Report in which the committee requests to be kept informed of development - Report No 367, March 2013

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. 881. The Committee last examined this case at its May–June 2012 meeting, when it presented an interim report to the Governing Body [364th Report, paras 650–675 approved by the Governing Body at its 315th Session (June 2012)].
2. 882. The complainant organization sent additional information in a communication dated 6 September 2012.
3. 883. The Government submitted its observations in communications dated 31 May and 14 September 2012.
4. 884. 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. Previous examination of the case

1. 885. In its previous examination of the case in May–June 2012, the Committee made the following recommendations [364th Report, para. 675]:
   • (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.

B. The complainants’ allegations

1. 886. In its communication dated 6 September 2012, the complainant organization, the Trade Union of Lithuanian Food Producers, forwards a copy in English of the Collective Agreement concluded on 20 October 2008 between the joint representation of the in-house trade unions and the enterprise Svyturys–Utenos Alus UAB (Carlsberg Group), including its Annex No. 4 “Provisions regarding Remuneration”.

C. The Government’s reply

1. 887. In its communication dated 31 May 2012, the Government states that pursuant to articles 109 and 114 of the Constitution of the Republic of Lithuania and sections 2 and 3 of the Act on Courts of the Republic of Lithuania, in the administration of justice, courts shall be independent. The Ministry of Social Security and Labour has no right to comment or try to influence court decisions.
2. 888. In addition, in its communication dated 14 September 2012, the Government indicates with respect to recommendation (a), which has been made by the Committee when last examining the present case, that it is noteworthy that the criteria mentioned by the Committee for determining essential services in the strict sense of the term, correspond to the criteria laid down in section 81(4) of the currently effective Labour Code of the Republic of Lithuania on the basis of which essential (vital) services are identified and – where these are present – a strike can be suspended or terminated. The Labour Code provides that, if there is a direct threat that the strike will affect the provision of minimum conditions (services) necessary for meeting the essential (vital) public needs and this may endanger human life, health and safety, the court shall be entitled to postpone the intended strike for a 30-day period or to suspend the ongoing strike for the same period.
3. 889. The Government confirms that neither the Klaipèda Regional Court in its Civil Case Ruling No. 2A-1599-460/2011 of 5 August 2011, nor the Supreme Court of Lithuania in its Civil Case Ruling No. 3K-3-81/2012 of 6 March 2012 examined the issue of acknowledging beer manufacturing as a vitally important service, and only referred to the limitation of calling a strike under section 78(3) of the Labour Code, which provides that it shall be prohibited to call a strike during the term of validity of the Collective Agreement if this agreement is complied with.
4. 890. The Government further indicates that the Supreme Court interpreted section 81(4) of the Labour Code only in two civil cases (Civil Case Ruling No. 3K-3-141/2008 of 3 March 2008 and Civil Case Ruling No. 3K-3-15/2011 of 31 January 2011) and none of these formulated a law interpretation rule pursuant to which beer manufacturing can be acknowledged as a service necessary to meet essential (vital) public needs in the meaning of section 81(4) of the Labour Code.
5. 891. As regards recommendation (c), the Government states that national legislation does not provide for its competence to interfere with internal relations between employers and trade unions during collective negotiations at a corporate level. Therefore, the Committee should rather be notified by the participating social partners about the collective negotiations in the company.

D. The Committee’s conclusions

1. 892. The Committee notes that, in the present case, the complainant organization alleges violations of the right to strike in law and in practice in the enterprise Svyturys-Utenos Alus UAB.
2. 893. The Committee notes the copy provided by the complainant of the Collective Agreement concluded on 20 October 2008 between the union and the company, including its Annex No. 4 “Provisions regarding Remuneration”. In this regard, the Committee notes that: (i) according to section 1.5 of the Collective Agreement, the agreement is signed for three years and valid until a new agreement is signed; if neither of the parties initiates the process to renew the agreements two months before its expiry, the agreement shall automatically be renewed for the next three years; the programme of social benefits and their levels are revised once per year together with the revision of pay levels; (ii) section 3.1 of Annex 4 of the Collective Agreement provides that wage levels are reviewed once per year, with negotiations over pay starting the first week of February and new wage levels being fixed as of 1 April; (iii) section 3.3.4 of this Annex provides that, during the wage revision process, wages are raised no less than by the average inflation rate; and (iv) according to section 3.6, wages shall be revised twice per year in the event that the inflation rate of the last six months after the last pay review suggests that the statistical annual inflation rate might be higher than 8 per cent.
3. 894. The Committee notes the Government’s indication that: (i) according to the national Constitution and law, courts shall be independent in the administration of justice and the Government has no right to comment or try to influence court decisions; (ii) the criteria that, according to the Committee, have to be established in order to determine situations in which a strike could be restricted or prohibited, correspond to the criteria laid down in section 81(4) of the Labour Code on the basis of which essential (vital) services are identified, in which case a strike can be suspended or terminated; (iii) neither the Klaipèda Regional Court nor the Supreme Court have examined the issue whether beer manufacturing is a vitally important service, and, in determining that the strike was illegal, have only referred to section 78(3) of the Code, which provides that it shall be prohibited to call a strike during the term of validity of the Collective Agreement if this agreement is complied with; (iv) the Supreme Court has hitherto interpreted section 81(4) only in two civil cases and has not formulated a legal interpretation to the effect that beer manufacturing can be acknowledged as a service necessary to meet essential (vital) public needs within the meaning of this provision; and (v) the Government does not have competence to interfere with internal relations between employers and trade unions during collective negotiations at a corporate level, therefore the Committee should rather be notified by the participating social partners about the collective negotiations in the company.
4. 895. At the outset, the Committee wishes to emphasize that it does not have the mandate to assess the application by the national courts of the national legislation and the Constitution of Lithuania; but that its mandate rather consists in determining whether any given legislation or practice complies with the principles of freedom of association and collective bargaining laid down in the relevant Conventions [see Digest of decisions and principles of the Freedom of Association Committee, fifth (revised) edition, 2006, para. 6].
5. 896. In this regard, the Committee takes due note of the information provided by the Government according to which there is no legal interpretation by the Supreme Court that beer manufacturing is a service necessary to meet vital public needs pursuant to section 81(4) of the Labour Code. The Committee also notes that the courts in the present case have not invoked section 81(4) concerning vital services in their determination of the illegality of the strike action at the beer manufacturing company. Recalling that it does not consider beer production to be an essential service in the strict sense of the term in which strike action may be restricted or even prohibited, the Committee expects that due account will continue to be given to this consideration.
6. 897. The Committee observes the Government’s indication that the strike was actually declared unlawful because it is prohibited to call a strike during the term of validity of a Collective Agreement if the agreement is complied with (section 78(3) of the Labour Code). The Committee notes that the Collective Agreement was still valid at the time of events, and that the courts have established that, although the negotiations over wages have failed, the company has complied with the Collective Agreement, since it took part in those negotiations in good faith. Indeed, if the dispute in question revolved around the interpretation or application of the Collective Agreement, the Committee has always held 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 [see Digest, op. cit., para. 532]. In the present case, the Committee observes that, according to Annex 4 of the Collective Agreement: “wage levels are reviewed once per year” (clause 3.1); “negotiations over pay start the first week of February and new wage levels are fixed as of 1 April” (clause 3.1); and “during the wage revision process wages are raised no less than by the average inflation rate” (clause 3.3.4).
7. 898. The Committee observes that, in its judgment of 6 March 2012, the Supreme Court held, with respect to clause 3.3.4 of Annex 4 of the Collective Agreement, that the company “had not committed itself to increasing wages unconditionally every year by no less than the average inflation rate”, and that “apart from the criterion set in Clause 3.3.4, a number of factors were indicated in other clauses as well, influencing the decision whether there were any grounds to raise wages for the employees and, if yes, by how much”. While in certain cases, clauses of collective agreements setting out modalities for wage increases may be worded in such a manner so that, where there is a dispute, it would be a question of the application of a right agreed to by the parties to the collective agreement, in this particular case, the Supreme Court’s interpretation of clause 3.3.4 appears to confirm that the annual wage revision process was to be carried out through negotiation. The Committee also recalls that, 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. para. 533]. As in this case there did not appear to be a dispute resolution mechanism provided for in the agreement or a fall-back clause in the event of disagreement, this raises the question as to whether the dispute should not rather have been considered as an interest dispute that would include the possibility of exercising strike action. If this is so, the Committee considers that the strike could indeed have been a legitimate action as a consequence of an interest dispute.
8. 899. In light of the above, the Committee wishes firstly to invite the Government, at national level, to engage in consultations with the social partners as regards the need to review the relevant provisions governing collective bargaining. Furthermore, at the enterprise level, as regards its previous request to be kept informed in regard to the collective bargaining negotiations between the union and the company following the expiry of the Collective Agreement on 20 October 2011, the Committee considers that, within the framework of the Government’s general obligation to promote and encourage collective bargaining, the Government should be in a position to give effect to this recommendation without interfering with the internal relations between employers and trade unions during collective negotiations at a corporate level. The Committee trusts that the union and the employer have since engaged in good-faith negotiations, in full conformity with the principles of freedom of association, and requests the Government as well as the complainant to provide information concerning the current status of collective bargaining negotiations in the company. In particular, the Committee requests the Government to promote the negotiation of a dispute resolution mechanism in the event of disagreement in relation to any annual wage revision process foreseen in current or future collective agreements.

The Committee’s recommendation

1. 900. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendation:
2. Considering that the strike could, in the absence of a dispute resolution mechanism, have been a legitimate action as a consequence of an interest dispute, the Committee:
   • (i) at national level, invites the Government to engage in consultations with the social partners as regards the need to review the relevant provisions governing collective bargaining; and
   • (ii) at the enterprise level, trusting that the union and the employer have since engaged in good-faith negotiations in full conformity with the principles of freedom of association, requests the Government as well as the complainant to provide information concerning the current status of collective bargaining negotiations in the company, and, in particular, requests the Government to promote the negotiation of a dispute resolution mechanism in the event of disagreement in relation to any annual wage revision process foreseen in current or future collective agreements.