Report in which the committee requests to be kept informed of development - Report No 358, November 2010

Case No 2730 (Colombia) - Complaint date: 06-JUL-09 - Closed

Allegations: The Cali Public Sanitation Services Company Workers’ Union (SINTRAEMSIRVA) alleges that, in the context of the liquidation of the company, which was completed on 25 March 2009, retirement was imposed on trade union leaders and members with the aim of eliminating the trade union, even though collective bargaining was in progress. The trade union claims that the retirements were effected without observance of the statutory circumstantial trade union immunity that was applicable during the bargaining process and without payment of the compensation and pension benefits provided for in the collective agreement in force

1. 423. The complaint is contained in communications from the Cali Public Sanitation Services Company Workers’ Union (SINTRAEMSIRVA) dated 6 July and 7 September 2009. The Single Confederation of Workers (CUT) and Public Services International (PSI) supported the complaint in communications dated 12 and 18 August 2010, respectively.
2. 424. The Government sent its observations in a communication dated February 2010.
3. 425. Colombia has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), the Labour Relations (Public Service) Convention, 1978 (No. 151), and the Collective Bargaining Convention, 1981 (No. 154).

A. The complainant’s allegations

1. 426. In its communications dated 6 July and 7 September 2009, the SINTRAEMSIRVA alleges that the Domestic Public Services Supervisory Authority liquidated the Cali Public Sanitation Services Company (EMSIRVA ESP) on grounds of supposed economic and financial non-viability. However, the complainant claims that the true motive for the liquidation was to eliminate the trade union at a time when it was engaged in collective bargaining.
2. 427. The complainant indicates that in December 1996 the SINTRAEMSIRVA and the company signed an unofficial accord which was later elevated to the status of collective labour agreement. The agreement provided for a compensated retirement plan designed to compensate workers who opted for voluntary retirement so as to reduce the company’s labour costs. Retirements under this scheme led to a significant reduction in the organization’s income as 317 workers retired. Eight years later, in October 2005, the Government intervened in the company through the Domestic Public Services Supervisory Authority on account of the company’s high labour and pension costs.
3. 428. In November 2006, the Domestic Public Services Supervisory Authority adopted a rescue package for the company based on the renegotiation of agreed benefits and a voluntary retirement plan. Even though the SINTRAEMSIRVA indicated its willingness to start new negotiations, the company refused to do so until August 2008. The negotiations covered, among other things, the economic proposal for compensation for voluntary retirement. The SINTRAEMSIRVA indicated its willingness to respect the agreement signed in 1996. However, on 10 March 2009, the Domestic Public Services Supervisory Authority announced its definitive proposal which all the contract workers had to accept. The proposal guaranteed rights that were considerably inferior to those provided for in the collective agreement as regards compensation and the old-age pension. All the statutory and discretionary benefits established in the collective agreement in force were ended definitively. On 20 March 2009, the union’s general assembly decided that the workers would accept voluntary retirement subject to payment of the compensation which had been established in the collective agreement. On 25 March 2009, the Domestic Public Services Supervisory Authority decided to liquidate the company because no agreement had been reached with the union concerning renegotiation of the collective agreement in force. The work of the company is currently being carried out by a labour cooperative.
4. 429. According to the SINTRAEMSIRVA, liquidation of the company was the mechanism used for justifying termination of the workers’ employment, thereby reducing the number of active members in the union.
5. 430. The SINTRAEMSIRVA also alleges that, when the lifting of trade union immunity was sought, the union argued that the workers were engaged in collective bargaining, owing to the partial denunciation of the collective agreement by the company, and hence they were protected by trade union immunity which could not be lifted until the bargaining process was completed. But the administrative authority states that it has no proof of any such denunciation. The union attaches a copy of the said denunciation and also of various official documents drawn up during the collective bargaining process started after the denunciation. The judicial authority authorized the lifting of trade union immunity so that the company could dismiss the union leaders.
6. 431. In the context of the denunciation filed with the Ministry of Social Protection on account of the company’s refusal to engage in collective bargaining, a decision was issued to the effect that the issue should be settled by the judicial authority. As regards the complainant’s claim that the pension rights established in the agreement were not recognized by the liquidating authorities during the liquidation of the company, the judicial authority decided in favour of the workers.

B. The Government’s reply

1. 432. In its communication of February 2010, the Government states that in the present case the SINTRAEMSIRVA workers never gave any indication of seeking a dispute inasmuch as they did not denounce the agreement or present a list of demands to the EMSIRVA ESP, which did not denounce the collective agreement either. In the specific case of the EMSIRVA ESP, a process of “renegotiation” took place in the context of the liquidation of the company for legal reasons connected with the grounds for liquidation of enterprises providing such services. The renegotiation was one of a number of measures aimed at rescuing the company in liquidation and was subject to the condition that, if no agreement was reached between the parties after reasonable efforts were made, liquidation would ensue. The workers were aware of that condition. The decision to conclude the bargaining process and proceed with liquidation of the company was taken when it became clear that no agreement could be reached between the EMSIRVA ESP and the complainant organization. This occurred after several meetings, and so there is no basis for the allegation that there was insufficient opportunity for the parties to reach an agreement.
2. 433. The Government explains that, by Decision No. SSPD-20051300024305 of 27 October 2005, the Domestic Public Services Supervisory Authority ordered the seizure of the EMSIRVA ESP with a view to liquidation. The decision stated that, further to completion of the first year of execution of the management programme and further to the evaluation which was completed on 30 September 2005, it was determined that, although certain commitments had been met in the areas of accounting, administration and legal and commercial matters, issues such as the location of a new final disposal site and aspects of the viability of the company remained critical.
3. 434. The Government points out that the company’s situation began long before the supposed partial denunciation of the collective agreement alleged by the SINTRAEMSIRVA and before the start of consultations with the trade union designed to analyse the rescue plan for the EMSIRVA ESP. The company’s situation actually predates that plan. For all these reasons the liquidation of the EMSIRVA ESP can be said to stem from the abovementioned causes, not from any alleged dubious and malicious intention of terminating collective bargaining between the EMSIRVA ESP and the SINTRAEMSIRVA. Moreover, the collective agreement was in force at the time the decision was issued. The key criterion for the legislator regarding liquidation of a public service provider is the provision of services itself. Furthermore, there is no trace of any anti-union intention in the decision.
4. 435. The seizure of the EMSIRVA ESP was followed by an analysis of the company by the Domestic Public Services Supervisory Authority designed to identify the necessary actions and measures for tackling the issues which gave rise to the seizure, in order to ensure the company’s viability and the quality and continuity of sanitation services in the company’s territory, in accordance with Decision No. SSPD-20061300042245 of 11 November 2005, establishing a business solution for the EMSIRVA ESP. The rescue process was established with the intention of identifying and adopting the necessary measures for seeking the recovery of the company and avoiding any adverse impact. The plan presupposed the implementation of a series of initiatives in various areas, one of which referred to renegotiation of the collective agreement, but such implementation proved impossible. According to the abovementioned decision, the initiatives to be implemented consisted of the following:
5. (1) renegotiation of the collective labour agreement ...;
6. (2) plan for voluntary retirement offered to all company employees, observing their legal rights and those arising from the collective agreement;
7. (3) reduction of operating and administrative costs linked to provision of the service;
8. (4) transfer, standardization and financial solution with respect to pension liabilities, including transfer thereof to the responsible bodies, including the Municipality of Cali, the Department of Valle del Cauca, EMCALI;
9. (5) public invitation to tender for the provision of a landfill service for the final disposal of solid waste matter collected by the EMSIRVA ESP and its contractors in the service area of the City of Cali.
10. 436. The SINTRAEMSIRVA alleges that, on account of the liquidation of the company, it was impossible to continue the collective bargaining between the EMSIRVA ESP and the trade union. The company recognizes that no agreement was reached between itself and the SINTRAEMSIRVA before starting liquidation but an exhaustive process of information exchange and consultation with the SINTRAEMSIRVA was completed before the decision to proceed with liquidation was taken by the Government. These consultations were held on 20 December 2006, 11 June 2008, 15 August 2008, 23 September 2008, 10 October 2008, 5 November 2008, 21 November 2008, 27 January 2009 and 24 March 2009. By means of Decision No. SSPD-2009130007455 of 25 March 2009 the Domestic Public Services Supervisory Authority ordered the liquidation of the EMSIRVA ESP:
    • The Supervisory Authority for Water Supplies, Sewerage and Waste Disposal, discharging its duties of supervision, inspection and control, became aware of the deterioration in the administrative, financial, technical and operational situation of EMSIRVA ESP for reasons including the following:
    • – High operating costs owing to: (a) an onerous collective agreement; (b) substantial pension liabilities resulting in an operating loss of $336 million in 2003; and (c) heavy expenditure owing to inefficient procedures and obsolescence of the vehicle fleet.
    • – It is responsible for 1,230 retirees who represent pension liabilities of $38.879 million, which accounts for 61 per cent of total liabilities. On behalf of the Municipality of Santiago de Cali, the EMSIRVA ESP paid the pensions of 291 retirees out of its revenue for provision of its service. This is not only irregular but also entails an unsustainable financial burden for the company.
    • – Total accounts receivable amounted to $38.973 million (42 per cent of total assets), of which accounts receivable for the supply of sanitation services alone, after payment of provisions, amounted to $25.954 million (28 per cent of total assets).
    • – Provision of cleaning services covered only 38 per cent of the city, which caused problems of public hygiene for the city and its inhabitants.
    • – Non-compliance with regulations concerning adequate final disposal of waste at the Navarro site, whose disposal capacity was saturated, and uncertainty regarding a new final disposal site, which could lead in the short term to the suspension of services.
    • – Deficiencies in reporting to the unified information system administered by the Domestic Public Services Supervisory Authority, and also alleged unauthorized payments collected from users of the final disposal site.
    • – Unreliable financial statements.
11. 437. As regards the allegation concerning non-compliance with the provisions of the collective agreement concerning retirement pensions, the Government indicates that proceedings exist for dealing with such complaints and these are at the evidentiary stage.
12. 438. The Government refers to the various actions taken by the labour administration:
    • – Decision No. 00002286 of 25 August 2009 of the Ministry of Social Protection – “For the resolution of an administrative investigation”. The decision was based on: (1) the denunciation by the IPS Colombia National Coordinating Committee, which resulted in ordinary judicial proceedings relating to the liquidation of the company, by means of the decision mentioned above; and (2) the action brought on 6 May 2009, in which the EMSIRVA ESP furnished documentary proof, analysis of which disproved the alleged refusal to negotiate. The Ministry of Social Protection refrained from taking any administrative labour measure against the EMSIRVA ESP.
    • – Judicial proceedings. The information supplied by the EMSIRVA ESP contains details of certain judicial proceedings. As a result of the liquidation of the company, the workforce was made redundant. Some workers launched action for protection of constitutional rights proceedings (tutela) (tutela ruling No. 0245-2009, Municipal Civil Court No. 24, Cali, Valle, 28 July 2009, brought by Mr Lisandro Henry Rengifo against EMSIRVA ESP in liquidation, and tutela ruling No. 0263-2009, Municipal Civil Court No. 24, Cali, Valle, 4 August 2009, brought by Mr Ananias Correa Piedarahita against the EMSIRVA ESP in liquidation). The tutela actions were successful and reinstatement was ordered by the first-instance court. The company, taking account of the state of liquidation and in compliance with constitutional guarantees, requested the lifting of trade union immunity in the competent court with respect to the members of the executive committee.

C. The Committee’s conclusions

1. 439. The Committee observes that in the present case the SINTRAEMSIRVA alleges that, in the context of the liquidation of the company which was completed on 25 March 2009, retirement was imposed on union leaders and members with the aim of eliminating the trade union, even though collective bargaining was in progress. The union claims that the retirements were effected without observance of the statutory circumstantial trade union immunity that was applicable during the bargaining process, and without payment of the compensation and pension benefits provided for in the collective agreement in force. The Committee notes the complainant’s assertion that the judicial authority authorized the lifting of the trade union immunity of the leaders so that the company could dismiss them, but that as regards the issue of non-compliance with the provisions laid down in the collective agreement the judicial authority decided in favour of the workers.
2. 440. The Committee notes the Government’s statement that: (1) by Decision
   • No. SSPD-20051300024305 of 27 October 2005, the Domestic Public Services Supervisory Authority ordered the seizure of the company with a view to liquidation;
3. (2) in the context of that process, “renegotiation” took place aimed at rescuing the company, subject to the condition that if no agreement was reached between the parties, liquidation would ensue; and (3) the workers were aware of that condition.
4. 441. The Committee notes the Government’s additional statement that, although the company did not reach any agreement with the SINTRAEMSIRVA before starting the liquidation process, an exhaustive process of information exchange and consultation with the SINTRAEMSIRVA was conducted between December 2006 and March 2009 before the decision was taken to proceed with liquidation. The consultations were held on 20 December 2006, 11 June 2008, 15 August 2008, 23 September 2008, 10 October 2008, 5 November 2008, 21 November 2008, 27 January 2009 and 24 March 2009. Finally, by Decision No. SSPD-2009130007455 of 25 March 2009, the Domestic Public Services Supervisory Authority ordered the liquidation of the EMSIRVA ESP on the grounds of high operating costs due to the existence of an onerous collective agreement, substantial pension liabilities and heavy expenditure owing to inefficient procedures and obsolescence of the vehicle fleet. In the wake of the decision, the company workforce was made redundant.
5. 442. The Committee notes the Government’s statement that some workers launched tutela proceedings and these were decided in favour of the workers, whose reinstatement was ordered, further to which the company brought actions for the lifting of trade union immunity. As regards the alleged failure to pay the retirement pensions provided for in the collective agreement, the Committee notes the Government’s statement that judicial proceedings exist for dealing with such complaints and that they are at the evidentiary stage.
6. 443. The Committee observes that the allegations and the Government’s reply show that the liquidation of the company affected all the workers, including trade union leaders and members and that the decision involves eminently economic grounds aimed at ensuring the efficient provision of service. Even though the liquidation of the company and the resulting dismissal of the workers had an impact on the SINTRAEMSIRVA, an enterprise trade union which was deprived of its membership, the Committee considers that neither the allegations nor the Government’s reply support the conclusion that the final objective of the liquidation was to ensure the elimination of the trade union, particularly if account is taken of the fact that numerous negotiation and consultation sessions were held between the company and the complainant.
7. 444. As regards the dismissal of the workers despite the fact that, according to the complainant, they were covered by circumstantial immunity which protects workers during collective bargaining, the Committee notes that the judicial authority authorized the lifting of trade union immunity so that the company could proceed with the dismissals.
8. 445. As regards the allegations that, in the context of the liquidation of the company and the dismissals of the workers, the collective agreement was not observed with respect to compensation and pension benefits, the Committee notes the Government’s confirmation that the collective agreement was in force and the judicial proceedings instituted are at the evidentiary stage. While recalling the importance of the observance of collective agreements, especially in this specific case concerning the terms of compensation and pension payments connected with the liquidation of a company and the shedding of the workforce, the Committee requests the Government to keep it informed on the views expressed in the allegations and of the final outcome of the abovementioned judicial proceedings. The Committee further expects that freedom of association and collective bargaining rights are respected in the labour cooperative currently carrying out the work previously carried out by the company.

The Committee's recommendations

1. 446. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendation:
   • As regards the allegations that, in the context of the liquidation of the company, the collective agreement in force was not observed with respect to the compensation and pension benefits linked to the dismissals, the Committee requests the Government to keep it informed on the views expressed in the allegations and of the final outcome of the abovementioned judicial proceedings. The Committee further expects that freedom of association and collective bargaining rights are respected in the labour cooperative currently carrying out the work previously carried out by the company.