Report in which the committee requests to be kept informed of development - Report No 342, June 2006

Case No 2447 (Malta) - Complaint date: 20-SEP-05 - Closed

Allegations: The complainant alleges that the Government violated Conventions Nos. 87 and 98 by amending the law on public holidays, thereby nullifying existing clauses on this matter in previously concluded collective agreements, bypassing the collective bargaining process and restricting the parties’ right to adopt such clauses in future agreements

722. The complaint is contained in a communication from the General Workers’ Union (GWU) dated 20 September 2005.

1. 723. The Government replied in a communication dated 5 December 2005.
2. 724. Malta 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. 725. In its communication of 20 September 2005 the GWU alleged that the Maltese Government violated Conventions Nos. 87 and 98 by unilaterally deciding to amend the law on public holidays so as to remove the right of workers to recover public holidays falling on weekends, thereby bypassing the process of collective bargaining, nullifying existing clauses on the matter in previously concluded collective agreements and restricting the negotiating parties’ right to adopt such clauses in future collective agreements.
2. 726. The complainant added that according to section 17 of the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta): “Where in the case of full-time employees, a public holiday other than Sunday, falls on a weekly day of rest to which such employee is entitled, such an employee shall be entitled to an additional day of vacation leave during the calendar year when such a public holiday falls on a weekly day of rest or on a Sunday in respect of each such public holiday.” This provision essentially granted workers a right to recover public holidays falling on a weekend. Collective agreements generally reflected this provision often as an expressly agreed stipulation within the agreement itself. The established principle also had repercussions on shift workers’ right to additional leave and salary supplements for work on those days.
3. 727. According to the complainant, tripartite negotiations between employers’ unions and the Government had broken down earlier in 2005. A range of issues had been discussed, notably whether the right to additional days of leave should be revisited. On the day following the breakdown of negotiations, the Government unilaterally decided to amend the law on public holidays thereby removing the right to recover public holidays falling on weekends. The Government did not repeal or amend the abovementioned section 17 but instead amended section 6 of the National Holidays and Other Public Holidays Act (Chapter 252 of the Laws of Malta) to read as follows:
4. Notwithstanding anything contained in any other law, or in any contract, or in any other instrument whatsoever:
5. (a) where under the conditions of service applicable to a person such person is, or but for the provisions of this Act would have been, entitled to a holiday on any day which ceases to be a public holiday by virtue of this Act, such person shall cease to be entitled to a holiday on any such day as aforesaid, but shall become entitled to a holiday before that date;
6. (b) with effect from 1st January, 2005 when a National Holiday or a Public Holiday listed in the Schedule falls on a Saturday or Sunday, it shall not be deemed to be a public holiday for the purpose of entitling any person to an additional day of vacation leave; and any such other law, contract or instrument as aforesaid shall have effect accordingly.
7. 728. The complainant contended that the amendment: (i) violated fundamental ILO principles on the right of social partners to act as independent, autonomous organizations with the power of regulating their dealings through collective agreements; (ii) limited the social partners’ freedom of negotiation and forbade them to conclude collective agreements on the issue of granting workers the right to recover public holidays which fell on a weekly day of rest; and (iii) invalidated existing rules on compensatory days of leave contained in collective agreements expiring after the coming into force of the amendment.
8. 729. While the complainant did not contest the Government’s right to repeal or decide which days were public holidays, the complainant contended that, there being no exceptional circumstances (e.g. an acute crisis situation wherein there was a manifest danger to the national economy, national security or democracy), the process was not acceptable. When no agreement was reached, the Government took legislative action instead of continuing with further negotiations through which national consensus could potentially have been reached.
9. 730. The complainant found it revealing that the new amendment stated that public holidays falling on weekends were not considered as such only with regard to the right to additional leave days. The new provisions directly targeted collective agreements, making null and void such clauses both in law and in existing collective agreements. Therefore, the complainant saw this as a clear overriding of existing clauses agreed through free collective bargaining and appealed for the Government of Malta to be advised to remedy this situation.
10. 731. Furthermore, it was especially problematic that unions and employers could no longer be entitled to grant additional days of leave for public holidays falling on weekends, if they chose to do so of their own free will or through agreement with employees and unions. The law not only made null and void existing clauses in collective agreements, but also explicitly prohibited such clauses from ever being adopted in a collective agreement, thus contravening the right to free collective bargaining. The complainant therefore felt that the Government should be warned to remove any such restriction and to be advised not to intervene in free collective bargaining.
11. B. The Government’s reply
12. 732. In a communication dated 5 December 2005 the Government reaffirmed its commitment to social dialogue and free collective bargaining. The rights to associate freely and to bargain collectively were enshrined in the Employment and Industrial Relations Act which was enacted in 2002 after a lengthy and fruitful process of consultation with the social partners. This law replaced legislation with similar provisions which had been in force since 1945.
13. 733. The Government indicated that the allegation that it unilaterally took legislative measures after a breakdown in tripartite negotiations in 2005 was a misrepresentation of events. The Government had been committed to a policy of embarking on wide-ranging consultations with the social partners in the preparation of its annual budget for a number of years, and this was what happened also last year. A process of consultation was initiated by the Government in the run-up to the budget to inform the social partners on the general situation in the country and to consult with them on the proposed necessary measures. Whilst unanimous agreement was ideal, any such process of consultation did not imply that there should necessarily be agreement on the issues under discussion.
14. 734. Thus, there was no breakdown in tripartite negotiations, as alleged. No negotiations were taking place since the process in question was the usual pre-budget consultative process and not a process of collective bargaining. There was however a breakdown in the attempt undertaken by unions and employers to present a common document to the Government on the economic situation and the measures contemplated in the budget. As a result of this, the Government felt that it was its responsibility to take those measures it deemed appropriate in the national interest.
15. 735. The Government explained that employees were statutorily entitled to a minimum of four weeks and four working days annual leave entitlement apart from another 14 public and national holidays. The complainant did not contest the Government’s right to repeal or decide which days were public holidays. However, it was contesting the means by which this was done, saying that the process followed was not acceptable. In that respect, it was important to note that the granting of public holidays in Malta was carried out through the National Holidays and Other Public Holidays Act. It necessarily followed that any repeal or amendment of this law could only be made through appropriate legislative provision after approval by Parliament. This was precisely what happened through the amendments referred to and quoted by the complainant. There was no bypassing of the process of collective bargaining as alleged, simply because statutory provisions enacted by Parliament to establish national and public holidays were never a matter for collective bargaining, but essentially a matter for public national policy.
16. 736. The situation in 2004 was that a worker had a statutory right emanating from article 17 of the Employment and Industrial Relations Act to recover an additional day of vacation leave when a national or public holiday fell on a day of rest. The amendment to the National Holidays and Other Public Holidays Act did not amend the Employment and Industrial Relations Act or affect any right to freedom of association or to bargain collectively. It redefined the concept of what constituted a national or public holiday. By virtue of this amendment, any day which was a national or public holiday and fell on a Saturday or a Sunday, which also happened to be a workers’ rest day, was no longer considered as a national or public holiday for the purposes of entitlement to an additional day of vacation leave. The wording of the text was chosen precisely to ensure that it would not have a negative repercussion on workers’ compensation (in general, work on national or public holidays attracts additional remuneration). As the amendment stood, employees who worked on national or public holidays falling on a Saturday or Sunday did not suffer any losses in financial remuneration since, for any purpose other than the entitlement to an additional day of vacation leave, this day remained a national or public holiday thus still attracting a higher rate of remuneration. This was the only reason for the wording of the amendment of the legislation.
17. 737. The relevant clause in collective agreements dealing with this matter reflected, and in most cases repeated word for word, the minimum provisions of the law. It was important to emphasize that it was the definition of what constituted a national or public holiday in law, and in particular in so far as the entitlement to an additional day of leave when the holiday fell on a Saturday or a Sunday, which happened to be a workers’ day of rest, that had changed. Any such clauses in collective agreements had not become null and void as alleged. However, it followed that any reference to the term “national holidays” or “public holidays” in any law, instrument or contract had to be interpreted in the light of this definition. This had nothing to do with the nullifying of existing clauses on the matter in previously concluded collective agreements and restricting the negotiating parties’ rights to adopt such clauses in future collective agreements or invalidating existing rules on compensatory days of leave contained in collective agreements, as alleged by the complainant.
18. 738. The paradox was that, according to the Government, whilst the complainant did not contest the Government’s right to decide which days were national or public holidays, it was interpreting the exercise of this right as an attack on the fundamental Conventions on freedom of association. This meant that if the Government had decided to remove four public holidays from the calendar, the complainant would have accepted this measure as a Government’s prerogative. However, when the Government legislated by defining the concept of a national or public holiday in such a way as to ensure that workers who worked on such days retained the right to be remunerated at the established higher rates, the complainant not only objected to this measure, as it is its right, but perceived it to be an attack on freedom of association and collective bargaining. This was an allegation which the Government vehemently objected to.
19. 739. It was important to underline that this amendment in no way targeted or affected the process of collective bargaining as enshrined in Convention No. 98 or any element of freedom of association pursuant to Convention No. 87. Contrary to what was being alleged, unions and employers’ associations were and remained free to act as independent autonomous organizations with the power of regulating their dealings through collective agreements. There was no limit whatsoever on the social partners’ freedom of negotiation. Unions had been and remained free to negotiate with employers on any condition of employment, including the granting of additional days of vacation leave or of any other type of leave for that matter. In fact, various collective agreements currently in force had annual, sick leave and other entitlements which were higher than the statutory minimum requirement or which did not exist as a legal requirement. There were, for example, some collective agreements which had clauses granting an extra day of vacation leave to celebrate Union Day. Such arrangements were the product of a long tradition of free collective bargaining. The Government had not only refrained from interfering with either the process or the content of collective agreements, but actually encouraged it. In fact, the Government itself, as an employer, had on 26 October 2005 concluded a collective agreement for all public officers which regulated their conditions of employment for a six-year period. This was done after intensive and complicated negotiations with six unions representing the various categories of workers. One of these was, in fact, the complainant which did not deem it necessary to either raise or insist on the issue which it had earlier raised with the ILO.
20. 740. The Government added that it had responsibly taken various decisions in its financial estimates presented in late 2004 for compelling reasons of national economic interest. Malta was facing serious economic problems brought about by various factors including globalization, economic restructuring, fiscal deficit and ever-increasing fuel prices. The Government had adopted measures to attempt to address the urgent need to retain economic competitiveness and productivity. As stated earlier, the Government could have removed a number of national and public holidays from the calendar as was its right and as acknowledged by the complainant. However, it adopted a softer approach. The measure adopted by the Government was very prudent and was formulated in such a way so as to minimize its impact on workers’ earnings and living standards. Unfortunately, the Government’s preference for a milder way of dealing with this issue had been misconstrued and had resulted in a mistaken interpretation and representation of events.
21. 741. In conclusion, the Government emphasized that: (i) there was no connection between the issue at hand and Convention No. 87; (ii) there was no law in Malta, including the one referred to by the complainant, which violated any Article of Convention No. 98; and (iii) the amendment to the National Holidays and Other Public Holidays Act was made to safeguard the national interest in seeking remedies to the loss of competitiveness of the economy in a globalized environment and was a moderate and necessary measure for that purpose which also sought to safeguard workers’ living standards.

C. The Committee’s conclusions

1. 742. The Committee notes that the present complaint concerns allegations that the Government violated Conventions Nos. 87 and 98 by amending the law on public holidays, thereby nullifying existing clauses on this matter in previously concluded collective agreements, bypassing the collective bargaining process and restricting the parties’ right to adopt such clauses in future agreements.
2. 743. In particular, the Committee notes from the complainant’s allegations that section 17 of the Employment and Industrial Relations Act essentially granted workers a right to recover public holidays falling on a weekend and that collective agreements generally reflected this provision, often as an expressly agreed stipulation within the agreement itself. However, pursuant to the breakdown of tripartite negotiations on this issue in 2005, the Government unilaterally decided to amend the law on public holidays thereby removing the right to recover public holidays falling on weekends. The Government did so not by amending the abovementioned section 17, but by amending section 6 of the National Holidays and Other Public Holidays Act so as to read as follows:
3. Notwithstanding anything contained in any other law, or in any contract, or in any other instrument whatsoever:
4. (a) where under the conditions of service applicable to a person such person is, or but for the provisions of this Act would have been, entitled to a holiday on any day which ceases to be a public holiday by virtue of this Act, such person shall cease to be entitled to a holiday on any such day as aforesaid, but shall become entitled to a holiday before that date;
5. (b) with effect from 1st January, 2005 when a National Holiday or a Public Holiday listed in the Schedule falls on a Saturday or Sunday, it shall not be deemed to be a public holiday for the purpose of entitling any person to an additional day of vacation leave; and any such other law, contract or instrument as aforesaid shall have effect accordingly.
6. 744. The Committee notes that although the complainant does not contest the fact that the Government has the right to decide which days will be public holidays, it argues that the amendment: (i) violates fundamental ILO principles on the right of social partners to act as independent, autonomous organizations with the power of regulating their dealings through collective agreements; (ii) limits the social partners’ freedom of negotiation as it forbids them to conclude collective agreements on the issue of granting workers the right to recover public holidays which fall on a weekly day of rest; and (iii) invalidates existing rules on compensatory days of leave contained in collective agreements expiring after the entry into force of the amendment. It further notes that according to the complainant, there were no exceptional circumstances (e.g. an acute crisis or manifest danger to the national economy) justifying the measure in question.
7. 745. The Committee notes that according to the Government, there was no breakdown in tripartite negotiations in 2005, but rather a breakdown in the attempt undertaken by unions and employers to present a common document to the Government on the economic situation and the measures contemplated in the budget, in the framework of the annual wide-ranging consultations with the social partners in preparation for the annual budget. As a result of this breakdown, the Government felt that it was its responsibility to take those measures it deemed appropriate in the national interest as a remedy to the loss of competitiveness and productivity of the economy in a globalized environment. There was no bypassing of the process of collective bargaining, as alleged, simply because statutory provisions enacted by Parliament to establish national and public holidays were never a matter for collective bargaining, but essentially a matter of public national policy. The Government could have removed a number of national and public holidays from the calendar as was its right and as acknowledged by the complainant. However, it adopted a softer and prudent approach, dictated by compelling reasons of national economic interest, and formulated it in such a way as to minimize its impact on workers’ earnings and living standards.
8. 746. The Committee further notes that according to the Government, the amendment to the National Holidays and Other Public Holidays Act simply redefines the concept of what constitutes a national or public holiday and does not affect any right to freedom of association or to bargain collectively. It is the definition of what constitutes a national or public holiday in law that has changed; any such clauses in collective agreements have not become null and void as alleged, although any reference to the term “national holidays” or “public holidays” in any law, instrument or contract now has to be interpreted in the light of the new definition. However, according to the Government, this has nothing to do with nullifying existing clauses on the matter in previously concluded collective agreements and restricting the negotiating parties’ right to adopt such clauses in future collective agreements, as alleged by the complainant. The unions and employers’ organizations are free to act as independent autonomous organizations so as to negotiate the conditions of employment, including the granting of additional days of vacation leave, as is currently the practice in various collective agreements.
9. 747. The Committee observes that both the complainant and the Government do not question the Government’s prerogative to decide, as a matter of public policy, which days will be national or public holidays. The Committee also observes however, that the wording of the abovementioned section 6 of the National Holidays and Other Public Holidays Act renders automatically null and void any provision which derogates from this section in any other law, contract or instrument, including collective agreements in force. Thus, section 6 (especially the opening paragraph and paragraph (b)) has the effect of not simply changing the definition of the national or public holidays, as indicated by the Government, but also rendering null and void all other legal provisions in any instrument, including collective agreements, which grant workers the right to recover public holidays falling on a weekend.
10. 748. The Committee considers that the interruption by law of provisions in already concluded. collective agreements is not in conformity with the principles of free collective bargaining. The primary reason for such a conclusion is that the voluntary negotiation of collective agreements, and therefore the autonomy of the bargaining partners, is a fundamental aspect of freedom of association principles [see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 844]. It recalls that in a previous case, it had found that the suspension or derogation by decree – without the agreement of the parties – of collective agreements freely entered into by the parties violates the principle of free and voluntary collective bargaining established in Article 4 of Convention No. 98. If a government wishes the clauses of a collective agreement to be brought in line with the economic policy of the country, it should attempt to persuade the parties to take account voluntarily of such considerations, without imposing on them the renegotiation of the collective agreements in force [see Digest, op. cit., para. 876]. While the Committee does not call into question the measures taken by the Government to modify the legislative requirement that holidays which fall on a weekly rest day be compensated with a vacation day, it requests the Government to amend section 6 of the National Holidays and Other Public Holidays Act so as to ensure that it does not render automatically null and void any provisions in existing collective agreements which grant workers the right to recover public holidays falling on a Saturday or Sunday, thus leaving such matters to free and voluntary negotiations. The Committee requests to be kept informed in this respect.
11. 749. Moreover, the Committee notes that section 6 of the National Holidays and Other Public Holidays Act also precludes voluntary negotiations in the future over the issue of granting workers the right to recover national or public holidays which fall on a Saturday or Sunday. Indeed, any provision in a future collective agreement derogating from the provisions of section 6 would be rendered automatically null and void.
12. 750. The Committee recalls that, it has accepted in the past that Governments may take measures restraining collective bargaining only within the context of economic stabilization policies, if such measures remain exceptional and do not exceed a reasonable period of time. For instance, the Committee has found that legislative provisions prohibiting the negotiation of wage increases beyond the level of the increase in the cost of living are contrary to the principle of voluntary collective bargaining embodied in Convention No. 98; such a limitation would be admissible only if it remained within the context of an economic stabilization policy and, even then, only as an exceptional measure and only to the extent necessary, without exceeding a reasonable period of time [see Digest, op. cit., para. 891]. The Committee observes, however, that the Government has not established on the material presented that the measure under examination falls within the framework of an economic stabilization policy so as to constitute an exceptional measure with limited application in time.
13. 751. The Committee recalls that, where intervention by the public authorities is essentially for the purpose of ensuring that the negotiating parties subordinate their interests to the national economic policy pursued by the Government, irrespective of whether they agree with that policy or not, is not compatible with the generally accepted principles that workers' and employers' organizations should enjoy the right freely to organize their activities and to formulate their programmes, that the public authorities should refrain from any interference which would restrict this right or impede the lawful exercise thereof, and that the law of the land should not be such as to impair or be so applied as to impair the enjoyment of such right [see Digest, op. cit., para. 867]. The Committee therefore requests the Government to amend section 6 of the National Holidays and Other Public Holidays Act so as to ensure that this provision does not preclude voluntary negotiations in the future over the issue of granting workers the right to recover national or public holidays which fall on a Saturday or Sunday. The Committee requests to be kept informed in this respect.

The Committee's recommendations

1. 752. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendation:
   • The Committee requests the Government to amend section 6 of the National Holidays and Other Public Holidays Act so as to ensure that this provision: (i) does not render automatically null and void any provisions in existing collective agreements which grant workers the right to recover public holidays falling on a Saturday or Sunday; and (ii) does not preclude voluntary negotiations in the future over the issue of granting workers the right to recover national or public holidays which fall on a Saturday or Sunday on the basis of a collective agreement. The Committee requests to be kept informed in this respect.