at the request of the representative of either the employer or the employees of the fund (article 62(6)). In these cases, the fund in question is not dissolved and its property is not seized as long as the litigation is under way. The terms and conditions under which the ETAT will manage the funds in question will be determined by presidential decree to be issued upon proposal by the Ministers of Economy and Finance and of Employment and Social Protection.
11. 1012. Finally, with regard to the complainant’s argument that the above violates collective bargaining rights of the bank employees, the Government indicates that article 2, paragraph 3, of Act No. 1876/1990 concerning “free collective bargaining and other provisions”, which constitutes the main Act on collective bargaining in the country stipulates that matters relating to pensions are excluded from the scope of application of collective labour agreements. Matters relating to pensions, which are not covered by collective labour agreements, also comprise the change, directly or indirectly, in the rate of insurance contributions paid by employees and employers, the transfer from one to the other of the total or part of the financial burden relative to the payment of regular contributions or contributions for the recognition of previous service, as well as the setting up of a special fund or account for the granting of temporary pensions or lump sums at the expense of employers (article 43, paragraph 3, of Act No. 1902/1990).
12. 1013. In a communication dated 7 March 2007, the Government adds that, according to article 22, paragraph 5, of the Constitution, the State shall care for the social security of working people and is competent to regulate relevant issues. Based on this principle, Act No. 3371/05 which aims at improving workers’ social insurance by facilitating the integration into the public social insurance system of the supplementary pension funds of financial institutions does not disregard workers rights, especially because the public social insurance system offers additional guarantees compared to those offered by the supplementary pension funds through the payment of pensions regardless of unforeseen financial circumstances. Finally, the Government adds that a new collective agreement between the Greek banks and the complainant has been concluded for the years 2006–07 and was registered at the Ministry of Employment and Social Protection on 17 December 2006. The collective agreement covers the period from January 2006 to 31 December 2007; it regulates all terms and conditions of employment and therefore confirms the climate of working peace that has been achieved in the sector of banking services.

C. The Committee’s conclusions

1. 1014. The Committee notes that the present case concerns allegations which go beyond social security legislation as such, but rather touch upon the Government’s action to unilaterally modify collective agreements concerning the pension funds of bank employees. In particular, the complainant indicates that the supplementary pensions of bank employees were provided until recently by 13 private funds which were set up and functioned in accordance with collective agreements reached between each employer/bank and the relevant employees’ associations. The Government enacted a law, Act No. 3371/2005, which made it possible for each party to these collective agreements to denounce/cancel them unilaterally. Moreover, the Act provided that, in case of denunciation/cancellation of the agreements, all moveable and immoveable assets of the funds were automatically transferred to a public social security scheme. As a result of this transfer, the bank employees ceased to have a say in the administration of the funds’ property. Moreover, whereas the pensions of those who joined the funds before 31 December 1992 were guaranteed, the pensions of those who joined later would certainly decrease, although their contributions were likely to increase. Furthermore, the complainant expressed the fear that the contributions of employers would decrease, as the Act did not specify the amount of such contributions and left them to be determined in a future legislative act, on the basis of an economic (not actuarial) study. Thus, the employers had an incentive to denounce the collective agreements while the employees’ associations were opposed to such denunciation.
2. 1015. The Committee notes that according to the complainant Act No. 3371/2005 ran contrary to fundamental principles of freedom of association as it interfered with the freely formed will of the two founders of the pension funds (the employers/banks and the association of bank employees). Not only did it allow for the unilateral denunciation of collective agreements, but it also led to the automatic dissolution of the funds established by these agreements and to the abolition of the private social security system which existed in the banking sector, rendering it public. Furthermore, the beneficiaries of the funds were arbitrarily divided into two categories, one of which would suffer unfavourable treatment in relation to the other, although it contributed the same amounts in the past. This discriminatory treatment was moreover retroactive and went back 12 years, violating vested pension rights acquired after 1 January 1993. Finally, a new Act No. 3455/2006 introduced an amendment to Act No. 3371/2005 to ensure that the appeals lodged by the employees’ associations before the courts did not prevent the dissolution of the funds.
3. 1016. The Committee notes that in its reply, the Government indicated that state intervention was regarded as necessary so that the multiple inequalities among bank employees due to the fragmentation of their social security bodies as well as the deterioration of the rate of pensioners to insured persons, which directly affected the sustainability of these bodies, could be dealt with; thus, the staff of financial institutions was integrated into a wider group of insured persons and a Single Fund for the Social Insurance of Bank Employees (ETAT) was established to manage the transition. The ETAT aims to ensure that the pensions of those bank employees who were insured before 31 December 1992 are paid in their totality (as the pensions granted by the previous scheme are higher than those granted by the new scheme); thus, the vested rights of those insured before 31 December 1992 are not affected; with regard to those insured since 1 January 1993, the ETAT aims to ensure that their pensions are higher than those granted by the new scheme only in relation to the amounts they contributed to the previous scheme until its dissolution.
4. 1017. The Committee also notes that, according to the Government, the abovementioned Act provides that, in case of prolonged litigation and in the absence of a joint decision between the parties with regard to the dissolution of the private funds, the ETAT will undertake to manage the funds in conformity with the terms and conditions to be determined by presidential decree; nevertheless, the funds in question are not dissolved and their property is not seized as long as the litigation is under way. Finally, with regard to the complainant’s argument that the adoption of Act No. 3371/2005 violates the collective bargaining rights of the bank employees, the Government indicates that section 2, paragraph 3, of Act No. 1876/1990 stipulates that matters relating to pensions are excluded from the scope of application of collective labour agreements.
5. 1018. The Committee emphasizes that state bodies should refrain from intervening to alter the content of freely concluded agreements [Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006, para. 1001]. The Committee considers that giving by law a special incentive encouraging one of the parties to these agreements to denounce/cancel collective agreements by which pension funds were set up, constitutes interference with the free and voluntary nature of collective bargaining. Moreover, the Committee considers that after the collective agreements by which pension funds were set up were denounced by one of the parties, it pertained to the parties themselves to determine whether and under which terms and conditions the funds would be dissolved and what would become of their assets. Nothing in Convention No. 98 enables the Government to step in and unilaterally determine these issues, much less to unilaterally determine that the assets of a private pension fund, established by collective agreement, would be appropriated and automatically transferred to a public pension scheme. The Committee notes, moreover, that the establishment of the funds through collective bargaining as well as trade union participation in the administration of these funds, constituted a trade union activity with which the Government unduly interfered. The Committee observes that the above are contrary to Article 3 of Convention No. 87 and Article 4 of Convention No. 98, both ratified by Greece.
6. 1019. The Committee observes that collective bargaining implies both a give-and-take process and a reasonable certainty that negotiated commitments will be honoured, at the very least for the duration of the agreement, such agreement being the result of compromises made by both parties on certain issues, and of certain bargaining demands dropped in order to secure other rights which were given more priority by trade unions and their members. If these rights, for which concessions on other points have been made, can be cancelled unilaterally, there could be neither reasonable expectation of industrial relations stability, nor sufficient reliance on negotiated agreements [Digest, op. cit., para. 941].
7. 1020. The Committee notes that the Government justifies its intervention on grounds of public interest, i.e. the Constitutional authorization to regulate social security issues, the need to avoid inequalities among bank employees due to the fragmentation of their social security bodies, the need to address the deterioration of the rate of pensioners to insured persons which affected the sustainability of these bodies, and the fact that the workers’ interests are safeguarded because the public social security funds guarantee the payment of pensions regardless of unforeseen financial circumstances. The Committee observes however, from the information before it, that the Government never participated through the public budget in the financing of the pension funds in question. It thus considers that the issues raised by the Government should be up to the members of the funds themselves and do not justify the intervention of the public authorities in their agreements. The Committee recalls that, where intervention by the public authorities is essentially for the purpose of ensuring that the negotiating parties subordinate their interest to the national economic policy pursued by the Government, irrespective of whether they agree with that policy or not, this is not compatible with the generally accepted principles that employers’ and workers’ organizations should enjoy the right freely to organize their activities and to formulate their programmes, that the public authorities should refrain from any interference which would restrict this right or impede the lawful exercise thereof, and that the law of the land should not be such as to impair or be so applied as to impair the enjoyment of such right [Digest, op. cit., para. 1005].
8. 1021. The Committee therefore requests the Government to cease all acts of interference with the collective agreements by which the supplementary pension funds of bank employees were set up. In light of the fact that the supplementary pension funds have already been integrated by the Government into a single public fund by Act No. 3371/2005, the Committee requests the Government to convene the employers or employers’ organizations and the workers’ organizations concerned to full consultations as soon as possible, in order to ensure that the future of the supplementary pension funds of bank employees and of their assets is determined by mutual agreement of the parties to the collective agreements by which the supplementary pension funds were set up, and to which only they contributed, and to amend Act No. 3371/2005 to reflect the agreement of the parties. The Committee requests to be kept informed of developments in this respect.
9. 1022. Finally, with regard to the Government’s indication that article 2, paragraph 3, of Act No. 1876/1990 stipulates that matters relating to pensions are excluded from the scope of application of collective labour agreements, the Committee recalls that matters which might be subject to collective bargaining include the type of agreement to be offered to employees or the type of industrial instrument to be negotiated in the future, as well as wages, benefits and allowances, working time, annual leave, selection criteria in case of redundancy, the coverage of the collective agreement, the granting of trade union facilities, including access to the workplace beyond what is provided for in legislation, etc.; these matters should not be excluded from the scope of collective bargaining by law [Digest, op. cit., para. 913]. Observing that supplementary pension schemes can legitimately be considered as benefits that may be the subject of collective bargaining, the Committee requests the Government to take all necessary measures as soon as possible to amend section 2, paragraph 3, of Act No. 1876/1990 so as to ensure that supplementary pension schemes may be the subject of collective bargaining. The Committee requests to be kept informed of developments in this respect.