Report in which the committee requests to be kept informed of development - Report No 325, June 2001

Case No 2106 (Mauritius) - Complaint date: 23-OCT-00 - Closed

Allegations: Revocation of interim pay increase;

non-application of negotiated agreement

1. 463. This complaint was presented in a communication dated 23 October 2000 from the Mauritius Labour Congress (MLC), supported by the International Confederation of Free Trade Unions (ICFTU) in a communication of 25 October 2000. The Federation of Civil Service Unions (FCSU) joined the complaint as a party by communications dated 16 and 22 May 2001.
2. 464. The Government provided its observations in communications dated 9 January, 5 March and 23 April 2001.
3. 465. Mauritius has ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98). It has not ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87).

A. The complainants’ allegations

1. 466. In its communication of 23 October 2000, the Mauritius Labour Congress (MLC) submits two distinct sets of allegations the first of which relates to civil servants and is supported by the Federation of Civil Service Unions (FCSU). Firstly, on 22 September 2000, the new Government elected on 11 September 2000 cancelled the payment of a Rs.300 monthly increase to all public officers. That advance payment had been decided by the previous Government following a request made by the FCSU for the payment of three increments to all civil servants, pending the submission of the report of an Ad Hoc Committee on Anomalies (the “Heeralall” report) arising out of the 1998 and 1999 reports of the Pay Research Bureau, and which was supposed to be issued by May 2000. After consultations, the former Government had decided not to grant the three increments but opted in favour of granting an interim increase of Rs.300 to all public officers.
2. 467. The complainant adds that there exists in the country a general practice to issue official circulars to all ministries and departments after the announcement of such decisions. In the present case, the Ministry for Civil Service Affairs sent such a circular note (No. 2 of 2000) dated 8 September 2000, announcing the Rs.300 monthly interim increase, with effect as of 1 September 2000. Provisions had already been made for that payment but the decision was annulled in a circular of 22 September 2000. According to the complainant, the new Government, which came to power after the elections of 11 September 2000, decided to cancel the payment on the assumption that it had been agreed as a form of electoral bribe. The Government stated that it could not afford the increase due to the difficult financial situation of the country.
3. 468. The complainant considers that this decision is arbitrary and unfair, and goes against well-established labour practices and collective bargaining principles in the country. It submits that the Government’s assertion regarding the difficult situation of the country is an excuse to justify its refusal to effect the payment, since economic indicators (growth rate for year 2000; actual and projected growth rates in the tourism and financial sectors) augur well for the future. Federations and unions have complained to the Government, the FCSU organized a protest march, and one trade union has launched judicial proceedings in this connection, without any reaction from the Government.
4. 469. Secondly, the MLC alleges the non-respect of an agreement reached on 9 September 2000 at a meeting of the Rose Belle Sugar Estate Board (which belongs to the State), whereby the unions and management agreed on the payment of arrears and on the implementation of a 40-hour week, with effect the same day. It was also agreed that the case of retired and deceased employees would be submitted to the Board for decision. The agreement signed that day specified that the Minister of Agriculture had undertaken, on behalf of the Government, to honour the balance of payments due to employees. Unfortunately, the Government has not implemented this agreement.

B. The Government’s observations

1. 470. In its communication of 5 March 2001, the Government states that the complaint is not receivable because the complainant failed to:
   • (i) allege specific infringements of freedom of association, or of specific articles of Conventions Nos. 87 and 98;
   • (ii) submit any proof to support their allegations: that the Government’s decision was unfair and arbitrary or was against well-established labour practices in the country; that the difficult financial situation mentioned by the Government was merely an excuse; and that one trade union had filed judicial proceedings.
2. 471. In its communication of 9 January 2001, as regards the first issue, the Government recapitulates the events as follows:
   • (i) In August 1998, the reports of the Pay Research Bureau (PRB) on the review of pay and grading structures and conditions of service in the public sector were released for implementation. In view of the complexity of the exercise, the PRB undertook to examine any genuine errors and omissions identified; in this context, its report on “Errors, omissions and clarifications of the 1998 report of the PRB” was published in June 1999 and the Government agreed to its implementation.
   • (ii) Following representations made by the unions regarding alleged anomalies contained in the abovementioned reports, the Government set up, in August 1999, an Ad Hoc Committee (the “Heeralall” Committee) to look into “alleged anomalies”, if any, arising out of the 1998 and 1999 PRB reports.
   • (iii) On 22 August 2000, whilst the Ad Hoc Committee was still carrying out its exercise, the Federation of Civil Service Unions (FCSU) requested the Government to grant, as an interim measure and with immediate effect, three increments to all civil servants, if the report of the “Heeralall” Committee was not published by 29 August 2000. Following this request, the Government published a press communiqué on 25 August 2000 bringing, inter alia, to the notice of the general public and, in particular, all civil servants, that the request could not be granted in view of the fact that the Ad Hoc Committee was in the process of writing its report which was expected to be ready by mid-October 2000 and that the Committee was looking into anomalous cases only and was not carrying out a full-scale revision of salaries in the public service.
   • (iv) The FCSU reiterated its request for an interim salary increase pending the publication of the report of the Ad Hoc Committee. On 8 September 2000, i.e. a few days before the general elections held on 11 September 2000, the then Government agreed to grant an overall increase of Rs.300 to all civil servants. This decision was conveyed to the President of the FCSU by the Secretary to the Cabinet and Head of the Civil Service on the same day. The Ministry for Civil Service Affairs and Administrative Reform issued a circular letter to supervising officers in charge of ministries/departments informing them that the Government decision would be effective as from 1 September 2000. This decision was also extended to all employees of parastatal bodies, local authorities and private secondary schools.
   • (v) In view of the difficult financial situation of the country arising, inter alia, out of the electoral measures announced on the eve of the general elections, the Government decided on 20 September 2000 that the decision taken by the previous Government on 8 September 2000 be revoked. A circular to that effect was issued by the Ministry for Civil Service Affairs and Administrative Reform on 22 September 2000. The Ad Hoc Committee on alleged anomalies submitted its report on 1 November 2000. The Government, after taking cognizance of the report, agreed to its release and implementation on 3 November 2000.
3. 472. The Government points out, however, that:
   • (i) the terms of reference of the Ad Hoc Committee were to look into “alleged anomalies”, if any, arising out of the PRB reports for 1998 and 1999; the grant of Rs.300 to all employees of the public sector and the private secondary schools fell outside the terms of reference of the Ad Hoc Committee;
   • (ii) the decision to grant the Rs.300 was revoked in view of the difficult financial situation of the country arising, inter alia, out of the electoral measures announced on the eve of the general elections;
   • (iii) the Government has agreed to implement the report of the Ad Hoc Committee in toto; the President of the FCSU had written to the Rt. Hon. Prime Minister on 7 November 2000 regarding, inter alia, the setting up of an appropriate forum to correct the anomalies arising out of the various PRB reports and the Ad Hoc Committee report; the Federation’s request was not acceded to and it was informed that it would be given the opportunity to put across its case to the Pay Research Bureau in the context of the next exercise for the review of pay and grading structures in the public sector.
4. 473. In its communications of 5 March and 23 April 2001, the Government describes the existing system of wage determination, including the Pay Research Bureau (PRB) which is mandated to determine wages and terms and conditions of employment in the civil service and other public bodies. The PRB makes recommendations to the Government for decision after consultation with trade unions and ministries concerned. In addition, there is a national Tripartite Committee where representatives of employers and of all trade union confederations are represented; it meets annually, under the chairmanship of the Deputy Prime Minister and other senior ministers, to discuss wage compensation with social partners, and submits its recommendations to the Government which then legislates through the Additional Remuneration Act. Any wage compensation that is granted comes into force as from July every year. In 2000, this process led to a 5 per cent increase, reflecting the cost-of-living increase. The Government is holding another round in May 2001, which demonstrates its commitment to collective bargaining.
5. 474. On the merits of the first issue, the Government adds that: (i) the pay raise decided by the previous Government would have cost an additional Rs.210 million for financial year 2000-01 and Rs.250 million annually thereafter; (ii) the decision to pay Rs.300 monthly to all civil servants was taken hastily, in an electoral context, in clear breach of well-established industrial relations practices; that decision called into question the very mandate of the Ad Hoc Committee on Anomalies, which was mandated to look into the question of compensation for loss of purchasing power; (iii) under Article 8 of Convention No. 87, the complainant should have used first national procedures, e.g. section 79 of the Industrial Relations Act; (iv) the complainant did not take into account a judgement delivered in 1996 in a somewhat similar case by the Supreme Court which ruled that: “… a government is not necessarily bound by any decision taken by its predecessor, still less one which needs other sanction, legislative, administrative or otherwise to be fully implemented …” (a copy of the judgement is attached to the Government’s communication); (v) whilst the FCSU served notice on 4 October 2000 of its intention to file proceedings in order to enforce the payment of the monthly Rs.300, the matter was never pursued before any court or industrial tribunal.
6. 475. With regard to the second issue, i.e. the alleged breach of agreement by the Rose Belle Sugar Estate Board, the Government offers the following observations:
   • (i) The agreement has been drafted in an inappropriate manner and it appears that the entire terms of the agreement have not been properly incorporated in the document. Furthermore, in relation to the “undertaking given by the Minister”, as set out in the agreement, the Government has been advised that this agreement does not bind it inasmuch as no representative of the Government was privy to the agreement.
   • (ii) The financial situation of the Rose Belle Sugar Estate Board and the Rose Belle Sugar Milling Co. Ltd. is precarious. At the time the agreement was signed, these two organizations had an overdraft amounting to Rs.32.5 million and had just renewed a core overdraft limit of Rs.14.5 million up to April 2001. The projected profit and loss of the group for 2000 amounts to losses of Rs.46.8 million, and the projected accumulated losses for the year ending 2000 would amount to Rs.197.5 million.
   • (iii) The cost of implementation of the decision to pay arrears and the 40-hour week works out to Rs.32.8 million: the inability of the group to meet such expenditure is therefore obvious. Moreover, payment of such arrears would automatically entail the closure of the factory.

C. The Committee’s conclusions

1. 476. The Committee notes that this case concerns two distinct issues: (a) the annulment of a decision, made by the previous government on the eve of a general election, to pay an interim increase to public servants; and (b) the failure to apply an agreement, also concluded on the eve of a general election, on various conditions of work in a state-owned sugar milling enterprise.
   • Receivability of the complaint
2. 477. As regards the first argument of irreceivability raised by the Government (i.e. the unspecific nature of the allegations) the Committee considers that the complainant did raise quite specific factual issues in relation to freedom of association principles: a pay raise for all civil servants, officially decided by a government and cancelled by its successor; and the non-respect of a pay raise embodied in an agreement signed at a state?owned enterprise. While opinions may differ on the ultimate consequences of both situations in the light of particular circumstances, that does not in itself make the complaint irreceivable. As to the second argument of irreceivability (absence of any proof to support the allegations) the Committee points out that it is within its mandate to examine whether, and to what extent, satisfactory evidence is being presented to support allegations; this appreciation goes to the merits of the case and cannot support a finding of irreceivability. The Committee also recalls that the purpose of its procedure is to promote respect for trade union rights in law and in fact [see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 4]. This complaint is therefore receivable.
   • Annulment of interim increase
3. 478. The Committee notes that there is no disagreement between the parties on the chronology of events as regards this issue. However, the complainant alleges that the decision of the newly elected Government to cancel the decision taken by the previous Government is totally arbitrary and unfair, and amounts to a breach of well-established labour and collective bargaining practices in the country. The Government replies that the decision to revoke the Rs.300 interim increment was taken in view of the difficult financial situation of the country, arising out of, inter alia, electoral measures announced on the eve of the general elections. The Government also states that it has agreed to implement the report of the “Heeralall” Committee in its totality; that the FCSU would be given an opportunity to present its views to the PRB during the next review of public service pay and grading structures; and that tripartite discussions on remunerations were supposed to be held in May 2001 within the National tripartite Commission.
4. 479. As regards the country’s financial situation, the Committee notes that the respective positions are both contradictory and unsupported by evidence. On the one hand, the Government merely states that the situation is difficult due, inter alia, to the electoral measures announced on the eve of the general elections; on the other hand, the complainant states that economic indicators augur well. The Committee is not in a position to appreciate the reality of the situation, and recalls in any event that it is not mandated to decide on eventual acceptable amounts of financial restraints [see Digest, op. cit., para. 889].
5. 480. As regards the substantive issue, the Committee considers as a matter of principle that stable and harmonious industrial relations imply a reasonable amount of legal certainty and continuity. If decisions made following a give-and-take process can be reneged upon, and if the social partners cannot trust that the word given, and a fortiori decisions officially made and signed, will be effectively implemented, that introduces on both sides a degree of uncertainty which is not conducive to a stable and predictable collective bargaining environment. Social partners should be able to rely on commitments made by a government in the context of social dialogue and that they will be respected and implemented: this is an essential prerequisite to developing and maintaining harmonious industrial relations.
6. 481. The Committee wishes to recall here two principles relating to collective agreements and collective bargaining: agreements should be binding on the parties [see Digest, op. cit., para. 818] and the exercise of financial powers by the public authorities in a manner that prevents or limits compliance with collective agreements already entered into by public bodies is not consistent with the principle of free collective bargaining [see Digest, op. cit., para. 895].
7. 482. The Committee further notes that the Pay Research Bureau (PRB) is going to review the pay and grading of public servants and that tripartite discussions on remuneration were supposed to be held in May 2001 within the National Tripartite Commission, where the MLC and the FCSU have been invited to participate. The Committee suggests that these are the forums where the parties could negotiate eventual adjustments, including by taking fully into account the Rs.300 interim increase, immediately or through progressive increments. The Committee emphasizes however that, in order to gain any credibility with workers and their representatives, this process must of necessity involve real and fully informed negotiations and that, notwithstanding any opinion submitted by the authorities responsible for assessing the financial consequences of draft collective agreements, the parties to collective bargaining should ultimately be able to conclude an agreement freely [see Digest, op. cit., para. 897]. The Committee requests the Government to keep it informed of the progress and results of these negotiations.
8. 483. Lastly, the Committee notes that, according to the complainant, judicial proceedings have been launched in this regard, without however giving any detail, and that the Government did not reply on this aspect of the case. The Committee requests the complainant and the Government to provide information on these judicial proceedings and, as the case may be, to inform it of its outcome.
   • Non-application of the agreement at Rose Belle Co.
9. 484. Concerning the second issue, the Committee notes that the Government’s argument is twofold: (a) the irregularities allegedly contained in the agreement as regards the signing authority, its incomplete contents, and its non-binding effect; and, (b) the dire financial situation of the Rose Belle Company which would automatically entail the closure of the factory, if the expenditure resulting from the agreement were to be paid.
10. 485. As regards the first argument, the Committee refers generally to the comments above on the necessary respect for agreements concluded. In addition, it recalls the importance it attaches to good faith negotiations for the maintenance of harmonious labour relations [see Digest, op. cit., para. 814], and that genuine and constructive negotiations are a necessary component to establish and maintain a relation of confidence between the parties [see Digest, op. cit., para. 815].
11. 486. As regards the second argument, the Committee points out that, for all practical purposes, the company here is a state enterprise. The Committee has had occasion in the past to state that collective bargaining in the public sector calls for verification of available resources in the various undertakings whose resources are dependent on state budgets, and that, as regards collective bargaining in such state-owned enterprises, provision should be made for a mechanism which ensures that both the trade union organization and the employer are adequately consulted and may express their point of view to the financial authority responsible for the wage policy of such enterprises [see Digest, op. cit., para. 898]. For this to take place however, it is essential that workers and their organizations be able to participate fully and meaningfully in designing an overall bargaining framework “which implies in particular that they must have access to all the financial, budgetary and other data enabling them to assess the situation on the basis of facts” [see General Survey of the Committee of Experts, ILC, 1994, para. 263]. On the basis of evidence available, the Committee is unable to determine whether such fully informed consultation took place in the circumstances, and whether this enterprise is empowered to negotiate and conclude collective agreements without the Government’s approval.
12. 487. The Committee therefore considers that it would be beneficial for all concerned that whatever agreement is ultimately concluded should rest on a sound basis, without any doubt as to its legal foundation and the conditions of its signing. The Committee considers it imperative that some balance be found here, so that the trade union may engage in meaningful and reliable collective bargaining about arrears, pay, working hours and other work conditions, with all the available relevant information, and therefore recommends that negotiations resume rapidly at the Rose Belle Sugar Estate, taking into account the above considerations. The Committee requests the Government to keep it informed of developments in this respect.

The Committee's recommendations

1. 488. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following conclusions:
   • (a) As regards the pay increase for public servants
   • (i) noting that discussions currently take place within tripartite national bodies on this issue, the Committee trusts that constructive negotiations, for which the bargaining agent should have full access to information, will be held, taking fully into account the increase decided by the previous Government, and requests the Government to keep it informed of the outcome of these discussions;
   • (ii) the Committee requests the complainant and the Government to provide information on the processing and outcome of the judicial proceedings filed concerning the cancellation of the pay increase.
   • (b) As regards the situation at the Rose Belle Sugar Estate, the Committee recommends that good faith bargaining resume on pending issues, with the bargaining agent being given full information on financial and other data enabling them to assess the situation in full knowledge of the facts, and requests the Government to keep it informed of developments in this respect.