Interim Report - Report No 364, June 2012

Case No 2907 (Lithuania) - Complaint date: 21-OCT-11 - Closed

Allegations: The complainant organization alleges violations of the right to strike in law and in practice in the enterprise Svyturys-Utenos Alus UAB

1. 650. The complaint is contained in communications from the Trade Union of Lithuanian Food Producers dated 21 October 2011 and 24 April 2012. In communications dated 8 November and 14 November 2011, respectively, the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF), and the International Trade Union Confederation (ITUC), associated themselves with the complaint.
2. 651. The Government submitted its observations in a communication dated 14 February 2012.
3. 652. Lithuania 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), and the Workers’ Representatives Convention, 1971 (No. 135).

A. The complainant’s allegations

1. 653. In its communications dated 21 October 2011 and 24 April 2012, the complainant indicates that, on 20 October 2008, the enterprise Svyturys-Utenos Alus UAB, which belongs to the Carlsberg Group, entered into a collective agreement with the joint representation of the in-house trade unions. The terms and conditions, as well as the procedure of bargaining over the revision of wages, were set out in the provisions of the collective agreement. Under the abovementioned provisions, bargaining over the annual revision of wages is supposed to start on the first week of February and the revised wages are set from 1 April. In other words, during the negotiations, revised wages are fixed by way of bargaining where the parties are entitled to present their demands related to pay rise, but not according to some prefixed formula or some specific figures.
2. 654. In the minutes of the meeting of 25 January between the employer and the joint representation of the trade unions, it was recorded that “the employer’s representatives informed the other party that the revision of wages was not on the employer’s agenda”. The minutes of the meeting between the employer and the joint representation of the trade unions that took place on 23 February 2011 indicates that “having considered the information from outside and the company’s financial figures, which were worse than in the year 2009, the employer’s representatives informed the unions again that the revision of wages had not been intended by the employer”. The employer repeated even twice that bargaining over wages in 2011 would not take place. Thus, after the bargaining process was over, with the parties failing to reach an agreement, a process of collective dispute was initiated. On 21 March 2011, the joint representation of the trade unions submitted their demands for higher wage levels to the employer. Only after entering the stage of collective dispute, the employer started making proposals. On 15 April 2011, in the meeting of the joint representation of the trade unions with the employer’s administration, only one proposal was made – to reintroduce the sports programme for one year. The employer reiterated again that the levels of wages would not be revised. Under the initiative of the joint representation of the trade unions, the resolution of the collective dispute was continued at the Conciliation Commission.
3. 655. On 17 May 2011, at the Conciliation Commission, the employer put forward a proposal to increase wages by 0.5 per cent or to have the provision of the collective agreement concerning “indexation of wages” interpreted by the court. On 31 May 2011, at the Conciliation Commission, the employer put forward two proposals: either provides the workforce with health insurance; or increase wages by 1.8 per cent. The trade unions suggested only increasing wages by 7.3 per cent. The Conciliation Commission discontinued its work by drawing up a protocol of disagreement.
4. 656. On 9–10 June 2011, a secret ballot on strike action was held in the towns of Utena and Klaipeda. The result of the ballot showed that 58 per cent of the workforce at the production unit were in favour of a strike. Therefore, on 15 June 2011, the employer was notified in writing about a strike which was supposed to start on 23 June 2011.
5. 657. Having received the notice about the strike, the employer applied to the County Court of Klaipeda seeking to have the strike recognized as unlawful and to obtain an injunction against the declaration, organization and conducting of the strike planned by the joint representation of the trade unions until a court decision over its lawfulness was adopted. On 20 June 2011, the Court made a decision to suspend the declared strike for 30 days. The joint representation of the trade unions brought an appeal before the Klaipeda Regional Court over the decision to suspend the strike. On 22 July 2011, the Klaipeda Regional Court upheld the decision to suspend the strike made by the Klaipeda County Court. As the time limit for the suspension of the strike expired on that very day (22 July 2011), the Klaipeda Regional Court adopted a new decision to prolong the suspension of the strike until the case over the lawfulness of the strike had been heard in court. Both decisions made by the Klaipeda Courts are valid and cannot be appealed. In other words, the Klaipeda Regional Court has formed a court precedent in Lithuania over the restriction or suspension of strikes and held that courts have the right to suspend a strike declared at any company for an unlimited period of time or, if the strike is already in progress, to order to stop it.
6. 658. The complainant further indicates that article 81(4) of the Labour Code of the Republic of Lithuania does provide for the possibility for the court to suspend the beginning of the intended strike for a 30-day period, or to delay the strike that is in progress for the abovementioned period, but only “if there is a direct threat that the intended strike will affect the provision of minimum conditions (services) required to meet the essential (vital) needs of the society and this may endanger the human life, health and personal safety.” Thus, according to the complainant, by suspending the strike declared by the joint representation of the trade unions for 30 days on the grounds of this provision, the courts admitted that the production of beer was of vital importance to the public and the strike could put the satisfaction of such an essential need in danger. The complainant further indicates that the Court of First Instance failed to take into consideration the fact that article 77(5) of the Labour Code, which provides that after taking the decision to take strike action (including a warning strike) in railway and public transport, civil aviation, communications and energy enterprises, health care and pharmaceutical institutions, food, water, sewage and waste disposal enterprises, oil refineries, enterprises with continuous production cycles and other enterprises’ cessation of work which would result in grave and hazardous consequences for the community or human life and health, the employer must be given a written notice of the strike at least 14 days in advance; and that article 80(2) of the Labour Code provides that, during the strike in the enterprises, institutions and organizations specified in article 77(5) of the Code, minimum conditions (services) necessary to meet the immediate (vital) needs of the society must be ensured. In other words, in article 77(5) of the Code, the legislature lists enterprises which provide the essential services necessary to meet public needs. Breweries or food producers are not recognized by the legislature as being among such service providers. Consequently, by adopting the decision to suspend the strike declared by the defendant in the brewery, the courts manifestly violated the provisions of article 81(4) of the Labour Code and perversely limited the legitimate right to strike enshrined in the Constitution.
7. 659. The dispute over the increase of wages and the conciliation procedure lasted for four months. According to the complainant, the employer openly, without even hiding its real intentions by the claim submitted to the court, sought to have the strike suspended until autumn when the beer “high season” would be over. The lengthy negotiations and conciliation procedures over wage levels and the suspension of the strike has been the employer’s aim to render the strike ineffective or even impossible. The complainant further adds that, in Lithuanian jurisprudence, breweries have been recognized as providing essential/vital services to the public. Therefore, one more argument of the Lithuanian courts to apply restrictions on the strike on the employer, and suspend the employees’ strike before it started, was that the enterprise provided essential services.
8. 660. Subsequently, on 5 August 2011, the Klaipeda Regional Court rendered a decision over the lawfulness of the strike (the decision was attached to the complaint). It ruled that the strike was unlawful and that it was prohibited to declare a strike during the term of validity of the collective agreement since the agreement was complied with. The complainant appealed the decision of the Klaipeda Regional Court (5 August 2011) to the Supreme Court. On 6 March 2012, the Supreme Court of the Republic of Lithuania adopted a judgment by which the strike in the enterprise was declared illegal (the decision was attached to the complaint). In addition, the Supreme Court held that the fact that no mutual agreement had been reached between the parties during the negotiations did not render the collective agreement invalid and did not constitute a violation or non-performance of the agreement. Therefore, under article 78(3) of the Labour Code, the strike was prohibited (it is prohibited to declare a strike during the validity of the collective agreement if the agreement has been complied with).
9. 661. However, according to the complainant, collective labour disputes (conflicts of interest) arise not because of the application of subjective/individual rights, but rather it is a problem of different interests of the parties to collective labour relations. Thus, by taking part in the negotiations over pay review and the conciliation procedures over the collective labour dispute, the employer recognized by its actions that the employees had the right to negotiate wage levels annually (that was confirmed by the court of both instances), and in case of failure to agree, initiate a labour dispute which may result in a strike. Apart from the reasoning put forward in the previous decisions, the complainant indicates that the Supreme Court stated additionally in its decision that if the employer had conducted collective bargaining in good faith, i.e. without unreasonable delay and seeking to come to an agreement (in this case the employer had offered to meet 10 per cent of the workers’ demand submitted) and failing to reach a mutual agreement, the employees are deprived of the right to strike. According to the complainant, under such an interpretation of Convention No. 154 by the Supreme Court, the very fact that the negotiations did take place in good faith deprives the workers of the right to strike although no agreement was reached during the negotiations.

B. The Government’s reply

1. 662. In a communication dated 17 February 2012, the Government indicates that, pursuant to article 51 of the Constitution, while defending their economic and social interests, employees shall have the right to strike. The limitations of this constitutional right to strike, as well as the conditions and procedure for its implementation, are established in Chapter 10 of the Regulation of Collective Labour Disputes of the Labour Code. According to article 76 of the Labour Code, strike means a temporary cessation of work by the employees, or group of employees, of one or several enterprises if a collective dispute is not settled or a decision adopted by the Conciliation Commission, the Labour Arbitration or third party, which is acceptable to the employees, is not executed or is improperly executed; when it was not possible to settle a collective labour dispute via a mediation officer, or when the agreement reached through mediation was not fulfilled.
2. 663. The Government further indicates that article 78 of the Labour Code stipulates that it shall be prohibited to declare a strike during the term of validity of the collective agreement if the agreement is complied with. In the court judgment of 5 August 2011, the Klaipeda Regional Court indicated that the collective agreement of 20 October 2008, which was concluded for a period of three years, i.e. until 20 October 2011, is still valid and shall be fulfilled (Collective Agreement, paragraph 1.5, t.1, b.I.16). The failure by the parties to reach a collective agreement concerning wages neither renders the collective agreement invalid nor implies its violation and non-compliance with the agreement. In view of that, the judicial panel ruled that the strike announced by trade unions on 15 June 2011 was unlawful.
3. 664. The Government adds that, pursuant to articles 109 and 114 of the Constitution and articles 2 and 3 of the Law on Courts, while administering justice, the judge and courts shall be independent. In view of the above, the Ministry of Social Security and Labour has no right to comment or try to influence court decisions.

C. The Committee’s conclusions

1. 665. The Committee recalls that, in the present case, the complainant alleges violations of the right to strike in the brewery industry in law and in practice.
2. 666. The Committee notes that, according to the complainant, on 20 October 2008, the complainant and the enterprise Svyturys-Utenos Alus UAB entered into a collective agreement for a period of three years (2008–11). The terms and conditions, as well as the procedure of bargaining over the revision of wages, were set out in the provisions of the collective agreement. Under the abovementioned provisions, bargaining over the annual revision of wages is supposed to start on the first week of February and the revised wages are set from 1 April. After the bargaining process was over, with the parties failing to reach an agreement, a process of collective dispute was initiated. Under the initiative of the joint representation of the trade unions, the resolution of the collective dispute was continued at the Conciliation Commission. After four months of negotiations, the Conciliation Commission discontinued its work by drawing up a protocol of disagreement. On 15 June 2011, the employer was notified in writing about a strike which was supposed to start on 23 June 2011. Having received the notice about the strike, the employer applied to the County Court of Klaipeda, seeking to have the strike recognized as unlawful and to obtain an injunction against the declaration, organization and conducting of the strike planned by the joint representation of the trade unions, until a court decision over its lawfulness was adopted. On 20 June 2011, the Court made a decision to suspend the declared strike for 30 days. The joint representation of the trade unions brought an appeal before the Klaipeda Regional Court over the decision to suspend the strike. On 22 July 2011, the Klaipeda Regional Court upheld the decision to suspend the strike made by the Klaipeda County Court. As the time limit for the suspension of the strike expired on that very day (22 July 2011), the Klaipeda Regional Court adopted a new decision to prolong the suspension of the strike until the case over the lawfulness of the strike had been fully heard in court.
3. 667. The Committee notes that, according to the complainant, the final decision of the Klaipeda Regional Court to prolong the legal suspension of the strike, and the final decision of the Klaipeda Regional Court to uphold the first decision of the Klaipeda County Court decision to suspend a strike at the employer for an unreasonable period of time (this decision was provided by the complainant), forms a precedent and constitutes a breach of the application of ILO Conventions. According to the complainant, as a consequence, courts now have the right to suspend a strike declared at any company for an unlimited period of time or, if the strike is already in progress to order to stop it. Furthermore, the Court, de facto, recognized the brewery sector as an essential service.
4. 668. The Committee further notes that, according to the complainant, the suspension of the strike for 30 days is based essentially on the assertion by the Government that the production of beer is an essential service and a strike could harm such an essential need (article 81(4), read with articles 77(5) and 80(2), of the Labour Code). The Labour Code of Lithuania already lists the enterprises which provide essential services for public needs and it does not cover breweries. The complainant further adds that, according to the Lithuanian jurisprudence, breweries have been recognized as providing essential/vital services to the public. Therefore, one more argument of the Lithuanian courts to apply restrictions on the strike in the enterprise, and suspend the employees’ strike before it started, was that the enterprise provided essential services. Consequently, by adopting the decision to suspend the strike declared by the defendant in the brewery, the courts manifestly violated the provisions of the country’s own Labour Code and significantly limited the legitimate right to strike enshrined in the Lithuanian Constitution. The complainant further alleges that the employer, without even hiding its real intentions by the claim submitted to the court, sought to have the strike suspended until the autumn when, as the employer allegedly maintained itself, the beer “high season” would be over.
5. 669. The Committee notes that, according to the Government, on 5 August 2011, the Klaipeda Regional Court declared the strike unlawful since the collective agreement of 20 October 2008, which has been concluded for a period of three years, i.e. until October 2011, was still valid and should be fulfilled (Collective Agreement, paragraph 1.5, t.1, b.I.16). The failure by the parties to reach a collective agreement concerning wages neither renders the collective agreement invalid nor implies its violation and non-compliance with the agreement. In view of that, the judicial panel ruled that the strike announced by trade unions on 15 June 2011, was unlawful under article 78(3) of the Labour Code which stipulates that it shall be prohibited to declare a strike during the term of validity of the collective agreement if the agreement is complied with. The Committee notes that the complainant appealed the decision of the Klaipeda Regional Court to the Supreme Court. On 6 March 2012, the Supreme Court upheld the decision of the Klaipeda Regional Court and ruled that the strike in the enterprise was unlawful (the decision was attached to the complaint).
6. 670. The Committee must recall that it does not consider beer production to be an essential service in the strict sense of the term. To determine situations in which a strike could be prohibited, the criterion which has to be established is the existence of a clear and imminent threat to the life, personal safety or health of the whole or part of the population [see Digest of decisions and principles of the Freedom of Association Committee, fifth (revised) edition, 2006, para. 581]. Noting that the complainant indicates that the courts have, here, and in the past, considered breweries as an essential service, the Committee requests the Government to indicate whether this has indeed been the case and, if so, to ensure respect for the abovementioned principle.
7. 671. The Committee notes, however, from the translation of the decision of the Klaipeda Regional Court (attached to the complaint) that the strike declared by the complainant was unlawful for the following reasons:
   • The strike is ultima ratio which can be applied in extreme cases when the parties fail to settle the collective dispute peacefully. The right of employees to strike is enshrined in the Constitution of the Republic of Lithuania; however, according to the Constitution, this right of employees is not absolute – its restrictions, terms and procedure of implementation are stipulated by laws. The Labour Code is such a law, articles 76–85 of Chapter X of the Regulations of Collective Labour Disputes whereof directly regulate the strike, its legal basis and declaration of a strike, restrictions of strikes, the body leading a strike and course of strike, lawfulness of strike and other legal relations in connection to the right to strike. Referring to article 76 of the Labour Code, a strike shall mean a temporary suspension of work by the employees, or a group of employees, of one or several enterprises, or a particular sector in the event of a collective dispute not being settled, or in the event of a failure to perform, or improper performance of, the decision adopted by the Conciliation Commission, Labour Arbitration or third party, which is acceptable to the employees or, in the event of failure, to implement the agreement reached during the mediation process. Hence, a strike as a way of solving collective labour disputes may only be used if the grounds established in the law are met and other possibilities of disputes solving set out in laws are exploited. The collective agreement of 20 October 2008 is concluded for three years, i.e. until 20 October 2011, it is effective and must be complied with (clause 1.5 of the Collective Agreement, volume 1, case page 16). A failure to reach a common agreement on wages between the parties by way of negotiations shall not make the collective agreement ineffective and shall not imply the breach or non-compliance therewith. According to article 78, paragraph 3, of the Labour Code, it shall be prohibited to call a strike during the term of validity of the collective agreement if this agreement is complied with. Due to the circumstances specified above, the judicial panel concludes that the strike declared by the trade union on 15 June 2011 is unlawful (article 78, paragraph 3, of the Labour Code).
8. 672. The Committee notes that the same reasoning was followed by the Supreme Court. In its reasoning, the Court indicates:
   • Under the given circumstances the Judicial Panel of the Court of Cassation [Klaipeda Regional Court] holds that there are no grounds to draw a conclusions that the provisions of the Collective Agreement signed by the parties had been breached since the employer had not violated his assumed obligation to revise workers’ wages once per year and take part in negotiations over that in good faith. The court of appeal instance rightly established that the collective agreement had been adhered to ... The arguments of the Cassation Appeal concerning the violation of the Collective Agreement has been based on the improper interpretation of the provisions of the Collective Agreement, i.e., by the submission that by Clause 3.3.4 of the Remuneration Regulations, the employer committed himself to raise wages every year by no less than the inflation rate. After the Court of Cassation having properly interpreted the provision of the Collective Agreement concluded by the parties and established that there is no unconditional duty of the employer to increase wages every year provided by the Agreement, having found no proof of bad faith on the plaintiff’s side during the bargaining over revision of wages, there are no grounds to conclude that the Collective Agreement had been violated.
9. 673. The Committee observes that the Court established that the strike was unlawful because it is prohibited to call a strike during the term of validity of a collective agreement if the agreement is complied with under article 78(2) of the Labour Code. According to the judicial panel, the dispute between the parties concerns the interpretation of the collective agreement, not its application. In this regard, the Committee wishes to recall that the solution to a legal conflict, as a result of a difference in interpretation of a legal text, should be left to the competent courts. The prohibition of strikes in such a situation does not constitute a breach of freedom of association. If strikes are prohibited while a collective agreement is in force, this restriction must be compensated for by the right to have recourse to impartial and rapid mechanisms, within which individual or collective complaints about the interpretation or application of collective agreements can be examined; this type of mechanism not only allows the inevitable difficulties which may occur regarding the interpretation or application of collective agreements to be resolved while the agreements are in force, but also has the advantage of preparing the ground for future rounds of negotiations, given that it allows problems which have arisen during the period of validity of the collective agreement in question to be identified [see Digest, op. cit., paras 532 and 533]. Given that the collective agreement was not provided to the Committee, the Committee considers that it is not in a position to determine whether the issue in question was a matter of rights dispute (as decided by the Court) or of an interest dispute (as contended by the complainant) nor whether specific machinery had been provided in the agreement for such a dispute and whether it had been used. The Committee therefore requests the complainant organization to provide a copy, in English if possible, of the relevant collective agreement.
10. 674. Noting that, according to the Court, the duration of the collective agreement was from 20 October 2008 to 20 October 2011, the Committee trusts that the union and the employer have since engaged in good faith negotiations in full conformity with the national legislation and the principles of freedom of association and requests the Government to keep it informed of developments in this regard.

The Committee’s recommendations

1. 675. In the light of its foregoing interim conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) Noting that the complainant indicates that the courts have, here, and in the past, considered breweries as an essential service, the Committee requests the Government to indicate whether this has indeed been the case and, if so, to ensure respect for the principles set out in its conclusions.
   • (b) The Committee requests the complainant organization to provide a copy, in English if possible, of the relevant collective agreement.
   • (c) Noting that, according to the Court, the duration of the collective agreement was from 20 October 2008 to 20 October 2011, the Committee trusts that the union and the employer have since engaged in good faith negotiations, in full conformity with the national legislation and the principles of freedom of association and requests the Government, to keep it informed of developments in this regard.