Definitive Report - Report No 248, March 1987

Case No 1370 (Portugal) - Complaint date: 30-MAY-86 - Closed

1. 205. The complaint submitted by the Union of Workers of the Southern and Islands Insurance Companies is contained in a communication dated 30 May 1986. The Government sent a reply on this matter in a communication of 16 October 1986.
2. 206. Portugal 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. 207. In this case, the complainant trade union alleges an infringement of the right of collective bargaining by the Government of Portugal. It states that it represents almost all the workers in the insurance sector and on the islands and is affiliated to the General Confederation of Workers (UGT).
2. 208. The complainant explains that, in accordance with the law, the trade union associations, which had previously accepted the collective labour agreement for the insurance sector, proposed to the employers' associations that the said agreement should be revised. The social partners entered into discussions but, as these gave rise to disagreement and a collective dispute, they called upon the Minister of Labour and Social Security to mediate in this matter. As a result of this conciliation, an agreement was, according to the complainant, ratified by a representative of the Ministry of Finance and a representative of the Ministry of Labour and Social Security. The presence of a representative from the Ministry of Finance was justified on the grounds that it was an agreement applying to publicly owned insurance companies under the supervision of the Ministry of Finance.
3. 209. The parties jointly submitted this agreement to the General Labour Directorate so that it might be registered and published after having requested, in accordance with the law, the approval of the appropriate ministry and other responsible ministries, in this case the Deputy Secretary of State to the Minister of Finance and the Treasury, acting for the Ministry of Finance, and the Secretary of State for Undertakings and Vocational Training, acting for the Ministry of Labour and Social Security. However, the complainant protests, the Deputy Secretary of State for the Ministry of Finance and the Treasury refused to give his approval under Order No. 1001/86/X of 3 January 1986. The Order in question is enclosed together with the complaint.
4. 210. The supervisory authority refused to give his approval on the grounds that a clause in the agreement provided for a reduction of 15 minutes in weekly hours of work (clause 35) whereas, according to the complainant, only the Minister of Labour and Social Security would have been empowered to take a decision of this nature, in accordance with Decree No. 505/74 of 1 October 1974. The social partners therefore called upon this Minister to give his authorisation.
5. 211. Apart from this incident, moreover described by the complainant as minor, the Deputy Secretary of State for the Minister of Finance and the Treasury allegedly took the liberty, under this Order of 3 January 1986, of placing restrictions on future revisions of the collective agreement in the insurance sector.
6. 212. The complainant acknowledges that following the Order in question, the social partners signed, for registration purposes, a new text which no longer referred to the 15-minute cut in weekly working time. It claims that the social partners were obliged to take this action in order not to delay the application of the new pay scales.
7. 213. In concluding, the complainant considers that the Order of 3 January 1986 infringes the principle of the confidence of the social partners. Indeed, it is of the opinion that the intervention of the supervisory authority, in so far as it implies that instructions may be given to the representatives of undertakings under supervision who are obliged to accept them as guide-lines binding the social partners, does not augur well for the future. It believes that the freely accepted revision of the agreement does not call for any corrective measure from the Government.

B. The Government's reply

1. 214. In its lengthy reply dated 16 October 1986, the Government confirms several of the complainant's allegations. For instance, it admits that following a disagreement which arose whilst the collective agreement was being renewed, the social partners called upon the Ministry of Labour to mediate in this matter and that, during the last conciliation meeting with the responsible service of this Ministry, the parties present, both trade union and employer, reached an agreement. It explains that, from the beginning, the presence of the Ministry of Finance at these conciliation meetings was justified on the grounds that the instrument to be revised applied to publicly owned undertakings under state supervision. The Government also acknowledges that the parties had jointly submitted the text of the agreement to the General Labour Directorate so that it might be registered and published; it goes on to explain that in order to be registered, this agreement had to be previously approved by the appropriate ministry acting in co-operation with the other responsible ministries, in this case the Deputy Secretary of State for the Ministry of Finance and the Treasury and the Secretary of State for Undertakings and Vocational Training.
2. 215. On the other hand, the Government denies the allegation that the Ministry of Finance ratified this agreement and, as evidence, it submits the Minutes of the conciliation proceedings of 17 December 1985 which do not bear the signature of the expert from the Ministry of Finance, although the latter was assisting the expert from the Ministry of Labour. According to the Government, as is evident from the Minutes of one of the previous meetings held on 13 December 1985, the text of which it encloses, the expert from the Ministry of Finance communicated the recommendations of his Ministry concerning wages, and not the length of working time, to the social partners during this meeting. The Government states that nothing in this communication points to the fact that the representatives of public undertakings were authorised to reduce the 35.5-hour working week even further, as it is already one of the shortest in Portugal, where the working week is around 44 hours (42 hours in the services sector).
3. 216. The Government acknowledges that Order No. 1001/86/X of 3 January 1986 laid down the conditions under which the Ministry could grant its approval and points out that the text of the agreement submitted by the social partners to the responsible services (which no longer contains the clause pertaining to the 15-minute cut in the weekly hours of work) on 8 January 1986 and approved by the Ministers of Finance and of Labour, was published in the Labour and Employment Bulletin on 22 January 1986.
4. 217. According to the Government, the allegation that the Minister of Finance's refusal to give his approval as long as the clause providing for a 15-minute cut in weekly working hours remained, whereas only the Ministry of Labour would have been empowered to take such a decision, in accordance with Legislative Decree No. 505/74 of 1 October 1974, is the result of an incomprehensible error on the part of the complainant. Indeed, the Government acknowledges that the Legislative Decree in question stipulates that "the limits of working time established by the schedules in force may not be reduced either by collective agreement or by individual labour contract" and that "the Government, through the Ministry of Labour, may however authorise changes in the schedules in force if it considers this step in line with the economic development of the branch of activity under consideration". However, it points out that the text dates from 1974, that the insurance sector was only nationalised on 12 March 1975 and, since that time, Legislative Decree No. 260/76 of 8 April 1976 on public undertakings stipulates that various economic, financial and social issues affecting the running of public undertakings must be submitted for approval to the appropriate ministry (section 13).
5. 218. The Government adds that section 24 of Legislative Decree No. 519/C1/79 of 29 December 1979 on collective agreements forbids the deposit of agreements concerning public or publicly owned undertakings if they are not accompanied by a document giving the permission or approval of the appropriate ministry, which decides upon this matter with the other responsible ministries. Approval must therefore be given by the appropriate ministry and, in the present case, the Ministry of Finance is the appropriate ministry. As far as the Government is concerned, the complainant is therefore making an error when he accuses the Secretary of State of Finances of having encroached upon the competence of the Ministry of Labour. Moreover, the Government concludes by stating that the negotiators, both trade unions and employers, showed their willingness to accept the lawfulness of this intervention by hastily amending clause 35 to ensure that the collective agreement as a whole might be approved, deposited and published.
6. 219. As regards the allegation that the representative of the Ministry of Labour abused the confidence of the social partners by taking the liberty of restricting future revisions of the collective labour agreement in the insurance sector, the Government states the following: in examining the above-mentioned Minutes of 13 December 1985 and Order No. 1001/86/X of 3 January 1986 containing the request that the clause on the reduction of weekly working hours should be withdrawn, it is clear, according to the Government, that there is no basis to this accusation.
7. 220. The Government is of the opinion that it has the right and duty to carry out a wages and incomes policy. However, it continues, having received a request for conciliation, it communicated to the social partners the limits within which wage bargaining could take place: the inflation rate + 1 per cent of the increase in wages in real terms + or - the variation in productivity rates, as stated in the Minutes of the meeting of 13 December 1985. However, Order No. 1001/86/X of 3 January 1986 notes that bargaining resulted in an increase of 19.6 per cent, in addition to an increase in the meal subsidy of 390 escudos, in spite of the guide-lines communicated to the parties to collective bargaining. In order to avoid the social consequences of a refusal, the Government gave its approval; however, in this Order, it informed the parties that the considerable wage increases granted (19.5 per cent) far exceeded inflation estimates for 1986 and drew their attention to the role they played in infringing the wages and prices policy in an economically sensitive sector made up of public undertakings. Whilst giving its authorisation for the wage increases agreed upon, it therefore proposed that the following riders should also be included: - either the excessive difference between the increase in the aggregate payroll as a result of bargaining and the inflation rate forecast for the period during which the pay scales were to be applied should be offset by increased economic efficiency, implying that the undertaking, and especially its management and administrative bodies, must make a considerable effort to improve its operating conditions; - or the excessive increase in wages should be offset by adjusting the upward trend in the aggregate payroll when next reviewing the collective agreement. In the Government's opinion, this second point does not constitute an abuse of confidence; it rather aims at making the partners assume their responsibilities by providing them with the opportunity to offset the excessive outcome of bargaining.
8. 221. According to the Government, the supervisory power exercised in this field is legitimate; it explains that in Portugal, supervision only goes so far as communicating to the parties, before they conclude their bargaining, the limits within which approval will be granted. The Government is therefore of the opinion that this intervention does not infringe Convention No. 98, since Article 4 of this Convention does not stipulate that collective bargaining is an absolute and unlimited right but that it is a privileged means of promoting and encouraging, through measures appropriate to national conditions, the regulation of terms and conditions of employment.

C. The Committee's conclusions

1. 222. The Committee notes the lengthy and detailed explanations provided by the Government. It nevertheless considers it necessary to draw attention to a principle to which it has referred on many occasions. It would observe that legislation authorising a refusal of the filing of a collective agreement on grounds of irregularity is not contrary to the principle of free collective bargaining. However, if this legislation implies that the filing of a collective agreement may be refused on grounds such as incompatibility with the general policy of the Government, this is tantamount to a requirement that prior approval be obtained before a collective agreement can come into force (see, for example, 236th Report, Case No. 1267 (Papua New Guinea), para. 600).
2. 223. Moreover, the Committee recalls that the requirement of approval by a public authority before an agreement can enter into force is not in conformity with the principle of voluntary collective bargaining, established under Convention No. 98. In the case where clauses of various collective agreements might seem to conflict with considerations in the general interest, procedures might be envisaged whereby these considerations would be brought to the attention of the parties, so that they might examine them once again, it being understood that they should maintain their freedom as regards the final decision. (See 208th Report, Case No. 1007 (Nicaragua), para. 389.)
3. 224. In the case in question, the Committee notes that under Act No. 505/74 of 1 October 1974, the limits of working time established by the schedules in force may not be reduced either by collective agreement or by an individual labour contract but that the Government may authorise changes in the schedules in force if it considers such changes compatible with the economic development of the branch of activity concerned. In the Committee's view, legislation excluding working time from the scope of collective bargaining, unless there is government authorisation, would seem to infringe the right of workers' organisations to negotiate freely with employers the working conditions guaranteed under Article 4 of Convention No. 98.
4. 225. Furthermore, the Committee recalls that section 24 of Legislative Decree No. 519/C1/79 of 29 December 1979 on collective agreements bans the deposit of agreements concerning public or publicly owned undertakings if they are not accompanied by a document giving the permission or approval of the appropriate ministry, which decides upon this matter with the other responsible ministers. In the Committee's view, if this legislation only authorised the refusal of the filing of a collective agreement on grounds of irregularity, it would not be contrary to principles of free collective bargaining. However, as soon as it implies that the deposit may be refused on grounds such as incompatibility with the general policy of the Government, this is tantamount to a requirement that prior approval be obtained before a collective agreement can come into force, which is not in conformity with the principles of free collective bargaining laid down in Convention No. 98.
5. 226. Although it is not for the Committee to pronounce on the economic measures that a government might deem useful on grounds of economic stabilisation, governments should give precedence to persuasion rather than constraint. Furthermore, instead of making the validity of collective agreements subject to government approval, the government might provide that every collective agreement filed with the respective authority should normally come into force a reasonable length of time after having been filed. If the public authority considered that the terms of the proposed agreement were manifestly in conflict with the objects of the economic policy recognised as being desirable in the general interest, the case could be submitted for advice and recommendation to an appropriate consultative body, it being understood, however, that the final decision in the matter lay with the parties to the agreement. (See 85th Report, Case No. 341 (Greece), para. 187; 132nd Report, Case No. 691 (Argentina), para. 28; and 236th Report, Case No. 1206 (Peru), para. 508.)

The Committee's recommendations

1. 227. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • a) Given that the requirement of prior authorisation by the public authorities for the entry into force of a collective agreement is not in conformity with Article 4 of Convention No. 98, the Committee requests the Government to amend its legislation to remove this requirement and to allow free collective bargaining on matters concerning the length of working time.
   • b) The Committee encourages the Government, whenever it wishes to draw the attention of the bargaining parties to considerations of general interest and major economic policy factors calling for a new examination on their part, to give precedence to persuasion rather than constraint.
   • c) The Committee draws the attention of the Committee of Experts on the Application of Conventions and Recommendations to this case.