Definitive Report - Report No 318, November 1999

Case No 1931 (Panama) - Complaint date: 12-JUN-97 - Closed

Allegations: Legislation restricting the rights of employers and their organizations

1. 353. The Committee first examined this case at its meeting of May 1998 when it presented an interim report to the Governing Body (see 310th Report, paras. 474 to 507, adopted by the Governing Body at its 272nd Session (June 1998)).
2. 354. Subsequently, the Government sent further observations in a communication dated 18 May 1999.
3. 355. Panama 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. Previous examination of the case

1. 356. At its previous examination of the case, the Committee presented the following conclusions regarding the allegations remaining pending (see 310th Report, paras. 498 to 501):
   • The Committee notes that the complainant organization opposes the provision of the Labour Code which requires the employer to pay wages when the strike has the following objects: (1) to demand fulfilment of any collective agreement, direct settlement or arbitration award (section 510(1) of the Labour Code); (2) to obtain fulfilment of and compliance with any statutory provision which has been ignored or infringed once or repeatedly throughout or in any part of the enterprise (section 510(1) of the Labour Code); (3) if the employer does not reply to the statement of claims or withdraws from the conciliation procedure (section 510(2) of the Labour Code); and (4) if the employer fails to comply with the obligation of closing down the enterprise in the event of a legal strike (section 511 of the Labour Code). The Committee notes furthermore that as regards these matters the complainant organizations point out that under the current regulations the labour administration authorities are not empowered to reject a flawed statement of claims which alleges imaginary or unfounded infringements of labour standards; and that according to the complainants, the conciliation procedure would be initiated and the strike could then be declared and the employer would have to pay the strike days in the circumstances referred to above.
2. 501. Before examining the allegations relating to the payment of wages of strikers by the employer, the Committee needs clarification and information on the following points: (1) the manner in which sections 510 and 511 of the Labour Code are applied in practice; and (2) the existence of procedures and competent bodies in the event of violations of the legislation or of collective agreements, in the event of disputes over their interpretation or in the event that the employer fails to cooperate in the collective bargaining process. The Committee requests the Government to supply information in this regard.
3. 357. In the light of these interim conclusions regarding these aspects of the case, the Committee, in June 1998, invited the Governing Body to approve the following recommendations (see 310th report, para. 507):
   • -- Before examining the allegations relating to the payment of wages of strikers by the employer, the Committee needs information and clarification on the following points: (1) the manner in which sections 510 and 511 of the Labour Code are applied in practice; and (2) the existence of procedures and competent bodies in the event of violations of the legislation or of collective agreements, in the event of disputes over their interpretation or in the event that the employer fails to cooperate in the collective bargaining process. The Committee requests the Government to supply information in this respect.
   • -- The Committee reminds the Government that the technical assistance of the Office is at its disposal, if it so wishes, to assist it in ensuring that the provisions complained of in this case are amended in line with the principles of freedom of association and collective bargaining.
   • -- The Committee draws the attention of the Committee of Experts on the Application of Conventions and Recommendations to the present case.
4. 358. Furthermore, the Committee, at its March 1999 meeting, while noting that the Government had requested the Office's technical assistance, requested the Government to provide a response to the issues raised in the case so that the technical assistance requested could be based on the definitive conclusions and recommendations of the Committee (see 313th Report, para. 5).

B. The Government's reply

1. 359. With regard to the information requested by the Committee at its previous examination of the case, the Government makes reference in its communication dated 18 May 1999 to sections 510 and 511 of Cabinet Decree No. 252, 1971 (Labour Code), regarding the imputability of a strike to the employer.
2. 360. In respect of these sections, the Government indicates that the imputability of responsibility for a strike is a judicial process falling to labour tribunals, whose rulings, if contested, may be appealed against before the High Labour Tribunals, with final cassation being sought before the third chamber of the Supreme Court of Justice. This is a proceeding designed to give rapid relief and in which it is incumbent upon the workers to prove that the strike was due to failure to comply with "the collective agreement, direct settlement or arbitration award" or legal texts which have been "ignored or infringed once or repeatedly" by the employer, as addressed by the conciliation procedure ensuing from the presentation of the statement of claims, which failed to result in any agreement. Proof may also be supplied of the employer not having responded to the statement of claims or having withdrawn from the conciliation process.
3. 361. The Government adds that grounds for imputability may also result during a strike, as stated in section 511, e.g. if the closure of the enterprise is not permitted, whereas it is a direct object of the strike, or if new contracts of employment are signed with a view to resuming the work interrupted by strike action, with the exception of contracts for the purpose of "avoiding irreparable damage to machinery and basic equipment", when strike participants do not permit such work and the administrative authorities consider it urgent. In this case, the employer applies to the administrative authorities for authorization to carry out such work. In the majority of instances, when the request is approved, the enterprise staff itself is called upon to conduct such tasks which need to be maintenance and not production work. Responsibility is also imputable to an employer who prevents workers from conducting the activities listed in section 496 of the Labour Code, as follows:
   • Section 496: Strike participants shall be guaranteed outside the enterprise:
4. 1. the right to peaceful demonstration;
5. 2. the right to distribute propaganda amongst fellow-workers and the general public as well as to use posters indicating their demands;
6. 3. the right to set up propaganda- and watch-pickets surrounding work premises; and
7. 4. the right to collect donations.
   • Furthermore, if the employer attempts to prevent strike action, she/he may also be declared responsible for the strike.
8. 362. According to the Government, any employer declared responsible shall pay wages for the strike period; this is decided by the judge when she/he determines liability for the strike. Consequently, the proceedings are designed to establish whether the employer has or has not given grounds, as listed in the law, to be attributed responsibility. As stated, this takes place in the form of adversarial judicial proceedings.
9. 363. The Government indicates that, specifically for the collective bargaining period, there are no "competent bodies in the event of violations of the legislation or of collective agreements, in the event of disputes over their interpretation or in the event that the employer fails to cooperate in the collective bargaining process". Nevertheless, Act No. 53, 1975, does empower the Ministry of Labour and Labour Development to conduct proceedings regarding the "legal interpretation or validity of clauses written into a collective agreement or other collective pact or accord". Moreover, section 527 of the Labour Code states that:
   • Whosoever seeks the exercise of any right, or the declaration that the existence or non-existence of a right is counter to his/her interests, similarly the existence or non-existence of a legal relationship affecting or concerning him/her or whosoever seeks any declaration affecting or concerning him/her, may make the relevant claim before the tribunals in the manner laid down in this Code.
   • In this connection, there has been no discussion in Panama regarding the consequences of such proceedings in the event of a statement of claims being presented or of scrutiny of collective bargaining. Would the proceedings be put into abeyance if reference were made to items also addressed in the statement of claims or the bargaining? Which authority is competent to determine these consequences? These are issues which should be elucidated through administrative or judicial channels.

C. The Committee's conclusions

1. 364. The Committee observes that the issues left pending at the previous examination of the case relate to the conformity with the principles of freedom of association of the legal texts applicable to cases in which the employer is required to pay wages in respect of strike days; more specifically, they concern cases in which the strike has the following objects: (1) to demand fulfilment of any collective agreement, direct settlement or arbitration award (section 510(1) of the Labour Code); (2) obtain fulfilment of and compliance with any statutory provision which has been ignored or infringed once or repeatedly throughout or in any part of the enterprise (section 510(1) of the Labour Code); and (3) if the employer does not reply to the statement of claims or withdraws from the conciliation procedure (section 510(2) of the Labour Code). As regards these matters, the complainant organizations also point out that under the current regulations the labour administration authorities are not empowered to reject a flawed statement of claims which alleges imaginary or unfounded infringements of labour standards; in this way, the conciliation procedure would be initiated and the strike could then be declared and the employer would have to pay the strike days.
2. 365. With regard to the allegation relating to the legal provisions obliging the employer to pay wages in respect of strike days, the Committee notes the Government's statement and in particular that the employer's "responsibility" for the (lawful) strike is declared in the course of relief proceedings, during which it is incumbent upon the workers to substantiate grounds for imputability of responsibility, as laid down by legislation, namely:
   • -- failure to fulfil any collective agreement, direct settlement or arbitration award (section 510(1) of the Labour Code);
   • -- failure to fulfil and comply with any statutory provision once or repeatedly in an enterprise, establishment, branch or works (section 510(1) of the Labour Code);
   • -- failure to comply with the obligation of closing down the enterprise in the event of a strike (section 511 of the Labour Code) (in a previous examination of the case in its substance, the Committee had requested the Government to repeal the sections of the Labour Code, which imposed the immediate shutting down of the enterprise, establishment, branch or works once a strike had been declared; see 310th Report, para. 507 (a)(i));
   • -- the signing of new contracts of employment in order to resume work interrupted by the strike (except where strike participants permit work to proceed in order to avoid irreparable damage to machinery and basic equipment (section 511));
   • -- preventing workers from exercising certain rights outside the establishment (peaceful demonstration, propaganda, propaganda- and watch-pickets as well as the collection of donations) (section 496);
   • -- preventing strike action or seriously and unjustly obstructing it (section 511); and
   • -- failure to reply to the statement of claims or withdrawal from the conciliation procedure (section 510(2)).
3. 366. In this respect, although the majority of aforementioned grounds for imputability of responsibility for the strike to the employer constitute violations of Conventions Nos. 87 and 98 and unlawful acts sanctioned in various forms in many countries for violation of the right to strike, failure to bargain in good faith or other unfair practices, the Committee considers that obliging the employer to pay wages in respect of strike days in the cases mentioned -- apart from potentially disrupting the balance in industrial relations and proving costly for the employer -- raises problems of conformity with the principles of freedom of association, to the extent that such payment should be neither required nor prohibited (see 307th Report, Case No. 1865, para. 223); consequently, it should be a matter for resolution between the parties. In these circumstances, the Committee requests the Government to take measures to amend the legislation in the manner indicated.
4. 367. Moreover, the Committee recalls that the complainant organizations of employers had pointed out that under the current regulations the labour administration authorities were not empowered to reject a flawed statement of claims which alleged imaginary or unfounded infringements of labour standards; in this way, the conciliation procedure would be initiated and the strike could then be declared and the employer would have to pay the strike days. Similarly, the Committee had requested the Government to provide information indicating whether there were procedures or competent bodies in the event of violations of the legislation or of collective agreements, in the event of disputes over their interpretation or in the event that the employer failed to cooperate in the collective bargaining process.
5. 368. In this regard, the Committee notes the Government's statement that: (1) specifically for the collective bargaining period, there are no "competent bodies in the event of violations of the legislation or of collective agreements, in the event of disputes over their interpretation or in the event that the employer fails to cooperate in the collective bargaining process"; (2) nevertheless, Act No. 53, 1975, does empower the Ministry of Labour and Labour Development to conduct proceedings regarding the "legal interpretation or validity of clauses written into a collective agreement or other collective pact or accord"; (3) section 527 of the Labour Code authorizes any person, who so wishes, to request of the judicial authorities a declaration that a right or legal relationship does or does not exist or any other kind of declaration. However, the Committee notes that, as emerges from the Government's statement, the practical application of the aforementioned legal texts -- in particular in respect of disputes over rights -- has not yet taken place; and that the issues raised (possible suspension of the examination of the statement of claims, competent bodies, etc.) should be elucidated where necessary through administrative or judicial channels.
6. 369. Consequently, the Committee recommends to the Government that it develop existing standards and procedures regarding conflicts of rights or interpretation as well as establish a clear, expeditious procedure, which would involve workers' and employers' organizations, for verifying non-compliance with legal provisions and clauses of collective agreements, making it possible to avoid collective disputes on the grounds under consideration. As regards the legal consequences of the employer's failure to reply to the statement of claims or his/her withdrawal from the conciliation procedure, the Committee considers that failure to reply to a statement of claims may be deemed an unfair practice contrary to the principle of good faith in collective bargaining, which may entail certain penalties as foreseen by law, without resulting, as is the case above, in a legal obligation upon the employer to pay strike days which is a matter to be left to the parties concerned. With regard to withdrawal from the conciliation procedure, the Committee observes that the legislation lays down mandatory conciliation and prevents the employer from withdrawing, irrespective of circumstances, at the risk of being penalized by payment of wages in respect of strike days; apart from being disproportionate, this runs counter to the principle of voluntary negotiation enshrined in Convention No. 98. In these circumstances, the Committee requests the Government to envisage amending the legislation in such a way that: (1) failure to reply to a statement of claims does not entail disproportionate penalties, and (2) withdrawal by one of the parties from the conciliation procedure does not give rise to disproportionate penalties.
7. 370. With regard to the Government's request for technical assistance, the Committee recalls that the technical assistance of the Office is at its disposal with a view to ensuring that the legislation conforms more widely to the Conventions ratified regarding freedom of association and collective bargaining. The Committee draws the attention of the Committee of Experts on the Application of Conventions and Recommendations to the legislative aspects of this case.

The Committee's recommendations

1. 371. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government to envisage amending the legislation in such a way that: (1) the payment of wages in respect of strike days is not mandatory but a matter for resolution by the parties; (2) the withdrawal by one of the parties from the conciliation procedure does not give rise to disproportionate penalties; and (3) that failure to reply to a statement of claims does not entail disproportionate penalties.
   • (b) The Committee recommends that, in developing existing standards and procedures regarding conflicts of rights or interpretation, the Government establish a clear, expeditious procedure, which would involve workers' and employers' organizations, for verifying non-compliance with legal provisions and clauses of collective agreements, making it possible to avoid collective disputes on the grounds under consideration.
   • (c) With regard to the Government's request for technical assistance, the Committee recalls that the technical assistance of the Office is at its disposal with a view to ensuring that the legislation conforms more widely to the Conventions ratified regarding freedom of association and collective bargaining.
   • (d) The Committee draws the attention of the Committee of Experts on the Application of Conventions and Recommendations to the legislative aspects of this case.