REPRESENTATION (article 24) - VENEZUELA - C095, C158 - 1997

1. Venezuelan Workers' Confederation (CTV), 2. Single Central Organization of Workers of Venezuela (CUTV), 3. General Confederation of Workers of Venezuela (CGT), 4. Confederation of Autonomous Trade Unions (CODESA), 5. National Trade Union of Public Employees and Officials of the Judiciary and of the Council of the Magistracy (ONTRAT)

Closed

Report of the Committee set up to examine the representation alleging non-observance by Venezuela of the Protection of Wages Convention, 1949 (No. 95), and the Termination of Employment Convention, 1982 (No. 158), made under article 24 of the ILO Constitution by the Venezuelan Workers' Confederation (CTV), the Single Central Organization of Workers of Venezuela (CUTV), the General Confederation of Workers of Venezuela (CGT), the Confederation of Autonomous Trade Unions (CODESA), and the National Trade Union of Public Employees and Officials of the Judiciary and of the Council of the Magistracy (ONTRAT)

Decision

1. The Governing Body adopted the report of the tripartite committee. Procedure closed.

Complaint Procedure

1. 1. In a letter sent to the Office on 13 June 1996, the Venezuelan Workers' Confederation (CTV), the Single Central Organization of Workers of Venezuela (CUTV), the General Confederation of Workers of Venezuela (CGT), the Confederation of Autonomous Trade Unions (CODESA) and the National Trade Union of Public Employees and Officials of the Judiciary and of the Council of the Magistracy (ONTRAT), referring to article 24 of the ILO Constitution, addressed a representation to the Office alleging non-observance by Venezuela of the Protection of Wages Convention, 1949 (No. 95), and the Termination of Employment Convention, 1982 (No 158).
2. 2. This representation concerns two Conventions which have been ratified by Venezuela and are in force for that country. (Endnote 1)
3. 3. The provisions of the Constitution of the ILO concerning submission of representations are as follows:
4. Article 24
5. (Representations on the application of a Convention)
6. In the event of any representation being made to the International Labour Office by an industrial association of employers or of workers that any of the Members has failed to secure in any respect the effective observance within its jurisdiction of any Convention to which it is a party, the Governing Body may communicate this representation to the Government against which it is made, and my invite that government to make such statement on the subject as it may think fit.
7. Article 25
8. (Possibility of publishing the representation)
9. If no statement is received within a reasonable time from the government in question, or if the statement when received is not deemed to be satisfactory by the Governing Body, the latter shall have the right to publish the representation and the statement, if any, in reply to it.
10. 4. The procedure to be followed in the case of representations is governed by the revised Standing Orders adopted by the Governing Body at its 212th Session in March 1980. (Endnote 2)
11. 5. In accordance with articles 1 and 2, paragraph 1, of the Standing Orders, the Director-General communicated the representation to the Government of Venezuela and brought the representation before the Officers of the Governing Body.
12. 6. At its 267th Session (November 1996), the Governing Body, on the recommendation of its Officers, decided that the representation was receivable and set up a committee to examine the matter, composed of Mr. Antonio Ducreux (Government member, Panama), Chairperson, Mr. W. Durling (Employer member) and Mrs. Maria Rozas (Worker member).
13. 7. In accordance with article 4, paragraph 1 of the Standing Orders, the Committee decided to invite the Government to submit its observations on the representation before 31 January 1997.
14. 8. In a letter dated 31 January 1997, the Government communicated its observations on the representation. The Committee met in Geneva on 25 March 1997 and adopted its report.
15. Examination of the representation
16. A. Allegations submitted
17. The Protection of Wages Convention, 1949 (No. 95)
18. 9. In their communication, the above-mentioned organizations consider that the Venezuelan wage system has been operating since 1987 outside the principles of legislation and international conventions ratified by the country. The adoption of laws or decrees creating benefits -- which it is specified are of a non-wage character and are therefore not taken into account for the purpose of calculating benefits, compensation and allowances which workers may receive in the event of separation or dismissal under law or collective agreement -- are not in accordance with the provisions of Articles 1, 10, 11 and 12 of Convention No. 95. This "desalarization", implying that part of the workers' remuneration is not included in the definition of wages, was allegedly introduced with the adoption of the Decree of 29 April 1987 which established the compensation allowance and was further consolidated by the adoption of the following texts: the Act respecting the payment of the compensation allowance in respect of transport expenses (Official Gazette No. 34.058 of 12 August 1988); Decree No. 2052 of 21 February 1992 (Official Gazette No. 34.909), which granted an increase in the special transport allowance; Decrees Nos. 123 and 124, both dated 13 April 1994 (Official Gazette No. 35.441), which fixed minimum obligatory wages in urban and rural areas respectively, and which abrogated Decree No. 2100 of 20 February 1992; Legislative Decree No. 247 of 29 June 1994 (Official Gazette No. 35.493), issued pursuant to Decree No. 241 of 27 June 1994 -- which suspended the constitutional guarantees indicated in section 1 of the Decree -- and which established a food and transport allowance equal to 2 per cent of the monthly minimum wage each day actually worked; Legislative Decree No. 617 of 11 April 1995 (Official Gazette No. 35.691), issued pursuant to Decree No. 285 of 22 June 1994, which suspended the constitutional guarantees mentioned in the text, and which granted a monthly allowance of 500 bolivars for each day actually worked, to be paid by employers in the private sector; Decree No. 1054 of 7 February 1995, which modified the food and transport allowance established by Decree No. 247 of 29 June 1994 and fixed at 600 bolivars for food and transport allowance for each day actually worked for workers in the national private sector earning a monthly income in cash of up to 75,000 bolivars; Decree No. 1055 of 7 February 1995 which modified the food and transport allowance established in Decree No. 247 of 27 June 1994 for workers and employers of the national public sector with cash incomes of up to 75,000 -- 890.50 bolivars for the former on 933.50 bolivars for the latter -- for each day worked and, finally, Decree No. 1240 of 6 March 1996 which modified the food and transport allowance established by Decree No. 1054 of 7 February 1996. A subsidy established by this Decree was 1,300 bolivars for each day worked for workers in the national private sector with a monthly cash income of up to 75,000 bolivars.
19. 10. The above-mentioned organizations consider that these exclusions are not in accordance with the definition of "wages" contained in Article 1 of the Convention, in so far as these benefits and allowances fulfil the necessary criteria to be considered as components of wages. They also consider that the "desalarization" of a large part of remuneration does not comply "in practice" with the protection of wages established by the Convention under Article 10 and feel that a discrepancy between the remuneration actually paid and the base wage for the purpose of calculating benefits, compensation and other allowances granted to workers for carrying out duties under the labour relationship, weakens the protection of wages against attachment. They refer to two provisions of the Organic Labour Law (LOT) which stipulate that: (i) the remuneration of a worker which does not exceed the minimum wage may not be attached (section 162); (ii) sums corresponding to benefits and allowances and any other claims due to workers during the employment relationship, up to a value of 50 minimum wages, may not be attached (section 163).
20. 11. Furthermore, the complainant organizations refer to section 158 of the LOT which establishes the priority claim of workers (six months of wages as well as social benefits up to 90 days of the normal wage). They feel that the Government, by deciding that certain benefits and allowances should not be considered an integral part of wages, contravenes the provisions of the Convention which stipulate that full wages are due to workers for services rendered during the period prior to bankruptcy or judicial liquidation, as prescribed by national legislation.
21. 12. The above-mentioned organizations point out that under Article 12 of Convention No. 95, a final settlement of all wages due should be paid upon the termination of a contract of employment. However, because of the practices denounced by the complainant organizations, only a tiny percentage of workers' remuneration is taken into account to calculate the wages due upon termination of the employment contract.
22. 13. Finally, the above-mentioned organizations note the observations made by the Committee of Experts on the Application of Conventions and Recommendations concerning the application of Convention No. 95 by Argentina, in the light of the observations made by the Congress of Argentinean workers (CTA) concerning the adoption of decrees establishing that social benefits should not constitute components of remuneration. (Endnote 3) They refer particularly to the following passage of the observations:
23. ... the Committee believes that it can be concluded that there is a connection between the benefits designed to improve the nutrition of workers and their families and the work performed or service provided by virtue of a contract of employment. These "benefits", however they are termed (bonuses, supplementary benefits, etc.) constitute components of remuneration in the sense of Article 1 of the Convention. They therefore have to be subject to the measures set out in Articles 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15 and 16 of the Convention.
24. The Termination of Employment Convention, 1982 (No. 158)
25. 14. According to the complainant organizations, the policy of excluding certain benefits or allowances from the definition of "wages" would affect the application of Articles 10 and 12 of Convention No. 158. As regards Article 10, the compensation which may be awarded by the judge in the event of unjustified termination cannot be "adequate" as specified in the Convention, given that the basis of calculation of compensation is reduced. In the case of Article 12, the amount of severance pay or separation benefits is not calculated on the basis of the workers' level of wages, as laid down in Convention No. 95. The wage policy denounced results in a reduction in the cost of dismissal and, consequently, makes job stability more precarious.
26. B. The Government's observations
27. 15. In its communication, the Government acknowledges that wages, the purchasing power of which has declined as a result of inflation, does serve as a basis for calculating all labour-related benefits (severance pay, paid leave, bonuses, etc.). It justifies having recourse to awards and non-wage benefits by the need to restore the purchasing power of wages in the immediate future. Indeed, its immediate objective is to combat inflation to be able subsequently to convert non-wage income or compensation into wages in the full sense of the term as in the past. Venezuela is attempting to correct its economic imbalances by means of an adjustment programme and to become part of a global economy, without however overlooking the need to establish wages in real terms which protect workers' purchasing power to combat inflation. With these objectives in view, the Government has called meetings with workers and employers in a climate of social dialogue.
28. 16. Furthermore, the Government recalls that the Organic Labour Law authorizes workers to be paid compensation or bonuses in return for their services without this affecting their wages. Consequently, there is no violation of the Organic Labour Law or Conventions Nos. 95 and 158.
29. C. The Committee's conclusions
30. 17. The Committee notes that the allegations submitted by the signatory trade union organizations and the reply of the Government reveals a legislative and regulatory mechanism which deforms the concept of wages by means of the adoption of benefits and various allowances (transport, food) paid by the employer, which do not affect the amount of wages, under the meaning of section 133 of the Organic Labour Law. They concern the repercussions of the situation thus created on the application of Articles 10, 11 and 12 of Convention No. 95, read in conjunction with the first Article of this Convention. These provisions which concern the protection of wages against attachment or assignment, wages constituting a privileged debt and the final settlement of all wages due, as well as the definition of the protected wages, read as follows:
31. Article 1
32. In this Convention, the term "wages" means remuneration or earnings, however designated or calculated, capable of being expressed in terms of money and fixed by mutual agreement or by national laws or regulations, which are payable in virtue of a written or unwritten contract of employment by an employer to an employed person for work done or to be done or for services rendered or to be rendered.
33. Article 10
34. 1. Wages may be attached or assigned only in a manner and within limits prescribed by national laws or regulations.
35. 2. Wages shall be protected against attachment or assignment to the extent deemed necessary for the maintenance of the worker and his family.
36. Article 11
37. 1. In the event of the bankruptcy or judicial liquidation of an undertaking, the workers employed therein shall be treated as privileged creditors either as regards wages due to them for service rendered during such a period prior to the bankruptcy or judicial liquidation as may be prescribed by national laws or regulations, or as regards wages up to a prescribed amount as may be determined by national laws or regulations.
38. 2. Wages constituting a privileged debt shall be paid in full before ordinary creditors may establish any claim to a share of the assets.
39. 3. The relative priority of wages constituting a privileged debt and other privileged debts shall be determined by national laws or regulations.
40. Article 12
41. (...)
42. 2. Upon the termination of a contract of employment, a final settlement of all wages due shall be effected in accordance with national laws or regulations, collective agreement or arbitration award or, in the absence of any applicable law, regulation, agreement or award, within a reasonable period of time having regard to the terms of the contract.
43. 18. Furthermore, the above-mentioned organizations also consider that the establishment and development of non-wage benefits affect the application of Articles 10 and 12(1)(b) of Convention No. 158. These Articles which concern the payment of "appropriate" compensation to a worker who has been unjustly terminated and the right of the dismissed worker to a "severance allowance" read as follows:
44. Article 10
45. If the bodies referred to in Article 8 of this Convention find that termination is unjustified and if they are not empowered or do not find it practicable, in accordance with national law and practice, to declare the termination invalid and/or order or propose reinstatement of the worker, they shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate.
46. Article 12(1)(b)
47. 1. A worker whose employment has been terminated shall be entitled, in accordance with national law and practice, to:
48. (a) (...)
49. (b) Benefits from unemployment insurance or assistance or other forms of social security, such as old-age or invalidity benefits, under the normal conditions to which such benefits are subject... .
50. Previous examination of the application of Conventions Nos. 95 and 158 by the supervisory bodies of the ILO
51. 19. In its report to the 82nd Session of the International Labour Conference (1995), the Committee of Experts noted with satisfaction that the Organic Labour Law gave effect, amongst other things, to the provisions of Articles 6, 10 and 13, paragraph 1, of the Convention, on which the Committee had previously commented. The Committee notes that the requests sent directly to the Government in 1995 and 1996 did not concern the provisions which are the subject of the representation. Finally, the examination of the application of Convention No. 158 did not give rise to any comments by the Committee of Experts.
52. Application of Convention No. 95
53. 20. The Committee notes that the trade union organizations consider that the policy of "desalarization" constitutes a violation of Article 1 of Convention No. 95, as the laws and regulations creating or increasing benefits and allowances state that they are of a non-wage character and that, consequently, they are not taken into account for calculating benefits which, either under law or under collective agreement, are due to the worker. A number of texts stipulate that these benefits are not considered an integral part of the base wage for calculating benefits, allowances and compensation which, by law or by collective agreement, may be granted to the worker during the performance of services or on the termination of the employment relationship (Decree No. 247 of 29 June 1994, section 4; Decree No. 617 of 11 April 1995, section 5).
54. 21. The Committee might note that Article 1 of Convention No. 95 gives a definition of the term "wages" "in this Convention". This definition might be wider than that contained in national legislation, without this necessarily implying a violation of the Convention -- provided that the remuneration or earnings due, payable under a contract of employment by an employer to a worker, whatever term is used, are covered by the provisions of Articles 3 to 15 of the Convention. This is the meaning of the observation of the Committee of Experts on the Application of Conventions and Recommendations, to which the trade union organizations concerned refer: (Endnote 4) the fact that the benefit, however it is termed, does not enter into the definition of wages contained in the national legislation does not ipso facto constitute a violation of the Convention. In the case to which the above-mentioned organizations referred, the Committee of Experts, "in the absence of further information in this regard", requested the government concerned to indicate the measures taken or envisaged to ensure that non-wage benefits, as provided for by the national legislation, should be covered by the protection established in the Labour Code, in application of the Convention. (Endnote 5)
55. 22. The Committee notes that section 133 of the Organic Labour Law stipulates that a certain number of benefits do not constitute part of the wages. These include: (1) bonuses not directly linked to services rendered which the employer, on special grounds, voluntarily grants to the workers; (2) subsidies or facilities granted by the employer to allow the worker to obtain basic goods and services at prices lower than standard prices; (3) employers' contributions to workers' savings funds, except in the event of a contrary decision; and (4) the reimbursement to the worker of expenses incurred during the course of his activities. The allowances provided for under the laws and regulations quoted by the above-mentioned trade union organizations do not enter into these categories. The Committee also recalls the Government's statement to the effect that the wage serves as a basis for calculating all benefits ensuing from work. However, by expressly mentioning that benefits and allowances are of a non-wage nature and that, consequently, they are not considered for purposes of calculating benefits which, by law or by collective agreement, may be granted to the worker during the performance of services, the above-mentioned laws and regulations have the effect, amongst others, of excluding them from the guarantees provided for under the Organic Labour Law in application of the relevant provisions of the Convention. Consequently, the Committee requests the Government to indicate the measures taken to ensure that these allowances, which are of a non-wage nature under the national legislation, are, in application of Convention No. 95, covered by the protection established in the Organic Labour Law, by repealing the legal provisions or regulations incompatible with section 133 of the Organic Labour Law.
56. 23. The Committee considers that there is no use continuing the examination of the repercussions of the adoption and implementation of the laws and regulations quoted by the above-mentioned organizations on the application of specific Articles of the Convention. Neither the information provided by the above-mentioned organizations nor the explanations given by the Government make it possible to conclude that the measures taken: (i) for the protection of wages against attachment or assignment to the extent deemed necessary for the upkeep of the worker and his family; (ii) for the protection of wages constituting a privileged debt as in the event of the bankruptcy or judicial liquidation of an undertaking; or (iii) to ensure a final settlement of all wages due upon termination of a contract of employment; are in accordance with the provisions contained in Articles 10, 11 and 12, paragraph 2, of the Convention. The Committee points out that the amassing of decisions which state that the benefits granted under the above-mentioned laws and regulations are not of a wage nature, reduces the amount of the sums protected under the term of "wages" to such an extent that the very concept of "wages" loses any meaning.
57. Application of the Termination of Employment Convention, 1982 (No. 158)
58. 24. The Committee notes that the allegations of the above-mentioned organizations concern the repercussions arising from the adoption of laws and regulations establishing or increasing various benefits or allowances (transport, food) paid by the employer, which are not considered as a basis for calculating wages by virtue of section 133 of the Organic Labour Law, on the application of Articles 10 and 12(1)(a) of Convention No. 158. These provisions, which concern the compensation ordered by the courts or arbitrators in the event of unjustified termination of employment and severance allowances, are drafted as follows:
59. Article 10
60. If the bodies referred to in Article 8 of this Convention find that termination is unjustified and if they are not empowered or do not find it practicable, in accordance with national law and practice, to declare the termination invalid and/or order or propose reinstatement of the worker, they shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate.
61. Article 12
62. 1. A worker whose employment has been terminated shall be entitled, in accordance with national law and practice, to:
63. (a) A severance allowance or other separation benefits, the amount of which shall be based, inter alia, on length of service and the level of wages, and paid directly by the employer or by a fund constituted by employer's contributions; (...)
64. 25. The Committee points out that section 125 of the Organic Labour Law provides that "if the employer persists in his intention to dismiss the worker, he shall pay, in addition to the wages which the worker has not received during the procedure, double the compensation provided for under section 108 (two months' of wages by year of length of service), plus the double due to him by virtue of section 104(a), (b) and (c) for not having received notice (between 15 days and two months' wages according to length of service), and the equivalent provided for if notice had been given, by virtue of section 104(d) and (e) (between two and three months' wages according to length of service)". The amount of this compensation is calculated in accordance with the wages. The Committee considers that the benefits introduced with a view to adjusting the purchasing power of the worker, as a consequence of the economic situation facing the country, should be taken into account for the calculation of compensation provided by the national legislation in the case of unjustified termination of employment. The point is whether the fact of not taking account of the said benefits is in accordance with the provisions of the Convention which refer to an "adequate" compensation.
65. 26. Article 10 of the Convention stipulates that "adequate" compensation should be paid as a substitute to a worker having been unjustifiably dismissed when it has been deemed impossible to declare the termination invalid and reinstate the worker as principal means of redress. The Committee notes that this financial compensation is designed to make up for the unjustified loss of employment and must therefore be deemed "adequate", i.e. sufficiently dissuasive to avoid unjustified termination of employment. The Committee notes that although the use of the term "adequate" does not establish either any specific amount for this compensation or the ways to calculate this amount, it nevertheless indicates that the amount of the compensation should make it reasonably possible to achieve the aim in question, i.e. to compensate for the unjustified loss of employment. The Committee also notes that in the case before it, section 125 of the Organic Labour Law states that the compensation in the event of unjustified dismissal should be in proportion to the amount of the wages. The Committee considers that the laws and regulations, establishing or increasing benefits or allowances which are not covered by the definition of wages for the purpose of calculating severance allowances, result in a reduction of the basis for calculating the amount of the compensation provided for in the event of unjustified dismissal and, by virtue of this fact, alters the "adequate" nature of the compensation provided for under Article 10 of the Convention. Consequently, the Committee concludes on this point that the Government of Venezuela is not fulfilling its obligations provided for under Article 10 of the Convention.
66. 27. As regards Article 12 of the Convention, the amount of the severance allowance should be based, amongst other things, on length of service and the level of wages. The application in law of this provision is guaranteed by section 108 of the Organic Labour Law which stipulates that the employer must pay compensation equivalent to ten days of wages if length of service does not exceed six months and one month of wages for each year of service in that employment or for part of the year exceeding six months.
67. 28. The Committee recalls the conclusions contained in paragraph 23 of its report, inasmuch as Article 12 provides that the amount of the severance pay shall be based on length of service and the level of wages. The Committee recalls the observation made by the Committee of Experts in paragraph 267 of its 1995 General Survey on protection against unjustified dismissal, to the effect that the severance allowance plays an important role in income protection in countries where a social security scheme does not provide such protection or where protection is inadequate. Consequently, the Committee concludes that the policy of adopting the above-mentioned laws and regulations results in a reduction in the amount of severance pay compared with the actual remuneration of the worker, thus altering the nature of the protection of wages provided for under this Article of the Convention. Finally, the Committee might conclude that the failure to fulfil obligations concerning Articles 10 and 12 of Convention No. 158 does not require specific action on the part of the Government but requires action as indicated under paragraph 23 of the report, with a view to establishing the wage nature of benefits and allowances under consideration in this representation.
68. 29. The Committee notes that the Government refers in its reply to its immediate objective which is to combat inflation with a view to converting non-wage incomes or compensation into wages in the full sense of the term, as in the past. The Committee expresses the hope that these objectives be attained rapidly as part of the social dialogue between the Government and the employers' and workers' organizations.
69. Recommendations of the Committee
70. 30. The Committee recommends the Governing Body:
71. (a) to approve this report and, in particular, taking account of the conclusions contained in paragraph 22 of the report, to invite the Government to submit a report under article 22 of the ILO Constitution on the application of Convention No. 95, on the measures taken to ensure that the allowances paid by virtue of the laws and regulations listed under paragraph 9, are covered, in law and in practice, by the protection provided for in Articles 3 to 15 of the Protection of Wages Convention, 1949 (No. 95) in particular, by repealing the legal provisions or regulations incompatible with section 133 of the Organic Labour Law;
72. (b) to declare closed the procedure initiated before the Governing Body as a result of the representation made by the Venezuelan Workers' Confederation (CTV), the Single Central Organization of Workers of Venezuela (CUTV), the General Confederation of Workers of Venezuela (CGT), the Confederation of Autonomous Trade Unions (CODEZ), the National Trade Union of Public Employees and Officials of the Judiciary and of the Council of the Magistracy (ONTRAT), concerning the application by Venezuela of the Protection of Wages Convention, 1949 (No. 95) and the Termination of Employment Convention, 1982 (No. 158).
73. Endnote 1
74. Convention No. 95, ratified on 10 August 1982 and Convention No. 158, ratified on 6 May 1985.
75. Endnote 2
76. See Official Bulletin, vol. LXIV, 1981, Series A, pp.93-95.
77. Endnote 3
78. ILC, 83rd Session (1996), Report III (Part 4A), Report of the Committee of Experts on the Application of Conventions and Recommendations, pp. 176-178.
79. Endnote 4
80. See para. 3 above.
81. Endnote 5
82. ILC, 83rd Session (1996), Report III(Part 4A), Report of the Committee of Experts on the Application of Conventions and Recommendations, p. 177.