Interim Report - Report No 327, March 2002

Case No 2138 (Ecuador) - Complaint date: 14-MAY-01 - Closed

Allegations: Denial of trade union registration, default on a collective agreement, refusal to convene an arbitration tribunal, legislation restricting trade union rights

1. 525. The Ecuadorian Confederation of Free Trade Union Organizations (CEOSL) presented the complaint in communications dated 14 and 29 May and 1 June 2001. The Government forwarded its observations in a communication dated 31 July 2001 (received in the Office on 24 September 2001).
2. 526. Ecuador 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. 527. In its communications dated 14 and 29 May 2001, the Ecuadorian Confederation of Free Trade Union Organizations (CEOSL) alleged the following:
2. (a) denial of registration to the trade union of the COSMAG security company. According to the CEOSL, the registration application was made on 31 October 2000 and to date the Ministry of Labour has not pronounced on it. The CEOSL also alleges that the failure to recognize the union has made it possible for the enterprise to intimidate workers and cause them to renounce union membership;
3. (b) violation of the collective labour agreement by the Cervecería Andina S.A. enterprise. According to the CEOSL, the enterprise has defaulted on clause 47 of the collective agreement relating to salaries and wages by not paying the difference between the salary increase established by the public authorities and that laid down in the agreement; and
4. (c) the administrative authority’s failure to convene the Conciliation and Arbitration Tribunal in accordance with the request made by the Workers’ Committee of the Hotel Chalet Suisse through the submission of a collective agreement.
5. 528. In its communication dated 1 June 2001, the CEOSL objected to certain clauses of the Public Finances Reform Act dated 30 April 1999, the Economic Transformation (Ecuador) Act dated 13 March 2000 and the Promotion of Investment and Citizen Participation Act dated 18 August 2000. Specifically, the CEOSL claims that the following clauses violate the freedom of association Conventions:
6. I. Public Finances Reform Act (public sector): the CEOSL objects to the establishment of the National Council for the Remuneration of the Public Sector (CONAREM), which is authorized unilaterally to modify the system for setting salary and wage levels, increases and severance pay as established by law or between the parties by collective agreement. According to the CEOSL, this will lead to the demise of the process of negotiation between employers and workers’ organizations, with the maximum value or percentage of pay increases being imposed through CONAREM.
7. II. Economic Transformation (Ecuador) Act (private sector): the CEOSL objects to article 85, which allows the hiring of workers on an hourly basis, since in its view the purpose of this is to destroy trade unionism and collective bargaining, and also to article 94, which provides for the standardization of salaries.
8. III. Promotion of Investment and Citizen Participation Act: the CEOSL objects to the provisions of Title 30 concerning the percentage of workers on work probation contracts, which impede workers’ exercise of the right to organize and bargain collectively, and to articles 190 and 191, which allow the employer to negotiate a free collective labour agreement with the workers without requiring them to be organized into a trade union.
9. B. The Government’s reply
10. 529. In its communication dated 31 July 2001, the Government states that the Ministry of Labour has not created any obstacle to the registration of the workers of the COSMAG security company, as incorrectly claimed, but that it did, however, find it impossible to grant the request because various legal requirements for its registration had not been met. The Government adds that 46 persons have left the ranks of those petitioning to set up the trade union, which prevents the union from meeting the established minimum legal standards for registration (it does not have the minimum of 30 workers required by law), in addition to a challenge by the employer; in these circumstances, and on the basis of verification of the facts contained in the attached documents (which informed the trade union of the challenge on 1 November 2000), it can be seen that there has been no denial of rights.
11. 530. As to the laws to which the complainants are objecting, the Government finds it most regrettable that there should be a complaint, without proper grounds, about legal instruments that have been in force since 1999. This attempt to obstruct the reorganization of the State is particularly inappropriate given that the provisions of the Public Finances Reform Act have already been implemented in a proper and positive way. The Government also finds it extremely surprising that, some three years later, the CEOSL is complaining about something that has already been accepted by the country, particularly since the present Government is thus being attacked for a law adopted by its predecessor, and a law that in any case never previously met with any opposition.
12. 531. The Government wishes to make it clear that the function of the National Council for the Remuneration of the Public Sector (CONAREM) is to avoid discrimination and inequalities among workers and employees in the public sector. There are enormous disparities in the pay rates for equal work in different state enterprises, which represent a flagrant violation of workers’ rights and the international standards established by the ILO. The Government considers that the salary paid to the President of the Republic is an adequate measure for setting a pay scale for state employees and workers. The Government adds that the budget deficit is caused mainly by the excessive burden of the state payroll, which on occasion seems to be out of control. So it is difficult to see what is wrong with a fair and adequate salary scale, especially given that today a worker in the private sector generally has a monthly income of $100 to $180, making the level of $5,000 dollars considered in 1999 seem preposterous. CONAREM made the following announcement in connection with the revision of the $5,000 level: "The National Council for the Remuneration of the Public Sector (CONAREM) may, if conditions justify it, modify this limit, but always universally, and in no case with any exceptions or special regimes." The Government adds that, within CONAREM, state employees and workers are duly represented by a member appointed by the Workers’, Employees’ and Craftsmen’s Electoral College.
13. 532. As regards the allegation of limitation of compensation payable under article 54 of the Act, it is true that CONAREM is setting an upper limit on the value of compensation, but this is not in any way damaging to workers’ interests, since the sums are determined by tripartite representation. The purpose is to ensure that all state employees are treated equally and that equal work is equally paid.
14. 533. As concerns hiring by the hour, the Government is responding to the increasing range of options in the labour market in order to increase productivity and allow a greater number of people to have access to resources that can sustain the economy, including by diversifying personal income. It adds that this type of hiring is overwhelmingly casual and occasional, so it is incorrect to suggest that it in any way undermines or deregulates labour relations. No employer could consider using a worker hired by the hour to represent the enterprise or to provide technical skills, specialized knowledge or other skills for a specific activity, since the operation could incur serious damage by hiring unsuitable people. This type of work is needed in particular circumstances or where additional manpower is needed. There is no unlawful competition between permanent employees and workers hired by the hour, since the latter fulfil different functions for a limited period determined in advance. In other words, this is a completely different activity and way of working, and another way of gaining access to employment. Moreover, the system of hourly hiring does not affect established or permanent staff. The Government finds it naïve to suggest that there is rotation of staff within organizations because the change of activity turns into untimely dismissal and at the same time that organizations are unable to use the system in a reasonable way, given that each person has his or her own skills and knowledge and all tasks cannot be done by all workers.
15. 534. As regards the alleged standardization of salaries, the Government states that there is no conflict with constitutional or international standards and, indeed, it represents a mechanism for regulating pay.
16. 535. Concerning contracts for a probationary period, the Government points out that 15 per cent is the percentage of total workers only in cases where enterprises are setting up operations or broadening or diversifying their production, activities or trade; these are entirely temporary, fortuitous and exceptional circumstances. The figure of 15 per cent is a maximum, the exception being in the case of workers who are hired to develop new activities. It should be emphasized that, where this exception is not observed, those workers will have to be taken on permanently; rather than damaging workers’ interests, this increases the number of workers in the enterprise. Such contracts are issued on a fortuitous and special basis. They make it possible to fill posts that may arise as the result of temporary demand, especially in the production of goods and services. Such instances may arise at the height of the tourist season, or during harvesting or periods of unexpected demand for a product or service. It can be seen that the standard in no way hurts the interests of permanent employees, but rather provides support for their work, protecting them from forced labour.
17. 536. In response to the allegations concerning the Cervecería Andina S.A., the Government states that it knows unofficially of a conflict between the employers and the workers, but that it is not possible to provide the relevant information, since the agreements reached by the employers and workers have not been sent to the Ministry.

C. The Committee's conclusions

1. 537. The Committee notes that in this case the complainant organization alleges: (1) denial of registration to the trade union of the COSMAG security company and intimidation of workers to make them renounce union membership in the context of the delay in the registration process; (2) default on the collective labour agreement by the Cervecería Andina S.A. enterprise; (3) failure to convene the Conciliation and Arbitration Tribunal in accordance with the request made by the Workers’ Committee of the Hotel Chalet Suisse through the submission of a collective agreement. The Committee also notes that the complainant organization objects to certain provisions of a number of laws, which, in its view, violate Conventions Nos. 87 and 98.
2. 538. As regards the alleged denial of registration to the trade union of the COSMAG security company and intimidation of workers to make them renounce union membership in the context of the delay in the registration process, the Committee takes note of the Government’s statement that the registration was not allowed because 46 persons had left the ranks of those petitioning to set up the trade union (the Government attaches a document submitted by the enterprise challenging the registration application, which indicates that 46 workers had left the union) and that the legal requirement (Labour Code) for a minimum of 30 workers had not been met. In this connection, noting that the Government attaches to its reply a document showing that over 20 workers revoke any signature made by them as part of the establishment of the trade union, which states that "we support the activity of our employer, and thus maintain our source of work", the Committee requests the Government to take measures to investigate whether there has been any kind of pressure on the enterprise’s workers not to participate in the establishment of the trade union, and, if so, to apply legal sanctions and promptly register the trade union in question. The Committee requests the Government to keep it informed of developments in that respect.
3. 539. Moreover, as regards the legal requirement laid down in the Labour Code for a minimum of 30 workers to establish a trade union, invoked as justification for not registering the trade union of the COSMAG company, the Committee recalls that several years ago the Committee of Experts on the Application of Conventions and Recommendations indicated that the minimum number should be reduced in order not to hinder the establishment of trade unions at enterprises, especially taking into account the very significant proportion of small enterprises in the country. This point of view is shared by the Committee, which requests the Government to take the necessary measures to amend the Labour Code accordingly. The Committee draws this aspect of the case to the attention of the Committee of Experts on the Application of Conventions and Recommendations.
4. 540. As regards the allegation of default on the collective labour agreement by the Cervecería Andina S.A. enterprise (specifically, it is alleged that the enterprise has defaulted on the clause relating to salaries and wages), the Committee notes that the Government has simply stated that it knows unofficially of a conflict between the employers and the workers, but that it is not possible to provide the relevant information, since the agreements reached by the employers and workers have not been sent to the Ministry of Labour. The Committee recalls "the importance which it attaches to the obligation to negotiate in good faith for the maintenance of the harmonious development of labour relations" and that "agreements should be binding on the parties" [Digest of decisions and principles of the Freedom of Association Committee, 1996, paras. 814 and 818]. That being so, the Committee requests the Government to take measures to investigate and, if the allegations are found to be true, to ensure that the relevant collective agreement is observed.
5. 541. As regards the allegations concerning the functions of the National Council for the Remuneration of the Public Sector (CONAREM) (imposition of a maximum value or percentage of pay increases or severance pay) established under the Public Finances Reform Act dated 30 April 1999, the Committee takes note of the Government’s statement to the effect that: (1) the role and competence of CONAREM is to avoid discrimination and inequalities among workers and employees in the public sector given the enormous disparities in the pay rates for equal work in different state enterprises; (2) the budget deficit is caused mainly by the excessive burden of the state payroll, which on occasion seems to be out of control; and (3) workers are represented by a member appointed by the Workers’, Employee’ and Craftsmen’s Electoral College. The Committee recalls that all public administration workers who are not employed by the state administration should enjoy collective bargaining rights [Digest, op. cit., para. 79] and should be able to negotiate, within the framework of their employment conditions, issues relating to salary increases or the value of severance pay, a function currently ascribed to CONAREM. The Committee requests the Government to take measures to amend the relevant law accordingly.
6. 542. As regards the allegations in connection with article 85 of the Economic Transformation (Ecuador) Act (private sector), which allows the hiring of workers on an hourly basis, with the purpose of destroying trade unionism and collective bargaining, the Committee takes note of the Government’s statement to the effect that: (1) hiring by the hour is a response to the increasing range of options in the labour market in order to increase productivity and allow a greater number of people to have access to resources that can sustain the economy; (2) this type of hiring is casual and occasional, and needed in particular circumstances or where additional manpower is needed; and (3) there is no unlawful competition between permanent employees and workers hired by the hour, since the latter fulfil different functions for a limited period determined in advance. In this respect, the Committee requests the Government to inform it whether workers hired by the hour have the right to establish or join the organizations of their choice and whether they enjoy collective bargaining rights.
7. 543. As regards the allegations in connection with article 94 of the Economic Transformation (Ecuador) Act (private sector), which provides for the standardization of salaries, the Committee takes note of the Government’s statement that there is no conflict with constitutional or international standards and that it represents a mechanism for regulating pay. The Committee requests the complainant organization and the Government to provide information on the application of this article (specifically whether it implies that salary levels may not be freely set through collective bargaining) and forward a copy of the law.
8. 544. As regards the allegations in connection with Title 30 of the Promotion of Investment and Citizen Participation Act, relating to the proportion of workers (15 per cent) that may be employed under work probation contracts and thus may not, in the CEOSL’s view, exercise their right to organize and bargain collectively, the Committee takes note of the Government’s statement that this percentage is authorized only in cases where enterprises are setting up operations or broadening or diversifying their production, activities or trade, and that, where this exception is not observed, one effect is that those workers will have to be taken on permanently. The Committee reminds the Government that "Workers undergoing a period of work probation should be able to establish and join organizations of their choosing, if they so wish" and "No provision in Convention No. 98 authorizes the exclusion of staff having the status of contract employee from its scope" [Digest, op. cit., paras. 237 and 802]. Accordingly, the Committee requests the Government to inform it whether workers on the probationary contracts referred to in the Act enjoy the rights conferred by Conventions Nos. 87 and 98.
9. 545. As regards the allegations in connection with articles 190 and 191 of the Promotion of Investment and Citizen Participation Act, which, according to the CEOSL, allow the employer to negotiate a free collective labour agreement with the workers even if they are not organized into a trade union, the Committee regrets that the Government has not communicated its observations on this. The Committee recalls that the Collective Agreements Recommendation, 1951 (No. 91), stresses the role of workers’ organizations as one of the parties in collective bargaining; it refers to representatives of unorganized workers only when no organization exists. In these circumstances, direct negotiation between the undertaking and its employees, bypassing representative organizations where these exist, might be detrimental to the principle that negotiation between employers and organizations of workers should be encouraged and promoted [Digest, op. cit., para. 785]. Accordingly, the Committee requests the Government promptly to communicate its observations on the issue.
10. 546. Finally, the Committee regrets that the Government has not communicated its observations on the alleged failure by the administrative authority to convene the Conciliation and Arbitration Tribunal in accordance with the request made by the Workers’ Committee of the Hotel Chalet Suisse through the submission of a collective agreement. The Committee requests the Government to communicate its observations on this issue without delay.

The Committee's recommendations

1. 547. In the light of its foregoing interim conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) As regards the alleged denial of registration to the trade union of the COSMAG security company and intimidation of workers to make them renounce union membership in the context of the delay in the registration process, the Committee requests the Government to take measures to investigate whether there has been any kind of pressure on the enterprise’s workers not to participate in the establishment of the trade union, and, if so, to apply legal sanctions and promptly register the trade union in question. The Committee requests the Government to keep it informed of developments in that respect.
   • (b) As regards the legal requirement laid down in the Labour Code for a minimum of 30 workers to establish a trade union, invoked as justification for not registering the trade union of the COSMAG company, the Committee considers that the minimum number should be reduced in order not to hinder the establishment of trade unions at enterprises, especially taking into account the very significant proportion of small enterprises in the country. The Committee requests the Government to take the necessary measures to amend the Labour Code accordingly. Furthermore, the Committee draws this aspect of the case to the attention of the Committee of Experts on the Application of Conventions and Recommendations.
   • (c) As regards the allegation of default on the collective labour agreement by the Cervecería Andina S.A. enterprise (specifically, it is alleged that the enterprise has defaulted on the clause relating to salaries and wages), the Committee requests the Government to take measures to investigate and, if the allegations are found to be true, to ensure that the relevant collective agreement is observed.
   • (d) Recalling that all public administration workers who are not employed by the state administration should enjoy collective bargaining rights and should be able to negotiate, within the framework of their employment conditions, issues relating to salaries or the value of severance pay, the Committee requests the Government to take measures to amend the Public Finances Reform Act dated 30 April 1999 in its provisions referring to the functions of the National Council for the Remuneration of the Public Sector (CONAREM) (imposition of maximum salary increases and severance pay).
   • (e) As regards the allegations in connection with article 85 of the Economic Transformation (Ecuador) Act (private sector), which allows the hiring of workers on an hourly basis, the Committee requests the Government to provide information on the application of the article (specifically, whether workers hired by the hour have the right to establish or join the organizations of their choice and whether they enjoy collective bargaining rights).
   • (f) As regards the allegations in connection with article 94 of the Economic Transformation (Ecuador) Act (private sector), which provides for the standardization of salaries, the Committee requests the complainant organization and the Government to provide information on the application of this article (specifically whether it implies that salary levels may not be freely set through collective bargaining).
   • (g) As regards the allegations in connection with Title 30 of the Promotion of Investment and Citizen Participation Act, relating to the proportion of workers (15 per cent) that may be employed under work probation contracts, the Committee requests the Government to inform it whether such workers enjoy the rights conferred by Conventions Nos. 87 and 98.
   • (h) As regards the allegations in connection with articles 190 and 191 of the Promotion of Investment and Citizen Participation Act, which, according to the CEOSL, allow the employer to negotiate a free collective labour agreement with the workers even if they are not organized into a trade union, the Committee recalls that direct negotiation between the undertaking and its employees, bypassing representative organizations where these exist, might be detrimental to the principle that negotiation between employers and organizations of workers should be encouraged and promoted, and requests the Government promptly to communicate its observations on the issue.
   • (i) The Committee requests the Government to communicate without delay its observations on the alleged failure by the administrative authority to convene the Conciliation and Arbitration Tribunal in accordance with the request made by the Workers’ Committee of the Hotel Chalet Suisse through the submission of a collective agreement.