Interim Report - Report No 302, March 1996

1. 495. The complaints were presented in communications from the Trade Union of Workers of the Calzado Peruano S.A. Factory (STFCP) dated 28 April 1995, the Trade Union of Workers of the Peruvian Telephone Company (STCPF) dated 23 May 1995 and the Unified Trade Union of Electricity Workers (SUTREL) dated 25 May 1995. SUTREL and the STFCP sent additional information in communications dated 17 and 31 July 1995, respectively. The Government replied in a communication dated 4 January 1996.
2. 496. Peru 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. 497. In its communications of 28 April and 31 July 1995 the STFCP alleges that, invoking section 68 of the Industrial Relations Act (Legislative Decree No. 25593) which empowers the Executive to order unilaterally that a strike should be called off, the administrative labour authority has ordered strikes to be called off on a number of occasions since 1993. One such occasion concerned a strike by the Trade Union of Workers of the Calzado Peruano S.A. Factory - Chosica Plant. In this instance, the administrative labour authority, faced with the reluctance of the Chosica Plant of the Fábrica de Calzado Peruano S.A. to negotiate, conducted a process of compulsory arbitration and rejected one by one all the points on a list of claims, instead of which it merely granted an annual bonus.
2. 498. The STFCP also refers to several instances in which the labour authorities failed to put pressure on enterprises that refused to sign an arbitration agreement with the trade unions to settle a list of claims (the los Olivos and Vitarte plants of Fábrica de Calzado Peruano S.A.) and states that section 16 of the Industrial Relations Act provides that "if an agreement cannot be reached through direct negotiation, or through conciliation, the parties may, if requested by the workers, submit the dispute to arbitration".
3. 499. In its communication of 23 May 1995 the STCPF alleges that Legislative Decree No. 25921, issued on 28 November 1992, empowers the employer to modify shifts or the days or hours of work, to modify, suspend or substitute financial benefits and working conditions, and to suspend the labour relationship temporarily. This means that the provisions of collective agreements can also be modified, since in the final analysis it is the Ministry of Labour that decides on the validity of the objective cause invoked; if the labour authority does not rule on the matter, the request is taken as approved. For example, on 2 May 1995 the Peruvian Telephone Company S.A. sent the trade union a communication seeking to modify the existing collective agreement, which was due to expire in November 1995) in accordance with the procedure laid down in Legislative Decree No. 25921. The STCPT requests that this Legislative Decree be repealed and respect for collective agreements be guaranteed.
4. 500. Finally, SUTREL alleges in its communications of 25 May and 17 July 1995 that the Ministry of Labour has issued administrative rulings preventing it from negotiating a collective agreement at the branch level encompassing several enterprises (EDEGEL S.A., Luz del Sur S.A., EDELNOR S.A., ELECTROLIMA S.A.), on the grounds that there was no prior agreement with the enterprises for branch level negotiations, even though SUTREL has members in those enterprises. SUTREL was therefore obliged to present a list of claims to each of the enterprises separately. The Ministry also insisted that the list of claims be submitted to the enterprise and not directly to the Ministry. ELECTROLIMA S.A. consequently claimed that the law did not allow a branch level union to a negotiate a collective agreement at the level of the enterprise (section 47 of Legislative Decree No. 25593 stipulates, however, that "the relevant trade union or, in its absence, the expressly elected representatives" are entitled to negotiate collectively on behalf of the workers of an enterprise). Contrary to the ruling of the administrative authority of the first instance, on appeal SUTREL was required to establish an enterprise-level trade union section to negotiate collectively at that level. SUTREL adds that trade union sections also had to be set up for the purpose in EDELNOR S.A., EDEGEL S.A. and Luz del Sur S.A.
5. 501. SUTREL adds that, before collective bargaining began, the Luz del Sur S.A. enterprise offered the workers an "individual agreement" (attached) that granted staff an increase in wages and other benefits so long as they were not union members, in the hope that workers would relinquish their membership of SUTREL. The following is an extract from this "individual agreement":
6. This document constitutes an individual agreement on an increase in remuneration and the granting of other benefits between, on the one hand, Mr. César Berghüsen G., Manager of Human Resources, representing Luz del Sur, and, on the other, the non-unionized employee who signs this agreement (subsequently referred to as "the worker"), the terms and conditions of which are as follows:
7. FIRST - This agreement is entered into as part of the proposal on increased remuneration and other benefits offered by Luz del Sur to its non-unionized staff, inasmuch as the absolute majority of the enterprise's employees (excluding senior managers and staff with special responsibilities) do not belong to any trade union organization and are therefore not covered by the collective negotiations for the period 1994-95 conducted by trade unions which by law do not represent them; this proposal is accepted by the worker in place of the benefits payable to the unionized members of the staff as a result of the collective bargaining conducted from October 1994 to September 1995.
8. SECOND - In the light of the first clause, Luz del Sur agrees to grant the worker the following benefits:
9. (a) an extra bonus;
10. (b) an increase in remuneration;
11. (c) an increase in other benefits;
12. (d) an economic certificate.
13. Both parties declare that they are in agreement with the foregoing clauses in virtue of which they have signed this agreement in Lima on ... April 1995.
14. Luz del Sur The worker
15. B. The Government's reply
16. 502. In its communication of 4 January 1996, the Government recalls, as regards the allegations made by the Unified Trade Union of Electricity Workers, that the complainant organization states that, under the powers conferred on it by Legislative Decree No. 25593, it presented a list of claims to the administrative labour authority for the purposes of concluding a collective agreement at the branch level. It points out furthermore that even though the administrative labour authority was simply required to transmit these claims to the enterprises concerned, it in fact issued a resolution dated 5 September 1994 stipulating that it was first of all necessary for the trade union to present the agreement signed with the employers concerned for the respective negotiations to be held.
17. 503. In this respect the Government points out that in accordance with the provisions of section 5(a) of Legislative Decree No. 25593, unlike works trade unions, whose members are workers from various occupations, trades or specializations which provide services to the same employer, branch trade unions are made up of workers from various enterprises which carry out the same trade, occupation or specialization. It should be borne in mind that the first paragraph of section 45 stipulates that in the absence of any prior collective agreement, the parties shall decide by common agreement the level at which the first agreement should be negotiated, and that in the absence of such an agreement, negotiation will be at the enterprise level. Furthermore, the second paragraph of section 45 of the above-mentioned Decree establishes that in the event of the existence of an agreement at any level for the negotiation of another at a different level, to replace or supplement it, an indispensable requirement is the agreement of the parties and that this may not be established by administrative act or arbitration award, from which it can be concluded that such prior agreement is compulsory. In these circumstances, and since, from the date of registration of the complainant organization - 29 November 1994, it can be inferred that the 1994 agreement was the first agreement, the resolution issued by the administrative labour authority was in accordance with the law, since there was no previous agreement to engage in bargaining at the branch level.
18. 504. As regards the allegations made by the Trade Union of Workers of the Fábrica de Calzado Peruano S.A., the Government recalls that as regards the allegedly arbitrary suspension of the strike by the Executive, that the complainant trade union maintains that the Peruvian Government has been making arbitrary use of its power to order the lifting of strikes, granted to it by section 68 of Legislative Decree No. 25593, the Industrial Relations Act. In this respect, it should be noted that the general indefinite strike which had been launched by workers who were members of the complainant trade union organization lasted for 60 calendar days, which substantially affected the financial and economic situation of the enterprise and thus had a negative impact on the economies of workers' households. The Executive therefore issued Supreme Regulation No. 068-94-TR which ordered the immediate resumption of work at the Fábrica de Calzado Peruano S.A. - the Chosica Plant and stipulated that within the third day after the resolution came into effect the parties should settle the list of claims by direct negotiation, failing which the administrative labour authority would intervene to resolve the matter in a final ruling.
19. 505. The Government adds that within this context the intervention of the Executive pursuant to the powers set forth in section 68 of Legislative Decree No. 25593 has been minimal since of the 168 strikes which occurred during 1994, the State intervened in only three cases, i.e. equal to 1.79 per cent of the strikes. That being so, it can be concluded that the intervention of the Executive, pursuant to the powers conferred on it by section 68 of the Industrial Relations Act is not arbitrary as alleged by the complainants. Furthermore, as regards the non-adoption by the administrative labour authority of effective measures to issue a warning to those enterprises which refuse to sign arbitration agreements, the complainant trade union states that the administrative labour authority should force enterprises to sign arbitration agreements in accordance with the law. In this respect section 61 of Legislative Decree No. 25593 establishes that if during the holding of collective bargaining no agreement is reached by direct negotiation or conciliation, the parties may submit the dispute to arbitration. As can be seen from the text of the legal provisions, the Act grants the participants in collective bargaining wide powers enabling them by common agreement to submit the dispute to arbitration, in accordance with the labour liberalization policy applied by the Government.
20. 506. The Government also states that the Act does not empower the administrative labour authority to oblige an enterprise to submit a collective dispute to arbitration or to sign the "arbitration agreement" to which reference is made in section 49 of the regulations governing the Industrial Relations Act. Furthermore, the authority may not force the enterprise to continue to bargain, but merely convene the parties for the conclusion of an agreement and to record the absence of either of the parties (if this is the case), and that the contrary would mean that the administrative labour authority would be establishing a procedure which was not sanctioned by the law, without taking account of the wishes of the parties.
21. 507. As regards the allegations of the Trade Union of Workers of the Peruvian Telephone Company S.A., the complainant trade union states that the powers granted to the employer by Decree No. 25921 contain a series of irregularities which seriously infringe procedural principles and workers' rights. In this respect it should be noted that the second paragraph of the third supplementary, transitional, repealing and final provision of Act No. 26513 of 18 July of 1995, which amends the Employment Promotion Act, expressly repealed Legislative Decree No. 25921, which established the procedure respecting the employer's powers.
22. 508. The Government believes that for these reasons, the complaints presented are unfounded and requests the Committee on Freedom of Association to dismiss them.

C. The Committee's conclusions

1. 509. The Committee observes that in this case the complainant organizations challenge certain legal provisions - and their application - concerning arbitration and the right to strike, as well as those which regulate the determination of the level of collective bargaining and those which give the employer the initiative of amending or replacing working conditions established in collective agreements. The complainants also challenge the practice concerning the so-called "individual agreements".
2. 510. As regards the alleged possibility of modifying conditions of work established by collective agreements at the initiative of the employer, the Committee notes with interest the Government's statement that Legislative Decree No. 25921 of November 1992 to which the complainants refer was expressly repealed by Act No. 26513 dated 18 July 1995. In this respect, the Committee emphasizes that any legislation which enables governments to unilaterally amend collective agreements violates the principles of freedom of association.
3. 511. As regards the allegations concerning legislative provisions respecting arbitration (sections 61 and 68 of the Industrial Relations Act - Legislative Decree No. 25593), the Committee notes that according to the Government, section 61 grants the participants in collective bargaining wide powers to submit their dispute to arbitration "by common agreement". The Committee also notes that, according to the Government the Executive's power to intervene to terminate strikes is not arbitrary since it was used only three times in 1994, and, in the specific case of the strike at the Calzado Peruano Factory (Chosica Plant) the indefinite general strike lasted for 60 days and had a negative effect on the enterprise and the workers.
4. 512. The Committee notes that sections 61 and 68 stipulate the following:
   • Section 61 - If no agreement is reached by direct bargaining or through conciliation, the parties may, if requested by the workers, submit the dispute to arbitration.
   • Section 68 - When a strike extends for an excessive period of time, seriously jeopardizing an enterprise or production sector, or deteriorates into acts of violence or, in any manner acquires characteristics which are serious in their scope and consequences, the Executive may intervene and order through a supreme resolution with arguments adduced the immediate resumption of work, without detriment to the search for a settlement or other forms of peaceful solution. Should these fail the Ministry of Labour shall resolve the situation in a definitive manner.
   • In this respect, the Committee notes the broad nature of certain situations described in this last mentioned section in which recourse to compulsory arbitration is susceptible to subjective interpretation. On previous occasions, the Committee has reiterated the following principle:
   • Compulsory arbitration to end a collective labour dispute and a strike is acceptable if it is at the request of both parties involved in a dispute, or the strike in question may be restricted, even banned, i.e. in the case of disputes in the public service involving public servants exercising authority in the name of the State or in essential services in the strict sense of the term whose interruption would endanger the life, personal safety or health of the whole or part of the population (see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 515) or in cases of acute national crisis (see Digest, op. cit, para. 517).
5. 513. In these circumstances, the Committee concludes that section 61 is in conformity with the principles of freedom of association and that the restrictions of section 68 (compulsory arbitration) would only be admissible in the public service or in the essential services in the strict sense of the term or in the event of acute national crisis. The Committee notes the Government's argument that section 68 is used in practice in a limited number of cases and that its use should be justified in a footwear factory because of the negative repercussions for workers or the enterprise of the strike. Nevertheless, the Committee insists that section 68 is very broadly defined and the fact that it is susceptible to subjective interpretation. The Committee therefore requests the Government to take measures to amend section 68 of the Industrial Relations Act so that arbitration may be imposed by the administrative authority only in the public service or in the essential services in the strict sense of the term or in cases of acute national crisis. In this connection, the Committee regrets that recourse was made to the application of section 68 of the above-mentioned Act in the strike at the Calzado Peruano Factory (Chosica Plant).
6. 514. As regards the legal provisions regulating the level of collective bargaining and which are an obstacle to bargaining at the branch level, the Committee notes the statement by the Government that section 45 of the Industrial Relations Act requires a prior agreement by the parties concerned before initiating bargaining at the branch level (in the absence of such an agreement negotiation shall be conducted at the enterprise level). Although this does not seem objectionable in itself, the Committee would like to refer to the text of other sections of the Industrial Relations Act concerning the level of bargaining (specifically sections 44, 45 and 46) as well as the opinion of the Committee of Experts in this connection, which are reproduced below and which address the question raised by the complainants (difficulty of bargaining at the branch level) from a wider perspective. The text of the above-mentioned sections is as follows:
   • Section 44 - The collective agreement shall apply within the scope agreed on by the parties, which may be:
     • (a) within the enterprise, when it applies to all workers of an enterprise, or workers in a category, section or specific establishment of the latter;
     • (b) a branch of activity, when it includes all workers of the same economic activity, or a specific part thereof;
     • (c) an occupation, when it applies to all workers who exercise the same occupation, trade or speciality in different enterprises.
   • Section 45 - If there is no prior collective agreement at any of the levels indicated in the previous section, the parties shall decide, by common agreement, the level at which the first agreement shall be negotiated. In the absence of an agreement, bargaining shall be held at the enterprise level.
   • If an agreement exists at any level, for the negotiation of another at a different level, to replace or supplement the said agreement, the agreement of the parties is an indispensable requirement and may not be established by administrative act or arbitration award.
   • The agreements at different levels concluded by the parties must be structured so as to define the subjects to be dealt with in each agreement. In the event of dispute the most favourable agreement shall be applied, after a full comparison of the texts.
   • Matters not dealt with in a higher level agreement may be negotiated at the enterprise level, and regulate or refer to the individual and exclusive working conditions of the enterprise.
   • Section 46 - For the conclusion of a collective agreement by branch of activity or occupation the trade union organization(s) must represent the majority of the enterprises and workers in the activity or respective occupation, at the local, regional or national level, and all the respective enterprises must be convened, whether directly or indirectly.
   • The opinion of the Committee of Experts, in line with a previous conclusion of the Committee, is as follows:
   • The Committee joins with the Committee on Freedom of Association in emphasizing that, according to the principle of free and voluntary collective bargaining embodied in Article 4 of the Convention, the determination of the bargaining level is essentially a matter to be left to the discretion of the parties and that, consequently, the level of negotiation should not be imposed by law (see 259th Report of the Committee on Freedom of Association, Case No. 1450 (Peru), para. 216). The Committee considers that the requirement of a majority, not only of the number of workers, but also of enterprises, in order to conclude a collective agreement for a branch of activity or occupation set out in section 46 of the Industrial Relations Act of 1992 could give rise to problems in the application of the Convention (see report of the Committee of Experts on the Application of Conventions and Recommendations, Report III (Part 4A), ILC, 83rd Session, 1996, p. 215).
7. 515. The Committee requests the Government to take measures with a view to amending legislation accordingly.
8. 516. As regards the alleged demand made in several enterprises in the electricity sector (EDEGEL S.A., Luz del Sur S.A., EDELNOR S.A. and ELECTROLIMA) for the establishment of a trade union section in order for a branch trade union to be able to negotiate a collective agreement at the enterprise level, the Committee notes that the Government has not sent any observations. The Committee believes that this practice is an inadmissible interference in the organization and internal structure of trade unions, and is contrary to the principle of the autonomy and free functioning of trade union organizations established by Article 2 of Convention No. 87. The Committee believes that for a trade union at the branch level to be able to negotiate a collective agreement at the enterprise level it should be sufficient for the trade union to establish that it is sufficiently representative at the enterprise level. The Committee therefore requests the Government to take measures at the legislative level and in practice to enable trade unions at the branch level which wish to engage in collective bargaining at the enterprise level to be no longer required to set up a trade union section in the enterprise and to be able to bargain if they can show that they are sufficiently representative.
9. 517. Finally, as regards the allegation concerning the "individual agreement" in the Luz del Sur S.A. enterprise (appended by the complainant) in which the enterprise granted, before the initiation of collective bargaining, an increase in remuneration and other benefits to non-unionized workers, the Committee requests the Government to communicate its observations in this respect as a matter of urgency.