Definitive Report - REPORT_NO350, June 2008

1. 806. The complaint is contained in communications from the Greek Telecom Employees’ Federation (OME–OTE) dated 20 June and 31 July 2007.
2. 807. The Government replied in a communication dated 4 January 2008.
3. 808. 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. 809. In communications dated 20 June and 31 July 2007, the Greek Telecom Employees’ Federation (OME–OTE) alleges that the Government unilaterally modified collective agreements concerning the terms and conditions of employees of the Greek Telecommunications Organization (OTE). According to the complainant, the OTE constitutes the most important telecommunications company of Greece. In the past, the organization belonged to the state but is today privatized in large part and its shares are held by private investors. For a long time, stable industrial relations prevailed within the organization and a large number of collective agreements had been concluded through dialogue. The two parties therefore managed to jointly regulate all the differences between them through the years. Professional relations were regulated in part by the General Internal Rules of OTE (GKP-OTE) which had been agreed upon through collective bargaining. There is also a body of collective agreements concluded between the OTE administration and representative trade unions. These collective agreements regulate the largest part of the terms and conditions of employment of workers in the organization.
2. 810. According to the complainant, section 38(3) of Act No. 3622/2006 provides that the internal rules of the COSMOTE enterprise, which is a subsidiary of OTE, will apply to the entire staff of the organization, that is to say, the staff of OTE. The same provision stipulates that any provision in a law or collective agreement (at the national or enterprise level) regulating the internal rules in a different way is rescinded. Following this, several exceptions are allowed concerning the continuity of application of some provisions of the abolished internal rules to part of the staff. Finally, it is provided that the new internal rules can be amended by collective agreement.
3. 811. The complainant explains that in this manner, a large part of collective agreements regulating relations with staff have been indirectly cancelled and replaced by rules elaborated without the participation of the trade unions of OTE. In particular, the rescinded internal rules regulated the following issues: the functions and nature of work accomplished by staff as well as the procedure for assigning work of a different nature (sections 6 and 45 of the internal rules concluded through collective bargaining); the procedure and conditions for the transfer of employees (section 9 of the internal rules); the procedure for hierarchical promotion of staff (section 8 of the internal rules); the procedure and conditions for the appointment of staff in management positions (sections 10 and 11 of the internal rules); the conditions of recruitment of workers (collective agreement of 25 May 2005). In addition to the above rules which were cancelled vis-à-vis all employees, the following rules were cancelled only with regard to the employees recruited after 14 July 2005: conditions for taking seniority into account (section 7 of the internal rules); conditions for granting annual and sick leave (section 13 of the internal rules); conditions for dismissal (cancellation of the requirement for a substantive and important reason – section 17 of the internal rules); conditions for resignation (section 18 of the internal rules).
4. 812. The complainant notes that Act No. 3622/2006 is contrary to Conventions Nos 87 and 98, ratified by Greece, and to freedom of association principles reflected in paragraphs 941, 1001 and 1008 of the Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006. The cancellation of a large part of collective agreements freely concluded between the trade union and the direction of OTE, thus modifying to a considerable extent the professional relations in the enterprise, without doubt constitute an act of interference in the collective agreements and a violation of freedom of association. The complainant therefore requests the Committee to examine the above acts of interference, so that these measures are declared contrary to freedom of association principles and the Greek Government be called upon to put an end to these acts of interference.

B. The Government’s reply

1. 813. In a communication dated 4 January 2008, the Government indicates that the provisions of section 38(3) of Act No. 3522/2006 constitute a follow-up to and implementation of the provisions of section 14 of Act No. 3429/2005 on Public Utility Companies. The said Act No. 3429/2005 provides for the rationalization and restructuring of the public utility companies – known as DEKO – which previously functioned in Greece under various laws. Act No. 3429/2005 aimed at unifying and rationalizing the legal framework within which the DEKO functioned and at helping their further development through their necessary entry into free market competition in accordance with European Union requirements. Moreover, apart from the general regulations concerning the “denationalization” (privatization) of the DEKO, the privatization of the OTE was based on a series of specific Acts.
2. 814. The Government adds that the State maintained a justifiable interest in the DEKO despite their partial privatization, since the DEKO provide public utilities and their services are essential to the quality of citizens’ daily life, while their economic activity and investments influence the country’s development rate, their tariff policy has an impact on inflation, their operational effectiveness affects the state budget deficit, their financing by means of state guarantees affects the country’s foreign debt and, finally, their business strategy has a decisive impact on the functioning of the market in the relevant branch of activity.
3. 815. Thus, one of the main objectives of the aforementioned Act No. 3429/2005 was to remedy shortcomings on staff-related issues. Both the internal rules and the secondary terms of employment of the DEKO staff, which applied while the DEKO constituted state-owned monopolies, continued to apply in most of the DEKO (OTE SA included) after their partial privatization and until the passing of Act No. 3429/2005. These internal rules and terms of employment were totally unrelated to private sector conditions (e.g. permanency of staff, prohibition of appointing directors coming from outside the DEKO and obligatory filling of positions of responsibility by means of staff advancement, restrictions on the recruitment process, etc.). This undermined the DEKO competitiveness in the free market. Although the entry of the Greek DEKO into the world of free competition did not affect their nature as public utility corporations and the fact that these continue to function “in the public interest”, they are from now on obliged to perform their activities under free market conditions and in an increasingly competitive environment. The DEKO, therefore, had to adapt to these new conditions, e.g., with regard to their compliance with the applicable corporate law, transparency in their management and in the monitoring of their economic indices since their shares are quoted on the stock exchange, etc.
4. 816. It is obvious that the entry of the DEKO into the world of free competition without the appropriate restructuring in the field of employment relationships would lead without doubt to their economic decline and, therefore, to mass dismissals, without excluding the possibility of cessation of their activities, which would threaten the jobs of thousands of workers. Most of the DEKO employ large numbers of workers, including the OTE, in which approximately 11,500 workers are engaged. It is, therefore, obvious that the legislation in question aimed at protecting the “general interest”, by saving not only the DEKO (as public utilities) but also the numerous jobs involved.
5. 817. According to the Government, Act No. 3429/2005 contains provisions regulating the organization, functioning, management and state supervision of the DEKO as well as provisions relating to the employment relationship with their staff (sections 13, 14 and 17). The provision which is of particular interest here is that of section 14 of Act No. 3429/2005, which reads as follows (emphasis added by the Government):
6. 1. The administrations of public utility companies, which produce negative economic results or are subsidized by the State are obliged, with a view to proceeding to their rationalization, to take all appropriate measures of staff development, by means of drawing up, if necessary, new internal rules and organization charts, as well as programmes for staff training and retraining. More specifically, as far as the general internal rules and employment relationships are concerned, any change is made after consultation with the two parties (company and workers) following the procedure for concluding a collective agreement with the most representative trade union organisation of the company.
7. 2. The changes mentioned in the previous paragraph relating to the conclusion of collective agreements must be completed in a period of up to four months at the latest from the date on which the present Act enters into force or, in case the public utility company produces negative economic results or is subsidized by the State, with a view to proceeding to its rationalization, in the fiscal year 2005 or in another fiscal year following the enactment of the present Act, from the date on which the balance sheet of that fiscal year is published.
8. 3. If, for any reason, no change is made in the aforementioned period, the above changes are made by law.
9. 818. According to the Government, section 14 of Act No. 3429/2005 obliges the administrations of public utility companies, in case of negative economic results, to draw up new internal rules and organization charts, aiming at their rationalization. An important element of section 14 is that these changes should be made by agreement of the parties and the administration of each DEKO should invite the most representative enterprise trade union to take part in negotiations through the applicable collective bargaining procedures. These negotiations have to be conducted and completed in accordance with sections 4 and 5 of Act No. 1876/1990 (which provide for the collective bargaining procedure, signature and entry into force of a collective agreement). In case no mutual solution can be found in a period of four (4) months, section 14(2) and (3) stipulates that the necessary changes of the internal rules will be made by law. This provision does not prevent the continuation of the direct negotiations between the parties after the expiration of the four-month period and does not exclude the possibility of a dispute settlement even after the expiration of the four-month deadline, unless the negotiations either do not start or end fruitlessly. Consequently, the provisions of section 14 of Act No. 3429/2005 clearly demonstrate that the Government respects the right to free and voluntary collective bargaining, guaranteed by the Constitution of Greece (article 22(2)) and acknowledged by Convention No. 98.
10. 819. With regard to the issue of OTE in particular, the Government indicates that since the creation of the Hellenic State, the telecommunications services have constituted a state-owned monopoly. In the long period during which the OTE, as well as other public organizations and companies, functioned as state-owned monopolies, the work was organized and working conditions were set in an environment of widespread state intervention, lack of competition and total disregard for labour market conditions. The General Internal Rules of OTE (GKP-OTE) were established in this context. Influenced by the public nature of the OTE, they provided for work organization and employment relationships similar to those applied to civil servants (e.g., strict terms applied to the recruitment process, staff permanency, prohibition of persons coming from outside the OTE from filling positions of responsibility and obligatory filling of such positions by means of staff advancement, etc.). Moreover, in the past, the General Internal Rules of OTE constituted public regulation, given that they were set and amended by decisions of the OTE Administrative Board, which were then approved by joint ministerial decisions based on legislative provisions (section 54 of Legislative Decree 165/1973, section 12(1) of Act No. 74/1975).
11. 820. Following the liberalization of the market for the supply of telecommunications services, according to EU requirements, the privatization process was initiated in the OTE, and resulted in the organization being quoted in the Athens stock exchange. The Hellenic State continues to participate in the OTE share capital at a rate of 28 per cent. It is obvious that, after the liberalization of the telecommunications market and the privatization of the OTE, it (the OTE) has been facing competition from private telecommunication companies, the personnel of which is employed solely under private law contracts, and has terms and conditions of employment formulated in the labour market.
12. 821. Given that the OTE SA is a public utility company and, additionally, presented negative economic results in the last fiscal year (2005) [publication of economic results of 7 March 2006], the provisions of section 14 of Act No. 3429/2005 became applicable; as noted above, these provisions stipulate that the DEKO administrations must renegotiate new internal rules by means of concluding collective agreements with the most representative enterprise trade union organizations.
13. 822. To this end, the OTE administration invited the complainant in this case OME–OTE to dialogue on the modernization of the general internal rules on four different occasions (letters of 23 March 2006, 5 May 2006, 6 June 2006 and 16 June 2006, the latter setting specific issues for negotiations and explicitly pointing out that these negotiations would not deal with financial issues, pay scales, time allowances, etc.; copies of the letters attached by the Government). However, according to the Government the complainant OME–OTE did not respond to any of these invitations, remaining set on its complete denial to discuss issues concerning the internal rules.
14. 823. According to the Government, it is obvious that the OTE administration made itself repeatedly available to carry out collective bargaining with the complainant (OME–OTE) within the framework of the provisions of Act No. 3429/2005. However, the complainant persistently denied entering into negotiations, so that the issue of the terms of the internal rules might be regulated freely and by agreement.
15. 824. Due to the complete denial of the complainant organization to negotiate and in view of the imperative need to redefine the terms of the OTE general internal rules, so that they might be adjusted to the demands deriving from the organization’s entry into a competitive environment, and in order to deal with the organization’s poor financial condition, i.e. for reasons of obvious public interest, the legislature made use of its ability to settle/regulate this matter by means of a legislative provision (as provided for in section 14(3) of Act No. 3429/2005). Thus, after almost a whole year had passed since Act No. 3429/2005 had entered into force and with the complete denial of the complainant organization throughout this period to enter into negotiations in order to arrive at an agreement regarding the solution of the issue, section 38(3) of Act No. 3522/2006 was finally adopted by law (Act No. 3429/2005 came into force on 31 December 2005, while Act No. 3522/2006 on 22 December 2006). This provision stipulated that the Internal Rules of COSMOTE SA would also apply to OTE SA.
16. 825. The Government emphasizes that the establishment by law of section 38(3) of Act No. 3522/2006 raises no obstacle to the holding of negotiations and the complainant could at any time demand from the OTE administration to enter into new negotiations, in order to achieve the conclusion of an enterprise collective agreement, which would – as explicitly stipulated in the said provision – wholly or partly amend the terms of the internal rules.
17. 826. The Government adds that the consequences of the establishment by law of section 38(3) of Act No. 3522/2006 were not in essence different from those that would have been if the OTE administration itself had unilaterally exercised the right to denounce the existing collective agreements under the general legislation on collective agreements (article 12, Act 1876/1990).
18. 827. Finally, irrespective of the above, section 38(3) of Act No. 3522/2006 did not affect the terms of the existing collective agreement relating to wage status, time allowance and all other allowances granted to workers employed in the company up to the year the said legislation was passed (Act No. 3522/2006), whereas a large part of the existing general internal rules continued to be in force after the passing of the provision in question (sections 5, 7, 12, 13, 14, 16, 17, 18, 20, paragraphs 1 III IV, paragraphs 2–10, articles 23 to 40 and articles 42, 46 and 47). Therefore, the wages of the company’s workers were in no way affected by the application of this transitional provision.
19. 828. The Government finally argues that section 38(3) is in compliance with Conventions Nos 87 and 98. The passing of this provision into law was neither sudden (as alleged) nor did it deprive the parties of the ability to negotiate and to conclude enterprise collective agreements on any matter, including the terms of the OTE internal rules. The contentious provision cannot be examined in an isolated manner, as attempted by the complainant, but within the framework of efforts to address the entry of public utility companies (among which the OTE) into the world of free competition, after their long-term operation as state-owned monopolies. Furthermore, the provision in question was not passed suddenly, as the complainant is also claiming, but following a long-standing effort to reach a solution by agreement. In addition, the provision in question does not prohibit the conclusion – following negotiations – of a collective agreement by the parties with respect to the OTE internal rules, under the existing legislation in Greece on collective bargaining (Act No. 1876/1990). The parties, either before the passing of this provision, or even after it, are free to enter into collective bargaining and conclude a collective agreement, the content of which will be of their free choice (section 14(1) Act No. 3429/2005 on the more general reform of public utility companies).
20. 829. Consequently, the only intervention resulting from section 38(3) of Act No. 3522/2006, which provided for the provisional application of the terms of the internal rules of the COSMOTE SA, is to fill in a temporary regulatory gap created due to the OME–OTE’s refusal to enter into negotiations and until the parties conclude an agreement. In other words, if the complainant had accepted to enter into dialogue, there would be no reason for the passing of the contentious section 38(3) of Act No. 3522/2006 and for the application of the internal rules of the COSMOTE SA. In addition, even after the adoption of this provision, the complainant trade union organization is not prevented from asking the commencement of negotiations, which could lead to the conclusion of an enterprise collective agreement; the said agreement would introduce new mutually agreed internal rules.
21. 830. It is, therefore, obvious that, on the basis of the above, the allegations made by the complainant organization are unsubstantiated, given that section 38(3) of Act No. 3522/2006 is in full compliance with Conventions Nos 87 and 98, and in no way extends beyond the State’s concern for the protection of the public and social interest. Moreover, the legislative intervention had a temporary and limited impact on the employment relationships of the OTE staff, since it was mainly limited to issues of work organization and did not affect the wages of the staff. In addition, it in no way affected the ability of the parties to re-enter into negotiations and set new internal rules, whose content would be different from that of the COSMOTE internal rules provided for by the said article.

C. The Committee’s conclusions

1. 831. The Committee notes that the present case concerns allegations that the Government cancelled in part the collective agreements concluded with the administration of the Greek Telecommunications Organization (OTE) on the general internal rules of the organization, through the adoption of a law providing that the internal rules of OTE shall be replaced by the internal rules of one of its subsidiaries which had been elaborated without the participation of the trade unions.
2. 832. The Committee notes that, according to the complainant, the OTE constitutes the most important telecommunications company of Greece. In the past, the organization belonged to the State but is today privatized in large part. For a long time, stable industrial relations prevailed within the organization and a large number of collective agreements had been concluded through dialogue. In particular, the organization’s internal rules had been agreed upon through collective bargaining. However, section 38(3) of Act No. 3622/2006 effectively replaced these internal rules with those of the COSMOTE enterprise, which is a subsidiary of OTE. The provision in question allows for several exceptions concerning the continuity of application of some provisions of the abolished internal rules to a section of the staff, and provides that the new internal rules can be amended by collective agreement.
3. 833. The complainant explains that in this manner a large part of collective agreements regulating relations with staff have been indirectly cancelled and replaced by rules elaborated without the participation of the trade unions of OTE. In particular, the cancelled rules include those which regulated the following: the functions and nature of work accomplished by staff as well as the procedure for assigning work of a different nature (sections 6 and 45 of the internal rules concluded through collective bargaining); the procedure and conditions for the transfer of employees (section 9 of the internal rules); the procedure for hierarchical promotion of staff (section 8 of the internal rules); the procedure and conditions for the appointment of staff in management positions (sections 10 and 11 of the internal rules); the conditions of recruitment of workers (collective agreement of 25 May 2005). In addition to the above rules which were cancelled vis-à-vis all employees, the following rules were cancelled only with regard to the employees recruited after 14 July 2005: conditions for taking seniority into account (section 7 of the internal rules); conditions for granting annual and sick leave (section 13 of the internal rules); conditions for dismissal (cancellation of the requirement for a substantive and important reason – section 17 of the internal rules); conditions for resignation (section 18 of the internal rules).
4. 834. The Committee notes that, according to the Government, the provisions of section 38(3) of Act No. 3522/2006 constitute a follow-up to and implementation of the provisions of section 14 of Act No. 3429/2005 on public utility companies (DEKO) which provides for the rationalization and restructuring of the public utility companies, including the OTE, from public monopolies into private enterprises in which the State maintained a controlling share. The internal rules and the secondary terms of employment of the DEKO staff, which applied while the DEKO constituted state-owned monopolies, were totally unrelated to private sector conditions and this undermined the DEKO competitiveness (e.g. permanency of staff, prohibition of appointing directors coming from outside the DEKO and obligatory filling of positions of responsibility by means of staff advancement, restrictions on the recruitment process, etc.). The Government also stresses that the entry of the DEKO into the world of free competition without the appropriate restructuring in the field of employment relationships would lead without doubt to their economic decline and, therefore, to mass dismissals, without excluding the possibility of cessation of their activities, which would threaten the jobs of thousands of workers (approximately 11,500 workers are engaged by OTE).
5. 835. The Committee notes that, according to the Government, against this background, section 14 of Act No. 3429/2005 provided that: (i) the management of the DEKO which had negative economic results or were subsidized by the State budget were obliged to take various measures including the revision of the internal rules and organization charts; (ii) any change in the internal rules and employment relationships should be made after consultation between the company and the workers following the procedure for the conclusion of collective agreements with the most representative trade union organization of the company; (iii) these changes should be completed within a period of four months at the latest from the date of entry into force of the Act or from the publication of the negative economic results; (iv) if this deadline is not respected, the changes would be made by law. The Government emphasizes that despite the four-month deadline, the parties were not prevented from continuing negotiations or undertaking negotiations for the first time after the legislature had intervened, with a view to adopting new rules through collective agreement.
6. 836. The Committee also notes the Government’s indication that, with regard to the issue of OTE in particular, since the creation of the Hellenic State, the telecommunications services have constituted a state-owned monopoly and terms and conditions of employment were set in an environment of widespread state intervention, lack of competition and total disregard for labour market conditions. The general internal rules of OTE (GKP-OTE) were established in this context. Influenced by the public nature of the OTE, they provided for work organization and employment relationships similar to those applied to civil servants (e.g., strict terms applied to the recruitment process, staff permanency, prohibition of persons coming from outside the OTE from filling positions of responsibility and obligatory filling of such positions by means of staff advancement, etc.). Moreover, the general internal rules of OTE constituted public regulation, given that they were set and amended by decisions of the OTE administrative board, which were approved by joint ministerial decisions based on legislative provisions (section 54 of Legislative Decree 165/1973, section 12§1 of Act No. 74/1975). Following the liberalization of the telecommunications market according to EU requirements, the OTE was privatized and registered in the Athens stock exchange. Thus, the OTE has been facing competition from private telecommunication companies, the personnel of which is employed solely under private law contracts and has terms and conditions of employment formulated in the labour market.
7. 837. Given that the OTE presented negative economic results in the 2005 fiscal year [publication of economic results of 7 March 2006], the provisions of section 14 of Act No. 3429/2005 became applicable. As a result, the OTE management invited the complainant (OME–OTE) to dialogue on the modernization of the OTE general internal rules on four different occasions (letters of 23 March 2006, 5 March 2006, 6 June 2006 and 16 June 2006, the latter setting specific issues for negotiations and explicitly pointing out that these negotiations would not deal with financial issues, pay scales, time allowances, etc.; copies of the letters attached by the Government). However, according to the Government the complainant OME–OTE did not respond to any of these invitations, remaining set on its complete denial to discuss issues concerning the internal rules.
8. 838. The Committee notes, that according to the Government, in order to deal with the poor financial condition of OTE and the implications for the state budget and following the complete denial of the complainant organization to negotiate one year after the entry into force of section 14 of Act No. 3429/2005, the legislature made use of its ability to redefine the terms of the OTE general internal rules, so as to allow for the organization’s adjustment to a competitive environment for reasons of public interest. Thus, section 38(3) of Act No. 3522/2006 which is the object of the present complaint was finally adopted by law. This provision stipulated that the internal rules of COSMOTE SA would be extended to OTE S.A. The Committee finally notes that, according to the Government, this legislative intervention did not affect the wages of the staff and in no way affected the ability of the parties to re-enter into negotiations and set new internal rules through collective agreement.
9. 839. The Committee recalls that in previous cases concerning economic rationalization programmes and restructuring processes, it had formulated the following principle: “The Committee can examine allegations concerning economic rationalization programmes and restructuring processes, whether or not they imply redundancies or the transfer of enterprises or services from the public to the private sector, only in so far as they might have given rise to acts of discrimination or interference against trade unions. In any case, the Committee can only regret that in the rationalization and staff reduction process, the Government did not consult or try to reach an agreement with the trade union organizations.” [Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006, para. 1079]. The Committee has also on several occasions emphasized that it is important that governments consult with trade union organizations to discuss the consequences of restructuring programmes on the employment and working conditions of employees [Digest, op. cit., para. 1081].
10. 840. The Committee observes that in the case at hand, the management of OTE sent four letters dated 23 March, 5 May, 6 June and 16 June 2006 inviting the complainant to negotiations over the revision of the internal rules of OTE, in light of the need for the organization to function in a world of free competition. The letters indicate that the complainant OME–OTE refused to meet with management. The letter of 16 June 2006 indicates in particular that the parties disagreed over whether the negotiations on the internal rules should be linked to negotiations over the 2006 enterprise collective agreement. The management also specified that the issues it intended to discuss were the following: establishment of a code of disciplinary control as an annex to the internal rules, and transfer of provisions on disciplinary control from the internal rules (50 per cent of the provisions) to the annex, keeping in the internal rules only the definition of what constitutes a breach of discipline; abolition of personnel grades which are of no substantial importance so as to avoid bureaucratic and costly procedures; automatic delay of wage promotion by one to four years, depending on the evaluation of the disciplinary sanction; a personnel evaluation system that will be determined by decision of the Managing Director; amendment of section 10 of the internal rules on selection of Heads of Sections or Directorates to fill in positions of responsibility; ability to recruit officials coming from outside the OTE for positions of responsibility. The letter also specifies that the permanency of persons working in OTE as of 25 May 2005, as well as financial issues, grade scales, time allowances etc. would not be discussed. The Committee notes that, according to the Government, the complainant refused to meet with the management and thus, six months later, the legislature extended through the adoption of section 38(3) of Act No. 3622/2006 the internal rules of one of the OTE subsidiaries, adopted without consultations with the most representative trade union, to the whole staff of the OTE. Bearing in mind the principles set out above, the Committee must observe that many efforts were made on the part of the Government to preserve collective bargaining rights and on the part of the management of the OTE to enter into negotiations on the internal rules in light of the new circumstances of the company. It further notes the information provided by the Government that the complainant can still engage in collective bargaining at any time with the management of OTE for the adoption of new internal rules through collective agreement. In these circumstances, the Committee considers that this case does not call for further examination.