Definitive Report - Report No 286, March 1993

Case No 1673 (Nicaragua) - Complaint date: 09-OCT-92 - Closed

1. 142. The complaint is contained in a communication from the "Nora Astorga" Trade Union (affiliated to the Sandinista Central of Workers - CST) dated 9 October 1992. The Government sent its observations in a communication dated 18 January 1993.
2. 143. Nicaragua 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 complainant's allegations

1. 144. In its communication of 9 October 1992, the "Nora Astorga" Trade Union in the "Supermercados Internacionales S.A." enterprise (an enterprise belonging to the State of Nicaragua attached to the Tourist Corporation of Nicaragua which, in turn, is part of the National Public Sector Corporation) alleges that the Tourist Corporation of Nicaragua, with a view to transferring ownership of "Supermercados Internacionales S.A." to private sector employers, has ordered the closing down of the enterprise and recognized only the following social benefits to workers: holiday pay, bonus and one-month wages in lieu of advance notice.
2. 145. The complainant adds that this is contrary to the collective agreement signed on 8 June 1992 between the workers and the employer, which had been ratified by the Directorate of Conciliation of the Ministry of Labour. Clause 20 of this collective agreement provides for compensation of one month's wages for each year worked, up to a maximum of six years, if workers are dismissed without just cause.
3. 146. The complainant concludes by pointing out that both the employer and the legal adviser of the Ministry of Labour (which held a consultation on the matters raised by this case) refuse to recognize the collective agreement and have declared it null and void.

B. The Government's reply

1. 147. The Government states in its communication of 18 January 1993 that the consultations held on this matter at the request of the complainant trade union by the Director of the Legal Division of the Ministry of Labour were consonant with the provisions of the labour legislation in force. The Government points out that the content of the ruling by the Legal Division has been distorted by the complainant and is in fact as follows:
   • In the event of the closing of an enterprise due to force majeure and external causes beyond the control of the workers as in the case of privatization, first preference shall be given to the payment of social benefits (to workers) such as advance notice (a month's wage), holidays in proportion to the time worked, thirteenth month of wages and wages outstanding.
   • In such cases there shall be negotiation between the enterprise and the workers with a view to obtaining from the enterprise some compensation for the workers.
   • In accordance with the provisions of section 32(6) of the Labour Code, the collective agreement shall terminate with the total closing of the enterprise. The disappearance of the trade name of the enterprise shall result in the disappearance of the employer and the collective agreement will cease to have any legal effect.
   • If there is a change in the ownership of the enterprise, the collective agreement would have to be updated with the new owners.

C. The Committee's conclusions

1. 148. The issue in this case is whether a collective agreement or more specifically - as the complainant states - its clauses respecting compensation in the event of dismissal are applicable if an enterprise ("Supermercados Internacionales S.A.") has been closed - to use the Government's words - "due to the force majeure and external causes beyond the control of the workers as in the case of privatization". The Government points out that under the Labour Code, collective agreements terminate with the total closing of an enterprise, and the disappearance of the trade name of an enterprise results in the disappearance of the employer and of the legal effect of the collective agreement.
2. 149. The Committee notes that "Supermercados Internacionales S.A." is a limited company of the State of Nicaragua which was closed down, and was subsequently taken over by private sector employers; this enterprise had signed a collective agreement on 8 June 1992, i.e. four months before the filing of the present complaint (9 October 1992) and thus of the closing of the enterprise.
3. 150. The Committee notes that in an earlier case concerning, amongst others, the non-payment of vested entitlements and dismissal compensation provided for in a collective agreement following privatization measures (268th Report, Case No. 1495 (Philippines), para. 246), it asked the Government to ensure that the appropriate action be taken so that the rights of the dismissed workers would be respected. In the present case, the Committee concludes that the closing of the enterprise in question should not in itself result in the extinction of the obligations on the employer resulting from the collective agreement, in particular as regards compensation in the case of dismissal.
4. 151. In these circumstances, the Committee requests the Government to take measures with a view to ensuring compliance with the compensation rights in the case of dismissals, resulting from the collective agreement concluded between "Supermercados Internacionales S.A." and the "Nora Astorga" Trade Union.

The Committee's recommendations

1. 152. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendation:
   • The Committee requests the Government to take measures with a view to ensuring compliance with the compensation rights in the case of dismissals, resulting from the collective agreement concluded between "Supermercados Internacionales S.A." and the "Nora Astorga" Trade Union.