Definitive Report - Report No 389, June 2019

Case No 3301 (Chile) - Complaint date: 18-MAY-17 - Closed

Allegations: The complainant organizations report anti-union dismissals, the suspension of the collective bargaining process and non compliance with the collective agreement

1. 187. The complaint is contained in a communication from the Workers’ Trade Union No. 3 of the El Mercurio S.A. newspaper enterprise dated 18 May 2017. Subsequently, on 14 September 2017, the Single Confederation of Trade Unions of Chile (CUT) sent a communication supporting the complaint.
2. 188. The Government sent its observations by communications of 30 October 2018 and 4 April 2019.
3. 189. 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 complainants’ allegations

1. 190. In their communication of 18 May 2017, the complainants indicate that on 27 February 2017 the El Mercurio S.A. newspaper enterprise (“the enterprise”), the largest print media enterprise in the country, notified 122 workers from the production area that their contracts would be terminated. Of those workers, 104 were members of Trade Union No. 3, who represent more than 85 per cent of the laid-off workers and 51 per cent of the union’s 204 members. The complainants indicate that the collective agreement in force with the said trade union was due to expire on 30 May 2017 and that the dismissals were intended to instil fear in the workers and prevent any possible work stoppages during the collective bargaining process.
2. 191. The complainants indicate that, although the enterprise relied on article 161 of the Labour Code (enterprise requirements) to justify the dismissals – more specifically the decision to outsource the printing of products by contracting a printing works that allegedly provides a service at lower cost and with higher quality – the printing works is one that was set up recently and has no other clients, and that it is untrue that it has greater efficiency and quality standards. The complainants indicate that the notice letters sent by the enterprise to the workers do not specify the grounds for the decision and that the dismissals are therefore wrongful. The complainants further allege that the dismissals were notified in an intimidating manner, as the security personnel identified the dismissed workers from photographs and prevented them from entering the premises. In addition, they indicate that more than half of the workers lodged complaints on the grounds of anti-union practices and sought to have the dismissals declared null and void.
3. 192. Furthermore, the complainants indicate that the legal time limit to present the draft text for the new collective agreement was due to expire on 15 April 2017, and Trade Union No. 3 therefore submitted its draft on 13 April; one hour later, it received an email from the enterprise saying that bargaining was suspended because on 31 March the enterprise had submitted a request to the Labour Directorate to designate the minimum services and emergency teams in the event of a strike, in accordance with the provisions of Act No. 20940 on the modernization of the labour relations system. The complainants indicate that, under that Act, prior to a collective bargaining process, the parties must determine and designate the minimum services and the corresponding emergency teams; to that end, the employer must make a proposal to the unions, who have a time limit to respond and reach an agreement. A collective bargaining process cannot be started in that period.
4. 193. The complainants also indicate that even if the enterprise’s obligation under the Labour Code to make a proposal to the union on the minimum services is not indicated explicitly in transitional article 3 of Act No. 20940, that article provides that the minimum services must be agreed by the enterprise and the trade unions. The complainants indicate that, in the present case, the enterprise requested the designation of the minimum services, arguing that there was no agreement with the union, but that the reason why there was no agreement was that the enterprise had not made any proposal to the union. The complainants also state that the Labour Directorate should not have admitted the enterprise’s request, as by so doing, it allowed the enterprise to unilaterally suspend the collective bargaining. They indicate that Trade Union No. 3 requested the National Labour Director to clarify that the intention of the Act is that the employer should make a proposal to the unions concerning the arrangements for minimum services and that, if it does not do so, the request to designate minimum services must be rejected.
5. 194. Moreover, the complainants allege that the enterprise systematically failed to comply with the collective agreement made with Trade Union No. 3, which was signed on 1 October 2013 and was in force until 31 May 2017. They indicate that, despite the repeated letters sent by the union and the various meetings that were held, on 20 October 2016 the executive board of the union submitted a request for mediation to the National Director of Labour in relation to the non-compliance with the collective agreement and the enterprise declined to attend the meetings and participate in the voluntary mediation.

B. The Government’s reply

1. 195. In its communications of 30 October 2018 and 4 April 2019, the Government sent its observations as well as those of the enterprise. The enterprise indicates that its main line of business is creating newspaper content and that its funding mainly comes from advertising revenue. It indicates that, in recent years, the media industry has been experiencing financial difficulties and that the press specifically has been seriously affected by the diversification of advertising platforms, moving away from traditional newspapers and print magazines to new and multiple channels for displaying advertisements. As from 2012, the enterprise had seen a significant drop in revenue and in that context had adopted a series of measures with a view to reducing costs and maintaining the sustainability of the business. The enterprise indicates that between 2011 and 2016 its revenue dropped by 31.2 per cent, despite it having implemented various types of measures, and that in 2015 and 2016, it underwent restructuring which meant that more than 130 people lost their job.
2. 196. The enterprise states that the sustained loss of advertising revenue, in a market characterized by the emergence of new advertising platforms, resulted in the enterprise taking a decision that it had been contemplating for several years: to improve the printing infrastructure, which meant that it had to decide between making a large investment in new equipment or beginning a process of gradually outsourcing the printing. The enterprise indicates that it received advice from a renowned investment bank and that, in view of the lack of other newspaper printing presses in the country except for one belonging to a competitor, it was the investment bank, through one of its subsidiaries, that in 2016 began the process of setting up a printing works. On 27 December 2016, the enterprise signed a service contract with that printing works, which began to operate two months later. The enterprise indicates that the decision to outsource part of the printing of its products has been positive, as the print quality is higher and it has created cost efficiencies. The enterprise clarifies that it does not own the printing works.
3. 197. The enterprise states that the decision to outsource part of its production operations was made on economic grounds and meant that an internal restructuring was necessary, particularly the area of production; as there were no other services or areas available to which the workers affected could be reassigned, it was necessary to downsize the production area. It indicates that, on the same day that the external printing works began operations, on 27 February 2017, it notified 122 workers in the production area that they were being laid off. The stated grounds for the layoffs were “Requirements of the undertaking, establishment or service”, pursuant to article 161 of the Labour Code, and the letters of notice sent to the workers explained thoroughly the economic reasons that had obligated the enterprise to reduce costs and outsource part of the printing of its products and, consequently, to lay off the workers from the production area.
4. 198. The enterprise indicates that, in January 2017, before the layoffs had taken place, it had met with Trade Union No. 3 to discuss matters on which they agree for the new collective agreement and that the president of the union voiced concern that there would be layoffs among his union’s members, as he had information about the outsourcing of the newspaper printing. The enterprise indicates that it made a proposal to the union to sign a new collective agreement, which included a fund for the laid-off workers for a period of four months after the signature of the collective agreement. The enterprise indicates that the demands made by the union far exceeded the offer that it had made, and hence the negotiation was unsuccessful.
5. 199. The enterprise also indicates that on 27 February, the day on which the workers were notified of the termination of their contracts, it provided facilities to receive the workers and carry out the related administrative tasks, and met with the executive boards of the trade unions whose members were affected and explained that, with a view to ending the contractual relationship in a sound manner, it would offer those workers who were in agreement with the contract termination an additional financial incentive over and above what it was legally obligated to offer, advice on social security and a plan for finding a new job. The enterprise indicates that at that meeting, one of the union officials asked whether the incentive was negotiable and, when the enterprise replied that it was prepared to consider alternatives, the trade union said that it would send a proposal that evening, which ultimately did not happen.
6. 200. The enterprise indicates that a total of 44 workers opted to sign settlements and receive the benefits to which they were entitled under the law and the collective agreements in force, as well as the additional incentives; a further 78 workers included in the documents that they reserved the right to subsequently take legal action. The Government informs the Committee that a decision has already been handed down in some of those proceedings, that in some proceedings a conciliation agreement has been reached, and that in other proceedings either there has not yet been a decision or an action for annulment has been brought which has not yet been resolved. The Government indicates that in all of the court cases brought by the union in which a decision has been handed down, for a total of 41 workers, the layoffs were found to be lawful and the complaints of infringement of freedom of association were dismissed.
7. 201. The Government provided a copy of a number of decisions in which the labour courts noted that the outsourcing process had begun well before the collective bargaining process, that production was being outsourced with a view to increasing competitiveness and that it did not aim to weaken the union, either directly or indirectly, also taking into account the fact that the enterprise has high levels of unionization among all categories of employees. Furthermore, they considered that the decision to lay off the workers mainly from the production area does not appear to be an arbitrary one nor intended to weaken the union directly or indirectly, in that the enterprise was unaware of the union membership of the workers affected – although it could assume a high level of unionization in the area – and that it could not be demonstrated that the union members were laid off with the deliberate intent of weakening the union either directly or indirectly in view of an imminent collective bargaining process.
8. 202. With regard to the request to designate the minimum services and emergency teams, the enterprise indicates that transitional article 3 of Act No. 20940, which was published on 8 September 2016 and has been in force since 1 April 2017, provides that, as from the publication of the Act, enterprises and trade union organizations may designate the minimum services and emergency teams by common accord, and that where collective bargaining is due to commence within two months of the entry into force of the Act and there is no agreement on the designation of the minimum services and emergency teams, the employer must notify the competent Regional Labour Directorate within a time limit of 90 days starting from the fourth month following the publication of the Act. The enterprise indicates that the negotiation with the union was due to begin between April and May 2017, and therefore the request to designate minimum services was due to be submitted by 31 March 2017, on which date the enterprise submitted the request to the Labour Directorate.
9. 203. The Government indicates that the right to request the designation of minimum services and emergency teams must be exercised with strict adherence to the principle of good faith prevailing throughout the collective bargaining process, such that it is not possible for the administrative authority to determine whether the exercise of that right constitutes an anti-union practice, because only the courts may characterize conduct as an anti-union practice. The foregoing is without prejudice to the responsibility of the Labour Directorate to report to the competent court any incidents it considers to constitute anti-union or unfair practices so that it may examine them. The Government adds that the entry into force of the Act may have given rise to some situations requiring adjustments through the administrative and/or legislative channels, all of which is currently under review with a view to creating greater certainty on the matter.
10. 204. The Government indicates that on 15 May 2017, the Oriente Regional Labour Directorate declared the work of security guards to be the only minimum service, against which the enterprise lodged a hierarchical appeal, which was rejected. The Government also indicates that the designation of the minimum service allowed the enterprise and the trade union to proceed with their negotiations and that on 5 September 2017 the current collective agreement was signed, which is in force until 9 September 2020.
11. 205. With regard to the purported “conscious, repeated and systematic” non-compliance with the collective agreement signed on 1 October 2013, the enterprise emphasizes that the complainant organizations did not specify which clauses the enterprise had allegedly violated and the nature of the alleged non-compliance. The enterprise indicates that the union sought voluntary mediation before the Labour Directorate to discuss provisions of the collective agreement in the light of various differences in opinion on the application of certain benefits and that the enterprise agreed to participate in that process. It indicates that it met with an official of the Labour Directorate and coordinated the submission of information concerning the matters that the union wished to address. However, the day before the meeting that was scheduled on 5 January 2017, the Labour Directorate informed the enterprise that the trade union organization had decided to unilaterally change the agenda of the mediation and that it wished to address other topics; consequently, as it was a voluntary process, the enterprise decided not to continue with the mediation.

C. The Committee’s conclusions

1. 206. The Committee observes that in the present case, the complainant organizations report anti-union dismissals, and the suspension of the collective bargaining process and non-compliance with the collective agreement by the largest print media enterprise in the country.
2. 207. The Committee notes that the complainants indicate that on 27 February 2017, the enterprise dismissed 122 workers from the production area, 104 of whom were members of Trade Union No. 3 of the enterprise (51 per cent of its 204 members), and allege that, although the enterprise justified the dismissals on economic grounds and on the basis of its decision to outsource part of the printing of the products to an external printing works that allegedly provided a lower-cost and higher-quality service, the dismissals were intended to instil fear in the workers and prevent any work stoppages during the collective bargaining process that was due to take place in the subsequent months.
3. 208. In this respect, the Committee notes that the enterprise indicates that: (i) its revenue has fallen by 31.2 per cent in recent years and restructuring has led to more than 130 people losing their job; (ii) the sustained loss of advertising revenue led to the enterprise deciding to outsource part of the printing of its products, which involved an internal restructuring that particularly affected the production area, as there were no other areas to which the workers concerned could be reassigned; and (iii) with a view to concluding the contractual relationship in an appropriate manner, the enterprise offered those who were in agreement with the contract termination a financial incentive over and above what it was legally obligated to offer, advice on social security and a plan for finding a new job.
4. 209. The Committee also notes that the complainants and the Government both indicate that more than half of the laid-off workers lodged complaints on the grounds of anti-union practices and sought to have the dismissals declared null and void, and that, according to the Government, decisions have been handed down in a number of proceedings, a conciliation agreement has been reached in some others, and in other proceedings either there has not yet been a decision or an action for annulment has been brought which has not yet been resolved. The Government also informs the Committee that in all of the court cases brought by the union in which a decision has been handed down, for a total of 41 workers, the layoffs were found to be lawful and the complaints of infringement of freedom of association were dismissed. The courts found that the outsourcing process had begun well before the collective bargaining process, that production was being outsourced with a view to increasing competitiveness and that it did not aim to weaken the union, either directly or indirectly, also taking account of the fact that the enterprise has high levels of unionization among all categories of employees.
5. 210. While duly noting the decisions and the fact that there are still legal proceedings ongoing, the Committee observes that, without prejudice to the financial reasons which may have underpinned the outsourcing, and without prejudice to the high level of unionization among the enterprise’s workers, the layoffs almost exclusively affected unionized workers and the restructuring had a direct impact on Trade Union No. 3 of the enterprise. However, the foregoing does not permit reaching the conclusion that the workers were dismissed because of their union membership or their participation in legitimate union activities. In this particular case, the Committee recalls the importance of consulting with trade unions when elaborating restructuring programmes, since they have a fundamental role to play in ensuring that programmes of this nature have the least possible effect on workers [see Compilation of decisions of the Committee on Freedom of Association, sixth edition, 2018, para. 1557].
6. 211. The Committee notes that the complainants also allege that, without prior consultation with Trade Union No. 3, the enterprise requested the Labour Directorate to designate the minimum services and emergency teams, which resulted in a unilateral suspension of the collective bargaining process. In this regard, the Committee notes that the enterprise indicates that although Act No. 20940, which was published on 8 September 2016 and has been in force since 1 April 2017, indicates that enterprises and trade union organizations may designate the minimum services and emergency teams by common accord, transitional article 3 of the Act indicates that, where collective bargaining is due to commence within two months of the entry into force of the Act, the employer must make an application to the Regional Labour Directorate within a time limit of ninety days beginning from the fourth month following the publication of the Act. The enterprise indicates that collective bargaining with the union was due to begin between April and May 2017, and therefore the request for the designation of minimum services was due to be submitted by 31 March 2017, on which date the enterprise submitted the request to the Labour Directorate.
7. 212. The Committee also notes that the Government adds that: (i) the right to request the designation of minimum services and emergency teams must be exercised with strict adherence to the principle of good faith; (ii) in a decision issued in November 2017, the Labour Directorate determined that the employer’s inertia in approaching its counterpart to seek an agreement on designating the minimum services and emergency teams cannot be considered to be a flaw that invalidates the submitted request; (iii) the entry into force of Act No. 20940 might have given rise to situations requiring adjustments through the administrative and/or legislative channels, all of which is currently under review with a view to creating greater certainty on the matter; and (iv) on 15 May 2017, the Labour Directorate declared the work of security guards to be the only minimum service, which allowed the parties to proceed with their negotiations, resulting in the signature of the current collective agreement on 5 September 2017, which is valid until 9 September 2020.
8. 213. The Committee observes that the matter concerning the request for the designation of minimum services and emergency teams has its origins in the provisions of transitional article 3 of Act No. 20940, which applied only to collective bargaining processes that were due to begin within the first six months of the entry into force of the Act, that is, until October 2017. Furthermore, taking into account the information from the Government that the enterprise and the union signed a collective agreement on 5 September 2017 that is in force until 9 September 2020, the Committee will not examine the matter further.
9. 214. Lastly, concerning the allegation of non-compliance with the collective agreement that is no longer in force, the Committee observes that, as the Government indicates, the complainants did not specify which clauses were allegedly violated by the enterprise and the nature of the alleged non-compliance. Consequently, and taking account of the fact that the union and the enterprise have negotiated a new collective agreement that is in force, the Committee will not examine this allegation further.

The Committee’s recommendation

1. 215. In the light of its foregoing conclusions, the Committee invites the Governing Body to decide that this case does not call for further examination.