Continuity of labour relations

Legal opinion Continuity of labour relations by Henrik Karl Nielsen within LO-TCO Baltic Labour Law Project Case 31, Lithuania 8 October 2002

2 Summary: On 6 May 1999 the general meeting of the shareholders of a company decided to liquidate the company and transfer the production of sugar to another company. On 13 August 1999, the giving company sold the sugar production equipment and machines to the receiving company. On 16 August 1999 a new company was set up instead of the liquidated company. On 20-30 August 1999, 90 per cent of the workers at the receiving company were dismissed due to the liquidation and immediately reemployed by the subsidiary. However, 20 active members of the TU were not reemployed and their jobs were occupied with new employees. EXPERT OPINION CONCLUSIONS From the information available to me I find a prima facie indication that the 20 active members of the TU, who were not reemployed, have been subject to a direct or indirect act of anti-union discrimination. INTERNATIONAL EXPERT OPINION ILO Standards on Freedom of Association The principle of freedom of association has been included in the Preamble to the ILO Constitution since the foundation of the Organisation by the 1919 Peace Treaty of Versailles. In this way, freedom of association has been proclaimed from the outset as one of the fundamental principles of the ILO. In 1944 the Constitution of the ILO was supplemented by the inclusion of the Declaration of Philadelphia, which reaffirmed the fundamental principles on which the Organisation is based and, in particular, that freedom of expression and of association are essential to sustained progress. After the 1946 revision of the ILO Constitution and the connecting of the ILO as a specialised agency to the United Nations under Article 57 of the UN Charter, the principle of freedom of association has been further developed by the adoption of the International Labour Conference of several ILO Conventions. These include the three ILO Conventions invoked by the Lietuvos Darbininkø Sàjunga in the pending case before the

Siauliai District Court. The major importance of the principle of freedom of association may be verified by the fact that a special supervisory procedure has been established by the ILO to examine alleged cases of violation of the principle of freedom of association. The supervisory procedures of the ILO will be dealt with in the following legal opinion. Supervisory procedures a) Procedures provided for by the ILO Constitution Under Article 22 of the ILO Constitution, Member States are required to submit to the ILO annual reports on the steps taken to implement ratified ILO Conventions in national law. These reports are examined by the ILO Committee of Experts on the Application of Conventions and Recommendations (hereinafter referred to as the Committee of Experts). The Committee of Experts drafts a comprehensive annual report to the International Labour Conference. The report is discussed in more detail by the annual Conference Committee on the Application of Standards. The annual report of the Committee of Experts consists of two parts. The first part consists of observations of the Committee of Experts on specific countries under specific ILO Conventions ratified by these countries. The second part of the report is a General Survey on the position under national and international law in relation to a specific convention or convention relating to a specific subject. In 1994 the General Survey of the Committee of Experts had the title Freedom of Association and Collective Bargaining. Articles 24 and 26 of the ILO Constitution provide for general supervisory procedures relating to representations and complaints submitted by organisations of workers or employers respectively, or Member States, alleging non-compliance by ILO Member States with ratified ILO Conventions. Special supervisory procedures relating to freedom of association. The supervisory procedures established by the ILO Constitution apply, of course, to ILO Conventions on freedom of association as well as to other ILO Conventions. However, the most important body of case law relating to these ILO instruments is found in the special supervisory system established for the examination of cases alleging violations by member states of ILO standards on freedom of association. The special procedure was established in 1950-1951 by the ILO pursuant to negotiations and agreements between the Governing Body of the ILO and the United Nations Economic and Social Council. The central organ under this procedure is the Committee on Freedom of Association set up by the Governing Body of the ILO. The history is described in detail by Ruth 3

Ben-Israel in her work International Labour Standards: The Case of Freedom to Strike, Deventer Antwerp London Frankfurt Boston New York 1988 at pp. 46-70. These pages are annexed to this legal opinion. I draw your attention to the finding at p. 64: The CFA procedure is now considered by all States members of the ILO to be a legally binding procedure. Under the special procedure, governments or organisations of workers and of employers can submit complaints concerning violations of trade union rights by States. The complaints are examined by the Committee on Freedom of Association. Until today this Committee has decided approximately 2000 cases of alleged violation of the principle of freedom of association. The decisions of the Committee on Freedom of Association are publicly available. They are published in the Official Bulletin of the ILO. The access to the comprehensive body of case law of the Committee on Freedom of Association is facilitated by the Digest of decisions and principles of the Freedom of Association Committee of the Governing Body of the ILO issued by the ILO. The Digest summarises and brings up to date the decisions and principles of the Committee on Freedom of Association. The useful table of contents enables the reader to search decisions of the Committee on Freedom of Association by subject and the Digest contains references to the individual decisions in which the issues in question have been at stake. In this legal opinion I refer to the fourth edition of the Digest, which appeared in 1996. Relevant provisions of ILO Conventions The basic individual right of workers and employers to establish and join organisations is laid down in Article 2 of the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87), hereinafter referred to as ILO Convention No. 87, which reads as follows: Workers and employers, without distinction whatsoever, shall have the right to establish and, subject only to the rules of the organization concerned, to join organizations of their own choosing without previous authorisation. The public authorities shall refrain from any interference, which would restrict this right or impede the lawful exercise thereof, cf. Article 3(2). Organisations established according to Article 2 shall not be dissolved or suspended by administrative authorities, cf. Article 4. The organisations established under Article 2 shall have the right to establish and join 4

federations and confederations and any such organisation, federation or confederation shall have the right to affiliate with international organisations of workers and employers, cf. Article 5. Articles 2, 3 and 4 apply to federations and confederations, cf. Article 6. ILO Convention No. 87 mainly concerns the rights of workers, employers and their organisations in relation with public authorities. Protection of workers against anti-union discrimination in respect of their employment, whether private or public, is provided by Article 1 of the Right to Organize and Collective Bargaining Convention 1949 (No. 98), hereinafter referred to as ILO Convention No. 98. The provision reads as follows: 1. Workers shall enjoy adequate protection against acts of anti-union discrimination in respect of their employment. 2. Such protection shall apply more particularly in respect of acts calculated to (a) make the employment of a worker subject to the condition that he shall not join a union or shall relinquish trade union membership (b) cause the dismissal of or otherwise prejudice a worker by reason of union membership or because of participation in union activities outside working hours or, with the consent of the employer, within working hours. The provision is supplemented by Article 2(1) of the Convention, which reads: Workers and employers organizations shall enjoy adequate protection against any acts of interference by each other or each other s agents or members in their establishment, functioning or administration. The rights of workers organisations to protection against any acts of interference by the employer or the agents of the employer in their functioning and the rights of workers to protection against anti-union discrimination have been subject to interpretation in a number of decisions by the Committee of Freedom of Association. These decisions are of major interest in the Pavenciu cukrus case and will be dealt with in more detail below. As regards workers representatives, the International Labour Conference has adopted a convention supplementing the two ILO Conventions mentioned above. The official title of the Convention is Convention concerning Protection and Facilities to be Afforded to Workers Representatives in the Undertaking, 1971 (No. 135). In the following I 5

6 refer to the Convention as ILO Convention No. 135. Article 1 of ILO Convention No. 135 stipulates: Workers representatives in the undertaking shall enjoy effective protection against any act prejudicial to them, including dismissal, based on their status or activities as a workers representative or on union membership or participation in union activities, in so far as they act in conformity with existing laws or collective agreements or other jointly agreed arrangements. ILO Convention No. 143 is supplemented by Recommendation concerning Protection and Facilities to be Afforded to Workers Representatives in the Undertaking, 1971 (No. 143), hereinafter referred to as ILO Recommendation No. 143. Relevant case law of the Committee on Freedom of Association a) Dynamic interpretation of the relevant standards The Committee of Freedom of Association has stressed the importance of Article 2 of ILO Convention No. 98. In Case No. 1568 (referred to in para. 759 of the Digest) the Committee held the view: Article 2 of Convention No. 98 establishes the total independence of workers organisations from employers in exercising their activities. Similarly, the fundamental importance of the right to protection against anti-union discrimination cf. Article 1 of ILO Convention No. 98 is stressed in paras. 690-691 of the Digest: No person shall be prejudiced in his employment by reason of his trade union membership or legitimate trade union activities, whether past or present. Protection against anti-union discrimination applies equally to trade union members and former trade union officials as to current trade union leaders. These views expressed by the Committee on Freedom of Association indicate that Articles 1 and 2(1) of ILO Convention No. 98 are interpreted

dynamically in order to offer a genuine protection of workers, who have used their right under Article 2 of ILO Convention No. 87 to join a trade union of their own choosing. 7 b)the position as regards dismissals, transfers, blacklisting etc. It must be emphasised from the outset that the provisions under the ILO Conventions mentioned above, do not as such exclude the legitimate dismissal of workers, who have made use of their legitimate trade union rights under the ILO Conventions in question. In several cases the Committee on Freedom of Association has pointed out that Article 1 of ILO Convention No. 98 does not confer immunity even on workers who hold trade union offices. Para. 725 of the Digest expresses the principle referred to in these cases: The principle that a worker or trade union official should not suffer prejudice by reason of his or her trade union activities does not necessarily imply that the fact that a person holds a trade union office confers immunity against dismissal irrespective of the circumstances. The fact that a number of members of the Lietuvos Darbininkø Sàjunga have been dismissed due to the liquidation of Pavenciu cukrus does not in itself constitute a violation of the relevant ILO Conventions. On the other hand it is evident that the case can not merely be considered as a case relating to the liquidation of an enterprise due to the fact that the enterprise has been continued and the major part of the staff re-employed after the transfer to Panevezio cukrus Kursenai subsidiary. The Committee on Freedom of Association has expressed the view that the protection against acts of anti-union discrimination does not only apply in cases of dismissals. In this respect I refer to paras. 695 and 705 of the Digest: Protection against acts of anti-union discrimination should cover not only hiring and dismissal, but also any discriminatory measures during employment, in particular transfers, downgrading and other acts that are prejudicial to the worker. Subcontracting accompanied by dismissals of union leaders can constitute a violation of the principle that no one should be prejudiced in his or her employment on the grounds of union membership or activities.

8 If the Siauliai District Court establishes that the true reason for the replacement of workers affiliated to the Lietuvos Darbininkø Sàjunga is their membership of this organisation, the District Court will have to conclude that there has been a violation of Article 1 of ILO Convention No. 98. This principle has been referred to by the Committee of Freedom Association in several cases, which have been summarised in the Digest at para. 707: It would not appear that sufficient protection against acts of anti-union discrimination, as set out in Convention No. 98, is granted by legislation in cases where employers can in practice, on condition that they pay the compensation prescribed by law for cases of unjustified dismissal, dismiss any worker, if the true reason is the worker s trade union membership or activities. c) The burden of proof I am, of course, unable to pronounce my view on national Lithuanian civil procedural law in relation to the burden of proof in general. However, it is necessary that I draw your attention to the fact that the ILO supervisory bodies on a number of occasions have pronounced their view on a number of aspects relating to the burden of proof in cases of alleged acts of antiunion discrimination. As regards workers representatives specifically, the Committee on Freedom of Association has referred to the Workers Representatives Recommendation 1971 (No. 143), which I annex to this legal opinion. In the Digest at para. 736 it is stated: The Committee has drawn attention to the Workers Representatives Recommendation, 1971 (No. 143), which recommends, as one of the measures that should be taken to ensure the effective protection of workers' representatives, the adoption of provisions for laying on the employer, in the case of any alleged discriminatory dismissal or unfavourable change in the conditions of employment of a workers representative, the burden of proving that such action was in fact justified. More generally the Committee on Freedom has addressed the questions

9 relating to the burden of proof in cases relating to acts on anti-union discrimination in para. 740 of the Digest: The existence of basic legislative provisions prohibiting acts of anti-union discrimination is not sufficient if these provisions re not accompanied by effective procedures ensuring their application in practice. Thus, for example, it may often be difficult, if not impossible, for a worker to furnish proof of an act of anti-union discrimination of which he has been the victim. This shows the full importance of Article 3 of Convention No. 98, which provides that machinery appropriate to national conditions shall be established, where necessary, to ensure respect for the right to organize. In its General Survey from 1994 Freedom of Association and Collective Bargaining, the Committee of Experts referred to the fact that legislation in several countries has strengthened the protection of workers by placing on the employer the onus of proving that the act of alleged anti-union discrimination was connected with issues other than trade union matters, and some texts expressly establish a presumption in the worker s favour. In para. 217 of the General Survey the view is expressed: Since it may often be difficult, if not impossible, for a worker to prove that he has been the victim of an act of anti-union discrimination, legislation or practice should provide ways to remedy these difficulties, for instance by using the methods mentioned above. From the information available to me I find a prima facie indication that the 20 active members of the Lietuvos Darbininkø Sàjunga, who were not re-employed, have been subject to a direct or indirect act of anti-union discrimination. This conclusion is, furthermore, supported by the fact that according to the information available to me no other reason has been given to the 20 persons in question than the liquidation of the former company. This reason, however, does indeed not explain why the persons in question were replaced by new employees. It will, therefore be required, in order to implement the ILO principles on freedom of association properly, to leave the burden of proof that no act on anti-union has taken place on the employer in this specific case. If this burden of proof is not lifted by the employers parties it will be for the High Court to conclude that there has been a violation of the above mentioned ILO standards on freedom of association.

10 National Trade Union Contact Lithuanian Worker's Union V.Mykolaicio Putino 5 2001 Vilnius Phone: +3702-621743, Fax: +3702-615253 ltds@takas.lt EXPERT H.K. Nielsen Sponsored by 1 1 Swedish International Development Cooperation Agency