Report in which the committee requests to be kept informed of development - Report No 333, March 2004

Case No 2272 (Costa Rica) - Complaint date: 01-MAY-03 - Closed

Allegations: The complainant organizations allege that the National Insurance Institute (INS) was unilaterally reorganized in August 2000, terminating the employment contracts with only partial payment of compensation, of 239 insurance brokers (including members of the ANDAS executive committee), whose relationship with the employers became a commercial one without social guarantees, in a fraudulent evasion of applicable law and in violation of the Constitution and the legislation; the dismissal of two trade union officials of the Insurance Brokers’ Association (AGEINS) who refused to accept the change in the articles of association; a judicial order for the arrest and imprisonment for alleged defamation following statements by a trade union official of AGEINS against the “underhand privatization”. Finally, the complainant organizations allege the disavowal of the existence of the collective agreement and the trade union organization ANDAS, with the withdrawal of the use of trade union facilities

1. 521. The complaints are presented in communications from the National Association of Insurance Brokers (ANDAS) of 23 June 2003 and the National Association of Public and Private Employees (ANEP) of 1 May 2003. ANDAS submitted further information in communications dated 23 July and 16 September 2003, and ANEP in communications dated 26 and 28 July 2003. The Government sent its observations in communications dated 23 July, 4 September and 10 November 2003.
2. 522. Costa Rica 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. 523. In its communications of 23 June, 23 July and 4 September 2003, the National Association of Insurance Brokers (ANDAS) states that, in order to avoid paying their social obligations, the National Insurance Institute (INS) arbitrarily and unilaterally dismissed insurance brokers selling insurance policies, including the executive committee of ANDAS; it partially annulled the rights of these brokers to severance pay and disavowed the existence of the trade union organization and the collective agreement, declaring that the employment contracts had changed to being commercial contracts. According to ANDAS, the political machinations of the INS, using the President’s Office and the Attorney-General’s Office of the Republic led, in a fraudulent evasion of applicable law, to the employment relationship of those workers being considered a commercial relationship, leaving the insurance brokers unprotected with regard to their social rights and guarantees (health insurance, pension and life insurance). ANDAS indicates that these measures were adopted unilaterally by the INS, contrary to the Constitution and the legislation, and involve false “commercial” contracts. ANDAS indicates that it lodged a judicial complaint against the INS in April 2001, but the proceedings may take years and further legal action for violation of the entire collective agreement. ANDAS indicates that the reason that the insurance brokers accepted, in August 2002, partial payment of their rights to severance pay was because the INS left them no alternative. Moreover, ANDAS was evacuated from its trade union premises (laid down in the collective agreement) and left to collect trade union dues through means other than the check-off facility, which was discontinued by the employer. The set of boxes for trade union members was abolished.
2. 524. In its communications of 1 May, 26 and 28 July 2003, the National Association of Public and Private Employees (ANEP) states that on 4 July 2003 the State, through the courts, issued an order to arrest and imprison Rodolfo Jiménez Morales, a trade union official of the Insurance Brokers’ Association (AGEINS) as a result of a defamation complaint (of which he was not notified) submitted by the former executive president of the INS. According to ANEP, this was in the light of retaliation for “the crime” of stating in public that the Social Security (Minimum Standards) Convention, 1952 (No. 102) had been violated as a result of the forced relinquishment of the social guarantees of the insurance brokers (which, in the opinion of the trade union official referred to, constituted the beginning of the privatization of the INS), and for revealing acts of corruption and 33 irregularities attributable to the former president of the INS, an investigation into which had been requested in the Legislative Assembly. According to press cuttings, the “underhand privatization” of the INS entailed the payment of severance pay benefits “without the addition of years of service” to the insurance brokers whose employment contracts were terminated, although they were able to continue with their duties and their client lists.
3. 525. ANEP adds that trade union official Rodolfo Jiménez Morales and his wife, Ms. Kenya Mejía Murillo (also a trade union official of AGEINS), were – according to the attached information sent by ANEP – the only employees dismissed from their posts when they opposed signing of a commercial contract, in the context of a “reorganization” of 243 insurance brokers; the heads of the opposition party in the Legislative Assembly requested of the President of the Republic that Rodolfo Jiménez Morales be reinstated as he was dismissed in violation of ILO Conventions relating to freedom of association, and they highlighted that this trade union official had promoted the movement for the Legislative Assembly to investigate the irregularities of the “underhand privatization” process and other irregularities at the INS and that his dismissal took the form of retaliation. ANEP adds that both trade union officials, after their dismissal, refused to sign the temporary administrative contract for six months offered to the dismissed insurance brokers, in which their social guarantees were abolished, and the INS gave instructions to exclude Mr. Jiménez Morales and his wife subsequently from the public tender process to accede to the new employment articles of independent broker and not to issue them with the certification for production of premiums (one of the requisites for the tender) as, according to the INS, when they did not sign the temporary contract they lost their status as insurance brokers and their client list. The other insurance brokers were forced to sign the temporary contract as they were threatened with the distribution of their client lists.

B. The Government’s reply

1. 526. In its communications of 23 July, 4 September and 10 November 2003, the Government sent its observations and the comments of the National Insurance Institute (INS) on the complaint. The Government states that the restructuring carried out at the INS in the insurance policy sales area is based on Act No. 7454 of 14 November 1995, which approves various international agreements in 1993 and 1994 between Costa Rica and the Inter-American Development Bank that include loans and sectoral programmes for investment and structural adjustment that envisage, among other things, the breaking up of monopolies, dynamic competition in the insurance and re-insurance sectors, participation of the private sector and the restructuring of the INS in this sector. The reorganization of the INS hoped to tackle increasing competitiveness in the field of insurance, insure the sustainability and the increase of sales and achieve better management of client services, providing services to those insured at lower intermediary costs, create a framework for monitoring and control and modernize the regulatory framework of insurance activities. The complainants’ accusation of corruption, fraudulent and illegal practices is completely untrue. The Government emphasizes that the present case does not refer to violations of trade union rights but to changes in employment conditions and the articles of association of INS insurance brokers, who move from being employees to independent brokers with a commercial relationship.
2. 527. The Government and the INS point out that the administrative reorganization for the reasons explained gave rise to the dismissal, from September 2000, of all 239 insurance brokers of the INS, whether or not they were trade union members (who received compensation worth millions), for which reason it is not correct to say that the dismissal was a result of anti-union discrimination or persecution. In fact, in this case, the employees affected have not appealed to administrative or judicial bodies on the basis of anti-union discrimination or persecution in spite of the fact that there are appeal procedures laid down in the legislation.
3. 528. According to the Government, the reorganization process was carried out in a transparent way and, in fact, the insurance brokers and ANDAS actively took part in the process and in the various activities; the Government attaches a circular of August 2000 from ANDAS (which is recognized as the largest association of insurance brokers), in which it indicates that “ANDAS has participated in this process, endeavouring – to the extent possible – to ensure that the form of change undertaken will be that which is least damaging to the brokers” and, in a communication dated 22 July 2000, it indicated that “in continuing our participation in the search for solutions to the problems affecting us in our employment relations, it is in the interests of the institution to carry forward the model of the independent broker, in which the administration has requested our participation ...”.
4. 529. The Government adds that, on a number of occasions, the AGEINS trade union official, Rodolfo Jiménez Morales, was summoned to discuss the new model of independent broker but Mr. Jiménez Morales showed no interest whatsoever, nor did he reply to the invitations, this at least according to INS documentation.
5. 530. The labour court, in Decision No. 372 issued on 28 July 2003, clearly stated that from 1 September 2000 insurance brokers would no longer be employees of the INS and would move to having independent status under the administrative employment system regulated by the act on administrative employment (a commercial contract rather than an employment contract), for which reason this is not a false employment relationship.
6. 531. A large group of insurance brokers lodged a complaint (currently under way) with the ordinary labour courts, in which they demand, specifically, that the existence of an employment relationship between independent brokers and the INS (following reorganization) be stated.
7. 532. The Government states that the brokers have not been deprived of social security and that nothing restricts the right of each broker or each family to enrol in a voluntary insurance programme with the Costa Rican Social Security Fund, as was stated by the legal authorities in the ordinary legal proceedings against the INS, which was appealed.
8. 533. In spite of the employment relationship being terminated, the brokers, in a transition plan of six-months’ duration, were freely able to continue working under a temporary administrative contract, in which case they had the possibility of participating in a public competition that culminated in making the administrative contracts for independent brokers official and they were able to sign contracts with commercial companies made up of these; in this way there were very satisfactory results for the INS (sustained increase in income through sales, reduction of administrative expenses, greater possibilities of access to services, decentralization of administrative procedures, etc.).
9. 534. According to the Government, Rodolfo Jiménez Morales and his wife, Kenya Mejía Murillo, did not present themselves to sign the temporary contract of services in the time limit laid down, and for this reason they disqualified themselves from this process of temporary employment and the new model of independent broker, preferring to use judicial procedures to request their reinstatement in the INS (incidentally, without bringing up at any time anti-union persecution), in spite of the fact that, currently, there are no insurance brokers in this company. As a result of not signing the temporary contract, they lost their accreditation and their client list was transferred to the INS. Moreover, the Insurance Brokers’ Association of the INS (AGEINS) (in which the couple are officials), which was established with 14 members on 1 August 2000, is not a trade union nor is it registered as such. It is an association that is registered in the commercial register, according to government documentation.
10. 535. Decision No. 372 of 28 July 2003 of the labour courts clearly stated that the collective agreement signed by the INS and ANDAS, which governed the relationship of the insurance brokers and which provided premises for the trade union, is not in force, as the employer denounced this collective agreement one month prior to its expiry. The arbitrator’s decision regulating labour relations expired on 27 November 1992; moreover, in an act that damaged the principle of good faith, the insurance brokers used one of the boxes to receive communications and the trade union headquarters to attempt, through having legal domicile, to re-establish labour relations, after having signed an administrative agreement. These facilities have continued to be used up until now, in which as a legal domicile they tried to show through these facilities that they had continuity of employment contracts (the Government provides documentation in this respect).
11. 536. According to the documentation received, the judicial order to arrest and imprison Rodolfo Jiménez Morales occurred as a result of his non-appearance before the judicial authorities following the action brought against him by the former president of the INS for defamation. The judicial authorities established contempt of court for non-appearance following information that the person concerned was not to be found at the address that he himself provided and that, on two occasions, there had been telephone communication by the legal assistant in which he was informed of the action and the need to be present. The complaint indicates that Mr. Jiménez Morales stated to Radioperiódicos that the president of the INS was a person who “alters invoices ... who buys people ...”. The Government states that the complaint lodged by the president of the INS falls into the personal and individual sphere and that no consequences arising out of this can be accepted for the Institute or the Government. The INS confirms that the complaint was not lodged on behalf of the INS.

C. The Committee’s conclusions

1. 537. The Committee notes that in the present case the complainant organizations allege that the National Insurance Institute (INS) was unilaterally reorganized in August 2000, terminating the employment contracts of 243 insurance brokers (239, according to the Government), including members of the ANDAS executive committee, whose relationship with the employer became a commercial one without social guarantees, in a fraudulent evasion of applicable law and in violation of the Constitution and the legislation; the dismissal of two trade union officials of AGEINS who refused to accept the change in the articles of association and, with regard to whom, the INS issued instructions for exclusion from the new non-employment articles of independent broker. They also allege a judicial order for the arrest and imprisonment for alleged defamation following statements by a trade union official of AGEINS against the “underhand privatization”. Finally, the complainant organizations allege the withdrawal of the trade union facilities laid down in the collective agreement (premises, sets of boxes, etc.), the existence of which, moreover, was disavowed.
2. 538. The Committee notes the statements of the Government and the INS rejecting the allegations, as follows: (1) the reorganization of the INS to restructure and to reduce costs was not unilateral but rather, according to the documentation attached, carried out with the participation of the insurance brokers and ANDAS, and that the representative of AGEINS did not reply to the invitations issued to him; (2) the dismissals affected all insurance brokers and, as such, cannot be held to constitute anti-union discrimination; (3) the employees dismissed were paid compensation and were offered a temporary administrative contract under which they were able to participate in a subsequent public tender as independent insurance brokers; (4) the legal authorities stated that the collective agreement (denounced by the employer one month prior to its expiry), including the sections relating to the trade union premises and the arbitrator’s decision (which had expired), were inapplicable; (5) the legal authorities had stated that from 1 September the insurance brokers would no longer be workers or employees of the INS and would become independent under the administrative contract, for which reason this was not a false labour relationship; (6) with regard to their rights to social security, the brokers could enrol in a voluntary insurance programme with the Costa Rican Social Security Fund and this was stated by the legal authorities; (7) the two trade union officials of AGEINS referred to by the complainant organizations are not officials of a trade union but of an association registered in the commercial register; after their dismissal, they did not accept the temporary administrative contract offered and, because of this, they lost their accreditation and their client list, choosing instead to appeal for reinstatement to their previous positions with the legal authorities; (8) the judicial order to arrest and imprison trade union official Rodolfo Jiménez Morales of AGEINS arose because he was declared in contempt by the judicial authorities for not appearing before them as a result of a complaint for defamation lodged by the former president of the INS, after Mr. Jiménez Morales stated on the radio that the former president “alters invoices” and “buys people”; according to the INS and the Government, the complaint was lodged on an individual and personal basis by the former president of the INS and not on behalf of the Institute; and (9) the Government sent documentation attesting that the ANDAS facilities (trade union premises, boxes) were being used as the legal domicile in order to try to show continuity of employment contracts, after the insurance brokers had signed an administrative contract; for this reason use of these facilities was withdrawn.
3. 539. The Committee emphasizes in this regard that the right to express opinions through the press or otherwise is an essential aspect of trade union rights [see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 153]. The Committee has indicated that it can examine allegations concerning economic rationalization programmes and restructuring processes, whether or not they imply redundancies or the transfer of enterprises or services from the public to the private sector, only in so far as they might have given rise to acts of discrimination or interference against trade unions [see Digest, op. cit., para. 935].
4. 540. In these circumstances, the trade union organizations having been able to take part in the restructuring process of the INS, and noting that the dismissals affected all the insurance brokers of the INS, the Committee concludes that there does not seem to have been any anti-union discrimination. The Committee notes that the restructuring process consisted mainly of a change in the legal articles of association affecting the insurance brokers, who were offered the possibility of participating – under a temporary administrative contract – in a public tendering process to choose to be independent agents, in the context in which the collective agreement had expired and it considers, without assessing the following proceedings, that in itself this had no bearing on trade union freedoms.
5. 541. With regard to the alleged instructions of the INS to exclude the AGEINS trade union officials, Rodolfo Jiménez Morales, and his wife, Kenya Mejía Murillo, from the public tendering process to accede to the new status of independent agent, the Committee notes the Government’s explanations in this regard rejecting these allegations and that it also denies that they were officials of a trade union. Given that the complainant organizations have appealed that the disassociation of these employees with regard to the INS is linked to defence activities in the interests of the insurance brokers (in particular, denouncement of irregularities and the attempt to establish a commission of inquiry in the Legislative Assembly on the restructuring process), the Committee requests the Government to keep it informed of the outcome of the legal proceedings with regard to both officials. The Committee also requests the Government to inform it of the outcome of the proceedings for defamation against Rodolfo Jiménez Morales.

The Committee's recommendations

1. 542. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the present report and, in particular, the following recommendations:
   • (a) The Committee requests the Government to keep it informed of the outcome of the legal proceedings with regard to AGEINS officials, Rodolfo Jiménez Morales, and his wife, Kenya Mejía Murillo.
   • (b) The Committee requests the Government to inform it of the outcome of the proceedings for defamation against Rodolfo Jiménez Morales.