Interim Report - Report No 307, June 1997

Case No 1887 (Argentina) - Complaint date: 05-JUN-96 - Closed

Allegations: Restrictions on the right to collective bargaining

1. 55. The complaints in this case are contained in a communication dated 5 June 1996 from the Tram-drivers' Union (UTA), the Argentine Air Crew Association (AAA), the National Truckers' Federation (FNTOCTAC), the Union of Dredging and Marking Staff (SPEDB), the Argentine Union of Private Teachers (SADOP). the Argentine Federation of Pharmacy Workers (FATF), the Argentine Federation of Printing Workers (FATI), the Union of Employees of Courts of Law (UEJN), the Centre of Overseas Captains and Merchant Navy Officers (CCUOMM), the Argentine Union of Mill Workers (UOMA), the Association of Medical Advertising Agents of the Argentine Republic (AAPMRA), the Single Union of Workers in Advertising (SUP), the Centre of Naval Radio Communications Chiefs and Officers (CJONR), the Association of Underground Supervisory Staff (APSESBA), and the Argentine Television Union (SAT). The International Transport Workers Federation (ITF) associated itself with the complaint in a communication dated 4 September 1996. In January 1997 the Tram-drivers' Union (UTA) sent a communication containing new allegations.
2. 56. The Government sent partial observations in communications dated 5 February and 9 May 1997.
3. 57. Argentina 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 complainants' allegations

1. 58. In its communication of 5 June 1996, the Tram-drivers' Union (UTA) and the other trade union organizations raise objections to Act No. 24522 on insolvency and bankruptcy which renders collective agreements in force ineffective and makes it compulsory to renegotiate new collective agreements. Specifically, the complainants object to the following sections of Act No. 24522:
   • Section 20, paragraphs 4, 5, 6 and 7
   • Labour contracts: The opening of bankruptcy proceedings renders collective agreements in force ineffective for a period of three years, or until the completion of the bankruptcy proceedings, whichever is the shorter.
   • During that period, labour relations shall be governed by individual contracts and by the Labour Contract Act.
   • The bankrupt party and the recognized trade union association shall negotiate an emergency collective agreement for the duration of the bankruptcy proceedings, up to a maximum of three years.
   • The conclusion of the bankruptcy proceedings for any reason, or their interruption sine die, shall put an end to the emergency collective agreement that may have been negotiated, and the corresponding collective agreements shall once again be in force.
   • Section 198, paragraph 3 (bankruptcy)
   • Collective labour agreements covering staff employed in the bankrupt establishment or enterprise shall cease to have any legal effect vis-à-vis the new owner and shall be renegotiated by the parties concerned.
2. 59. The trade union organizations explain that in July 1994 a Framework Agreement on Employment, Productivity and Social Equity was signed by the Government, the employers' sector and the General Confederation of Labour (CGT) representing the labour sector, which, inter alia, set out the terms of the current reform of the law on bankruptcy. The complainants state that their representation by the CGT was a formal arrangement and no more, inasmuch as the workers' movement making up this Confederation did not at any time authorize the signatories to subscribe to any such agreement.
3. 60. In its communication of January 1997, the UTA raises objections to the following Executive Decrees: Decree No. 1553/96 empowering the Ministry of Labour to revoke the registration of a collective labour agreement; Decree No. 1554/96 empowering the Ministry of Labour to determine the scope of collective bargaining; and Decree No. 1555/96 containing certain provisions regarding collective bargaining.

B. The Government's reply

1. 61. In a communication dated 5 February 1997, the Government points out that the impugned law (Act No. 24522) is an Act proclaimed by the National Congress in the exercise of its constitutional powers and is based on the Framework Agreement on Employment, Productivity and Social Equity, a tripartite agreement in which the employers' and workers' sectors (through their most representative bodies) agreed with the national Government, inter alia, to undertake a reform of the insolvency and bankruptcy procedures in force in the country and to revise the juridical framework of collective bargaining. The provisions of sections 20 and 198 of Act No. 24522, which are impugned by the complainants, are the outcome of that agreement.
2. 62. The Government states that the reasons behind the said Act are that insolvency and bankruptcy proceedings are exceptional circumstances and that the labour legislation should therefore address them in terms that are sufficiently broad to enable the employer to fulfil his or her obligations, on the one hand, and to help the workers recover the amounts due to them, on the other. Insolvency proceedings should endeavour to facilitate the continued operation of the enterprise and to maintain the workers' jobs. Similarly, in the case of bankruptcy, a purchaser should be sought for the bankrupt establishment or enterprise, essentially to avoid the disappearance of a source of employment. This is particularly important in an economic crisis such as is currently being experienced both internationally and nationally, because of its impact on employment. From the juridical standpoint, both bankruptcy and insolvency proceedings imply a substantial change in the circumstances under which the bankrupt employer entered into his or her original commitments and in the circumstances that prevailed when the collective agreements were concluded and while they remained in force. All these factors justify the revision of the applicable collective agreement. It does not in any way violate international labour Conventions Nos. 87, 98 and 154. Moreover, although section 20 of Act No. 24522 temporarily suspends the collective agreements in force for the reasons indicated (suspension is for a maximum of three years or for the duration of the bankruptcy proceedings, whichever is the shorter), it provides for the bankrupt establishment or enterprise and the recognized trade union to negotiate an emergency collective agreement for the duration of the proceedings, up to a maximum of three years. These agreements are negotiated directly between the trade union and the bankrupt employer, without the involvement of the trade union movement or bankruptcy courts, and leaves the parties considerable discretion. Finally, the Governe impugned sections of the Act are designed to protect the worker by facilitating the continued operation of the enterprise and the maintenance of the workers' jobs and, in the worst of cases, to enable to workers to recover the amounts due to them.
3. 63. In its communication of 9 May 1997, the Government notes that the application of Decrees Nos. 1553, 1554 and 1555 has been suspended since they were the subject of a case before the Supreme Court. The Government states that it will be forwarding its observations on this matter shortly.

C. The Committee's conclusions

1. 64. The Committee observes that in this case the complainants raise objections to certain provisions of Act No. 24522 on insolvency and bankruptcy which suspend the collective agreements in force and require the negotiation of new collective agreements. The Committee further notes that the Tram-drivers' Union (UTA) raises objections to Executive Decrees Nos. 1553/96, 1554/96 and 1555/96, on the grounds that they restrict the right to collective bargaining.
2. 65. With regard to the impugned sections of Act No. 24522 on insolvency and bankruptcy, the Committee notes that the Government states in its reply that (i) the employers' and workers' sectors (through their most representative organizations) agreed with the Government to undertake a reform of the insolvency and bankruptcy procedure and that sections 20 and 198 of the said Act were drawn up in line with that agreement; (ii) the reasons behind the Act are that insolvency and bankruptcy proceedings are exceptional circumstances and that labour legislation should therefore address them in terms that are sufficiently broad to enable the employer to fulfil his or her obligations, on the one hand, and to help the workers recover the amounts due to them, on the other; (iii) from the juridical standpoint, both bankruptcy and insolvency proceedings imply a substantial change in the circumstances under which the bankrupt employer entered into his or her original commitments and in the circumstances that prevailed when the collective agreements were concluded; and (iv) although section 20 of the Act temporarily suspends the collective agreements (for a maximum of three years or for the duration of the proceedings, whichever is the shorter) the Act does provide for the possibility of negotiating an emergency collective agreement, without the involvement of the judicial authorities, and leaves the parties considerable discretion.
3. 66. The Committee notes that the Act concerned does indeed provide that (i) in the event of insolvency proceedings (when an enterprise's liabilities are greater than its assets and the employer proposes an agreement with his or her creditors in order to pay his or her debts), a collective agreement for cases of crisis can be negotiated, the previous collective agreements being therefore repealed for three years - or less if the proceedings are completed before; and (ii) in the case of bankruptcy the collective agreements cease to be in force and may be renegotiated by the parties concerned.
4. 67. The Committee has always considered that collective agreements entered into freely by the parties must be respected and their renegotiation must not be imposed by law. In the present case, however, which refers to insolvency and bankruptcy proceedings, insisting on full compliance with the provisions of the collective agreement might threaten the continued operation of the enterprise and the maintenance of the workers' jobs. Moreover, the Committee notes that, according to the complainants and the Government, the General Confederation of Labour (CGT) - of which the complainants are members and which is the most representative trade union - did reach an agreement on the impugned provisions of the Act on insolvency and bankruptcy, although the complainants claim that the CGT did not have a mandate to accept any restrictions. Moreover, the Committee notes that the trade unions concerned can renegotiate the collective agreements which were repealed in a crisis situation. Consequently, the Committee considers that the Act does not violate Convention No. 98.
5. 68. As to the alleged restriction of the right to collective bargaining under Decrees Nos. 1553/96, 1554/96 and 1555/96, the Committee observes that the Government has stated that it will forward its observations on this matter shortly and that the Decrees are suspended and are the subject of proceedings before the Supreme Court. Finally, the Committee requests the complainants to submit additional information regarding these allegations.

The Committee's recommendations

1. 69. In the light of its foregoing interim conclusions, the Committee invites the Governing Body to approve the following recommendation:
   • - With regard to the alleged restriction of the right to collective bargaining under Executive Decrees Nos. 1553/96, 1554/96 and 1555/96, the Committee expresses the hope that the Government, as it has indicated, will forward its observations shortly. Finally, the Committee requests the complainants to submit additional information regarding these allegations.