Interim Report - Report No 337, June 2005

Case No 2337 (Chile) - Complaint date: 26-FEB-04 - Closed

Allegations: Failure of the transnational enterprise ING Seguros de Vida S.A. to allocate work to trade union leaders; practices used by the enterprise to obstruct the collective bargaining process; dismissal of delegates and members of the complainant trade union; pressure applied by the enterprise to force members working at two branches to resign from the trade union; non-compliance with collective agreements, in particular, deduction of benefits arising under those agreements; the enterprise’s refusal to recognize the affiliation to the Trade Union ING AFP (Pension Fund Administrator) Santa María of workers whose labour contracts were modified by the enterprise, with the result that this trade union is running short of money and its existence is under threat; unilateral imposition of individual agreements

425. The complaint appears in a communication from the National Trade Union of Workers of ING Seguros de Vida S.A. (SNTISV) dated 26 February 2004. In a communication dated 26 March 2004, the Confederation of Banking and Related Trade Unions (CSBA) supported the complaint. The Government sent its observations in a communication dated 13 January 2005.

1. 426. Chile 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 complainant’s allegations

1. 427. In its communication of 26 February 2004, the SNTISV alleges that the transnational enterprise ING violated the trade union rights of the trade unions of the enterprises making up its holding company in Chile, the SNTISV and the Trade Union ING AFP Santa María. More specifically, the complainant organization alleges the following violations of trade union rights by the enterprise ING:
2. (a) Failure to allocate work to the leaders of the SNTISV: a fine has already been imposed by the Municipal Labour Inspectorate concerning this situation and on 10 February 2004 the Labour Directorate reported the enterprise to the First Labour Tribunal for anti-trade union practices.
3. (b) Obstructing the right to collective bargaining of the unionized workers, both those belonging to the SNTISV and the Trade Union ING AFP Santa María. This violation took place during the collective bargaining processes carried out with the SNTISV in May-June 2003 and the Trade Union ING AFP Santa María during the month of December 2003. In each case, the enterprise refused to negotiate in practice, thus forcing the trade unions to have recourse to article 369 of the Labour Code, which establishes the maintenance of benefits for 18 months without readjustment.
4. (c) The dismissal of delegates and members of the SNTISV subsequent to the collective bargaining process undertaken in May-June 2003. This situation has meant that some of the workers who were dismissed filed suit against the ING Seguros de Vida S.A. in various Chilean cities. Furthermore, at the time of the bargaining process, the trade union had around 300 members but by December 2003 it had only 85, most of them having been dismissed without severance pay.
5. (d) A suit for anti-trade union practices filed by the Provincial Labour Inspectorate of Melipilla, which was ratified by the Tribunal in Case No. 1309-2002, due to the fact that all the members at this branch were put under pressure to resign from the trade union. An identical situation arose in the Iquique office, following the collective bargaining process of May 2003. This last fact was established in Provincial Labour Inspectorate Verification Report No. 13.00.04/12.
6. (e) Disregard for the consequences and effects of collective agreements, in particular the collective agreement of 9 July 2003, reducing benefits arising from these agreements.
7. (f) ING also refuses to recognize and denies affiliation to the Trade Union ING AFP Santa María of workers whose individual labour agreements were modified by the enterprise, with the result that the Trade Union ING AFP Santa María is now running short of money and its existence is under threat.
8. (g) ING’s policy regarding agreements is based on the unilateral imposition of individual agreements, containing provisions regarding their maintenance in force that are extremely difficult to comply with.
9. B. The Government’s reply
10. 428. In its communication of 13 January 2005, the Government refers to the allegation that the enterprise failed to allocate work to the leaders of the SNTISV and states that, in this case, the Labour Inspectorate imposed a fine. Furthermore, on 10 February a suit, Case No. 719-04, was filed with the Labour Court of First Instance of Santiago. On 2 October 2004, with a ruling on the case pending, trade union leaders Messrs. Iván Ferrada Quilodrán, Pía Caro Recio and Marco Antonio Rodríguez submitted a document to the Court in which they announced that an agreement had been concluded with the enterprise. As a part of this agreement, the parties agreed to end the case, with the enterprise ING being forced to pay each of the individuals involved a specified sum and those sums being accepted by the plaintiffs, who in doing so resigned from their jobs and received the entirety of their severance pay with regard to the employment relationship linking them to the enterprise.
11. 429. As to the allegation that the Dutch multinational ING denied the right to collective bargaining to those unionized workers belonging to the SNTISV and the Trade Union ING AFP Santa María, the Government states that both trade unions submitted draft collective agreements during the course of 2003, both cases being extremely complex in nature. The SNTISV has long-standing differences with its employer (Aetna Chile Seguros de Vida), as in 1999 the Labour Services informed the Committee on Freedom of Association of events detrimental to the right to collective bargaining.
12. 430. On 17 April 2003, the complainant trade union submitted a draft collective agreement; an impasse arose within the collective bargaining process when the enterprise refused to negotiate with regard to workers’ pay conditions, basically made up of commissions. This demand led to a strike that lasted for four days. Finally, faced with a final offer, one of the conditions of which was that current wages should be lowered, the parties involved chose to have recourse to article 369, clause 2, of the Labour Code. For almost all of the workers, this meant having to accept an individual agreement, as they had no recourse to a minimum level under a previous collective agreement order to freeze benefits.
13. 431. Prior to this process, the Trade Union ING AFP Santa María (also the property of the Dutch holding company ING) undertook a bargaining process during which it submitted a draft collective agreement in the month of November 2003. This bargaining process had an added complication in that the enterprise challenged the workers involved, saying they had concluded their labour relationship and had received legal severance pay and were subsequently hired by another firm of the holding company ING. Previously, the Labour Inspectorate imposed a fine on the enterprise for excluding the abovementioned workers from receiving the benefits attached to the collective agreement. The enterprise then appealed against this ruling before the First Labour Tribunal of Santiago (Case No. 5276 of 2003). With the filing of this case, the Labour Inspectorate was forced to abstain from ruling in this respect, which led to the trade union lodging a writ of protection against the Municipal Labour Inspector of the North East, which was not accepted by the Santiago Court of Appeal. Given the fall in the number of individuals involved, and faced with an offer whose conditions were even stricter, the workers in this case also chose to have recourse to article 369, to maintain the benefits for 18 months without their wages being readjusted.
14. 432. The Government states that, prior to and during the negotiations, the Dutch enterprise ING made parallel offers to the individuals involved, pressing for the amendment of the individual agreements with the aim of lowering commissions across the board, an attempt which was resisted by the trade unions and which forced them to choose the lesser evil, that is to say, the formula of article 369.
15. 433. As to the dismissal of delegates and members of the SNTISV, subsequent to the collective bargaining process concluded in June 2003, the Government states that trade union leaders and the enterprise stated that during 2003 a large number of workers affiliated to the Trade Union ING Seguros de Vida were dismissed. However, they could provide no record of the exact number or existence of legal claims for unfair dismissal or unsettled payments/benefits.
16. 434. As to the suit for anti-trade union practices filed with the Tribunal by the Provincial Labour Inspectorate of Melipilla, Case No. 1309-2002, which is related to workers cancelling their trade union membership, the Government states that this suit was accepted in a ruling issued by the Tribunal of Melipilla on 4 August 2003, and that the defendant has been ordered to pay a fine of 10 Monthly Tax Units (MTU) and costs. The ruling was confirmed by the San Miguel Court of Appeal.
17. 435. As to the allegation that the enterprise disregards the consequences and effects of the collective agreements, the Government states that the Trade Union ING Seguros de Vida, during the meetings held with the authorities of the Labour Directorate, demonstrated that prior to the collective bargaining process and once the workers had exercised their prerogative with regard to article 369, clause 2, of the Labour Code, the enterprise proceeded to amend the contracts of the sales staff, reducing commissions and benefits which had already been stipulated in accordance with Ruling No. 4984/217 of 20 November 2004 to that effect. It was decided that this constituted a violation of article 311 of the Labour Code, as it is not possible to reduce benefits of a collective nature through an individual procedure. The new clauses established requirements that were extremely difficult to comply with, leading to a high turnover of workers and subsequently to the withholding of commissions that had accrued and that were not paid, as the worker was no longer linked to the enterprise. Despite this Labour Directorate ruling, Dutch ING proceeded to amend the individual agreements, as stated in the records provided by the trade union.
18. 436. As to the allegation that the ING refuses to recognize and denies affiliation to the Trade Union ING AFP Santa María (Pension Fund Administrator of the holding company) on the part of the workers whose labour contracts it amended, the Government states that, as is explained above, the collective bargaining process which took place in 2003 excluded those workers who had received their severance pay and who had been hired by another firm of the same holding company, making it impossible for a large number of workers belonging to the trade union to participate in collective bargaining, a fact that both the Labour Directorate and the labour tribunals have confirmed in their rulings.
19. 437. As to the alleged unilateral imposition of contracts, in addition to its previous statements on this issue, the Government adds that, through mediation and unofficial steps taken by high-ranking authorities and officials within the service, the Labour Directorate attempted to aid the parties to find alternative solutions to the collective disputes in which they were involved during 2003 and 2004. However, these actions proved to be fruitless, as the Netherlands holding company’s policy on commercial decisions affecting human resources management was inflexible. In addition to the preceding information, it should be noted that the Trade Union ING Seguras de Vida amended its statutes in July 2002, changing from an enterprise union to an inter-enterprise union in order to survive when, following the collective bargaining process, the number of members fell from 310 to 35. However, the Netherlands enterprise made a parallel offer consisting of a benefits package, to which was attached the condition that the workers could not be affiliated to the trade union. This measure effectively brought to an end the recruitment to the trade union of employees of the ING enterprises and those who had already joined the union asked to cancel their membership.
20. 438. Finally, the Government states that the leaders of the Trade Union ING Seguros de Vida S.A. were prevented from working for 17 months, at the end of which time they chose to sign an agreement, as is laid out at the beginning of the Government’s reply, in order to find a way out of a situation that was having an extremely negative effect, both on their financial situations and on morale, without awaiting the results of the legal cases regarding the allocation of work to trade union leaders set out in the contract and the other issues related to alleged anti-trade union practices.

C. The Committee’s conclusions

1. 439. The Committee notes that the complainant organization presented the following allegations: failure on the part of the transnational enterprise ING Seguros de Vida S.A. to allocate work to trade union leaders of the National Trade Union of Workers of ING Seguros de Vida S.A. (SNTISV); practices used by the enterprise to obstruct the collective bargaining process; dismissal of delegates and members of the complainant trade union; pressure applied by the enterprise to force members working at two branches to withdraw from the trade union; non-compliance with collective agreements, in particular, deduction of benefits arising under those agreements; the enterprise’s refusal to recognize the affiliation to the Trade Union ING AFP (Pension Fund Administrator) Santa María of workers whose labour contracts were modified by the enterprise, with the result that this trade union is running short of money and its existence is under threat; unilateral imposition of individual contracts.
2. 440. As to the alleged non-allocation of work to the trade union leaders of the SNTISV, the Committee notes that the complainant organization states that the Labour Inspectorate fined the enterprise and that the Government stresses that: (1) a charge of anti-trade union practices was also brought against the enterprise ING Seguros de Vida S.A.; and (2) that, during the procedure, the three trade union leaders who had not been allocated work concluded an agreement with the enterprise, accepting set sums of money, resigning from their posts and bringing to an end definitively their labour relationship and the case for non-allocation of work to trade union leaders and other anti-trade union practices.
3. 441. As to the practices allegedly employed by the enterprise to prevent collective bargaining by workers, both belonging to the SNTISV of Seguros de Vida and the Trade Union ING AFP Santa María in 2003, in that the enterprise refused to participate in the collective bargaining process, the Committee notes the Government’s statements, according to which when the complainant trade union submitted a draft collective agreement, the enterprise refused to negotiate with regard to workers’ pay conditions, basically made up of commissions. This led to a strike that lasted for four days. Finally, faced with a final offer lowering pay levels, the workers involved chose to have recourse to article 369, clause 2, of the Labour Code (which, according to the complainant, establishes the maintenance of the benefits included in the previous collective agreement for 18 months without readjustment); which, for almost all of the workers, meant having to accept an individual agreement, as they had no recourse to the previous collective agreement.
4. 442. As to the collective bargaining process carried out between one of the ING enterprises with the Trade Union ING AFP Santa María, the Committee notes the Government’s statements, according to which: (1) the Labour Inspectorate fined the enterprise for excluding certain workers from receiving the benefits included in the previous collective agreement; (2) with the fall in the number of workers involved in the collective bargaining process for 2003 and faced with an offer, the conditions of which were stricter than those of individual agreements, the workers also chose to have recourse to article 369 of the Labour Code.
5. 443. In relation to the various allegations connected to collective bargaining, the Committee stresses that while the question as to whether or not one party adopts an amenable or uncompromising attitude towards the other party is a matter for negotiation between the parties, both employers and trade unions should bargain in good faith making every effort to reach an agreement [see Digest of decisions and principles of the Freedom of Association Committee, 1996, 4th edition, para. 817]. The Committee requests the Government to take measures to ensure that in the future the ING Seguros de Vida S.A. and AFP Santa María respects this principle and abstains from employing anti-trade union practices such as those verified by the Labour Inspectorate.
6. 444. With regard to the dismissal of delegates and members of the SNTISV subsequent to the 2003 collective bargaining process, the Committee notes that the complainant organization has not mentioned the number or names of those dismissed, or the reasons given by the enterprise for the dismissals, nor, as pointed out by the Government, if judicial appeals were lodged. The Committee invites the complainant organization to communicate this information regarding the number of individuals dismissed and any facts that may indicate that the dismissals are linked to the exercise of trade union rights.
7. 445. As to the alleged pressure for workers to cease membership of the SNTISV, the Committee notes that the Government states that the judicial authority fined the enterprise ten Monthly Tax Units (MTU) for this offence (adjusted according to the cost-of-living index). The Committee deplores the pressure of an anti-trade union nature verified by the judicial authority and requests the Government to take the measures necessary to ensure that the enterprise ING Seguros de Vida S.A. abstains from such practices, as well as from offering benefit packages to workers in return for not becoming affiliated to the trade union, as stated by the Government. The Committee also deplores the fact that these practices led to members feeling compelled to leave the trade union, as stated by the Government.
8. 446. As to the enterprise’s alleged failure to comply with the collective agreements, the Committee notes the Government’s statements that: (1) despite the terms of article 369 (which establishes the maintenance of benefits included under collective agreements for 18 months without readjustment when no other agreement has been negotiated at the end of their period of validity), the enterprise ING Seguros de Vida amended the individual agreements, lowering previously stipulated commissions and benefits of workers, in violation of article 311 of the Labour Code (according to the expert ruling of the Ministry of Labour), as collective benefits may not be reduced through the use of individual contracts; and (2) the new clauses of the individual agreements established requirements that were extremely difficult to comply with, leading to a high rotation of workers (between the abovementioned enterprises) and subsequently the withholding of commissions that had accrued and that were then not paid, as the worker was no longer linked to the enterprise. The Committee requests the Government to take the necessary measures to ensure that the enterprise ING Seguros de Vida respects the legislation and the collective agreement which was extended for 18 months in the light of article 369 of the Labour Code.
9. 447. As to the AFP Santa María enterprise’s alleged refusal to recognize as members of the Trade Union ING AFP Santa María those workers whose labour agreements were amended by the enterprise, the Committee notes that according to the Government: (1) the collective bargaining process which took place in 2003 excluded those workers who had been released from their contracts and who had been hired by another firm of the same holding company; and (2) the Labour Directorate and the tribunals have confirmed this fact through various rulings. The Committee believes that the situation described constitutes an abuse of right and requests the Government to take the measures necessary to prevent the enterprise from having recourse to anti-trade union practices in the future.
10. 448. The Committee expresses its concern in observing the numerous anti-trade union practices ongoing within the ING Seguros de Vida S.A. and AFP Santa Maria enterprises, which were verified by the administrative and judicial authorities and requests the Government to take the necessary measures to ensure that Conventions Nos. 87 and 98 are fully respected within the abovementioned enterprises.
11. 449. Finally, the Committee requests the Government to solicit information from the employers’ organizations concerned, with a view to having at its disposal their views, as well as those of the enterprises concerned, on the questions at issue.

The Committee's recommendations

1. 450. In the light of its foregoing interim conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee expresses its concern in observing the numerous anti-trade union practices ongoing within the ING Seguros de Vida S.A. and AFP Santa Maria enterprises, which were verified by the administrative and judicial authorities and requests the Government to take the necessary measures to ensure that Conventions Nos. 87 and 98 are fully respected within the abovementioned enterprises.
   • (b) As to the practices allegedly employed by the enterprise to prevent collective bargaining by workers, belonging both to the National Trade Union of Workers of ING Seguros de Vida S.A. (SNTISV) and the Trade Union ING AFP Santa María in 2003, in that the enterprise refused to participate in the collective bargaining process, the Committee highlights the principle that, while the question as to whether or not one party adopts an amenable or uncompromising attitude towards the other party is a matter for negotiation between the parties, both employers and trade unions should bargain in good faith making every effort to reach an agreement. The Committee requests the Government to take measures to ensure that in the future the ING Seguros de Vida S.A. and AFP Santa María enterprises respect this principle and abstain from employing anti-trade union practices such as those verified by the Labour Inspectorate.
   • (c) With regard to the dismissal of delegates and members of the SNTISV subsequent to the 2003 collective bargaining process, the Committee invites the complainant organization to communicate any information regarding the number of individuals dismissed and any facts that may indicate that the dismissals are linked to the exercise of trade union rights.
   • (d) As to the alleged pressure for workers to withdraw from the SNTISV, the Committee deplores the pressure of an anti-trade union nature verified by the judicial authority and requests the Government to take the measures necessary to ensure that the enterprise ING Seguros de Vida S.A. abstains from such practices, as well as from offering benefit packages to workers in return for not joining the trade union, as stated by the Government. The Committee also deplores the fact that these practices led to the workers feeling compelled to leave the trade union.
   • (e) As to the enterprise’s alleged failure to comply with the collective agreements, the Committee requests the Government to take the necessary measures to ensure that the ING Seguros de Vida S.A. respects the legislation and the collective agreement which was extended for 18 months in light of article 369 of the Labour Code.
   • (f) As to the enterprise’s alleged refusal to recognize as members of the Trade Union ING AFP Santa María those workers whose labour agreements were amended by the enterprise and excluded them from the scope of the collective bargaining process, the Committee notes that these facts were verified by the judicial authority and requests the Government to take the necessary measures to prevent the enterprise from having recourse to anti-trade union practices in the future.
   • (g) The Committee requests the Government to solicit information from the employers’ organizations concerned, with a view to having at its disposal their views, as well as those of the enterprises concerned, on the questions at issue.