Definitive Report - Report No 338, November 2005

Case No 2375 (Peru) - Complaint date: 30-JUL-04 - Closed

Allegations: The complainant organizations allege that the construction sector was obliged by legislation to negotiate according to branch of activity, thereby preventing the parties from being able freely to determine the level of negotiation in violation of Convention No. 98

1211. The complaint is contained in a communication dated 30 July 2004 from the International Organisation of Employers (IOE), submitted on behalf of the National Confederation of Private Employers’ Institutions (CONFIEP) and the Peruvian Chamber of Construction (CAPECO).

1. 1212. In view of the failure of the Government to send its observations, despite the time which had elapsed since the submission of the complaint, the Committee made an urgent appeal at its May-June 2005 meeting [see 337th Report, para. 10, approved by the Governing Body at its 293rd Session (June 2005)], indicating that, in accordance with the procedural rules in force, it would present a report on the substance of the case at its next meeting if the Government’s observations had not been received by that date. Since then, no reply has been received from the Government.
2. 1213. Peru 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. 1214. In its communication of 30 July 2004, the International Organisation of Employers (IOE), the National Confederation of Private Employers’ Institutions (CONFIEP) and the Peruvian Chamber of Construction (CAPECO) submitted a complaint alleging violation of the principles of freedom of association and the right to collective bargaining provided for in Convention No. 98, ratified by Peru on 13 March 1964. They allege that the Government issued legislation that obliged the civil construction sector to negotiate according to branch of activity, subsequently affecting the fundamental right to determine, freely and voluntarily, the level of negotiation between employers and workers, in opposition to that recommended by the Committee on Freedom of Association and the Committee of Experts on the Application of Conventions and Recommendations.
2. 1215. As a result of the above, the complainant organizations ask the Committee on Freedom of Association to request that the Government modifies the legislation to bring it into line with the provisions of Convention No. 98 of the ILO, so that the parties involved in a collective bargaining procedure, be they employers or workers, are freely able to choose the level at which they wish to carry out said collective bargaining.
3. 1216. The complainant organizations indicate that Article 4 of Convention No. 98 comprises two basic elements: that it is the measures taken by the public authorities to encourage collective bargaining, and the voluntary character of the recourse to collective bargaining, which lead to the independence of the parties involved in the collective bargaining. In conclusion, the right of freedom or independence to set the level of collective bargaining is a fundamental freedom that the ILO, in its various declarations, has always supported.
4. 1217. Nevertheless, current legislation in Peru has established, specifically in article 46 of Act No. 27912, which entered into force on 9 January 2003, that “should there be an existing level of collective bargaining in a specific branch of activity, this shall remain in force”, a regulation that completely violates the meaning and scope of Article 4 of Convention No. 98, because it has been a legal authority that has mandatorily set pre-existing levels of collective bargaining in the construction sector and not the parties who have set the level of collective bargaining in which they should progress freely and voluntarily. The complainant organizations indicate that, on 12 December 2001, the Ministry of Labour, in violation of the regulations then in force, issued Sub-Executive Order No. 037-2001, in which, contrary to what happened in 1997, 1998, 1999 and 2000, it maintains that the return of the trade union petition for collective bargaining (at the industry level) carried out by the Peruvian Chamber of Construction (CAPECO) is invalid and orders the parties to bargain according to branch of activity.
5. 1218. In the light of this situation, according to the complainant organizations, the Peruvian Chamber of Construction (CAPECO) submitted a complaint based on violation of constitutional rights to the Constitutional Court, which, in the legal reasons for its decision of 26 March 2003 (attached), it laid down that:
6. … in order to prevent collective bargaining from becoming inoperable, it is reasonable and justified that the State intervene, establishing measures that favour effective collective bargaining. Therefore, they shall remove from our regulations those measures that are incompatible with an effective promotion of collective bargaining in the civil construction sector and, should this be the case, issue regulations that, without disregarding that the level of bargaining should be fixed by mutual accord, establish as the level of bargaining that of the branch of activity when this cannot be reached by said accord.
7. The complainants believe that this is contrary to the principle of free and voluntary collective bargaining laid down in Article 4 of Convention No. 98.
8. 1219. According to the complainant organizations, the new legal situation created is the result of a mistaken policy of supposed restitution of labour rights infringed by previous governments, when, in reality, it has shown that the various mechanisms established to impose a level of collective bargaining that has never occurred, have been unsuccessful. In effect, as shown in the collective agreements mainly resolved by the labour administrative authority, collective bargaining in the construction industry sector has never had a favourable reception by the parties involved in these processes. It should be noted that the rights and freedoms – fundamentally understood – cannot be abolished or subject to conditions that prevent them being exercised fully, as these are universal rights and freedoms that are inherent to all people independent of their socio-economic situation. Moreover, the current situation implies discrimination against the construction sector with regard to other economic branches.

B. The Committee’s conclusions

1. 1220. The Committee regrets that the Government has not sent its observations, all the more so given that, following two postponements of the case, it issued an urgent appeal to the Government at its May-June 2005 meeting requesting that it transmit its observations as a matter of urgency and warning it that, in accordance with the procedural rules in force, it would present a report on the substance of the case at its next meeting, even though the Government’s observations had not been received. In view of the failure of the Government to reply, the Committee finds itself obliged to submit a report to the Governing Body.
2. 1221. The Committee reminds the Government that the purpose of the whole procedure established by the International Labour Organization for the examination of allegations relating to violations of freedom of association is to promote respect for employers’ and workers’ organizations in law and in fact. While this procedure protects governments against unreasonable accusations, governments on their side should recognize the importance for the protection of their own good name of formulating for objective examination detailed factual replies to such detailed factual charges as may be put forward [see 1st Report, para. 31].
3. 1222. The Committee notes that, in the present case, the complainant organizations allege that article 46 of Act No. 27912, which entered into force on 9 January 2003, is contrary to the principle of free and voluntary collective bargaining laid down in Article 4 of Convention No. 98 and involves obligation by legislation of the level of collective bargaining according to branch of activity in the construction sector, a situation that, moreover, discriminates against the construction sector with regard to other economic branches. The Committee notes that the complainant organizations take exception to a decision by the Constitutional Court, dated 26 March 2003 (attached), relating to the above, in which the Court stated that the administrative decision of the administrative labour authority (Sub-Executive Act No. 037-2001 of 12 December 2001), resolving that the Peruvian Chamber of Construction and the Federation of Civil Construction Workers of Peru “shall carry out collective bargaining at the level of the branch of activity” did not infringe the rights of the Chamber of Construction.
4. 1223. The Committee notes that the relevant legal provisions relating to the present case are as follows: Decree-Act No. 25593 relating to collective labour relations, of 26 June 1992, lays down in article 45 that “If there is no previously existing collective agreement at any level of those indicated in the previous article, the parties shall decide, by common accord, the level at which they shall enter into the first agreement. Failing accord, collective bargaining shall take place at the enterprise level.” “Should there be an agreement existing at any level, to enter into another at a different level, with substitutory or complementary character, the agreement of the parties is a prerequisite and this may not be established through administrative act or arbitrator’s ruling. [...].” Article 46 of Act No. 27912, which entered into force on 9 January 2003, provides that “should there be an existing level of collective bargaining in a specific branch of activity, this shall remain in force”.
5. 1224. The Committee also notes the legal reasons contained in the decision of 26 March 2003, where the obligation to promote collective bargaining by the State invoking article 28 of the Constitution, and Article 4 of Convention No. 98 of the ILO is highlighted:
6. (...) labour organization for workers in the civil construction sector is very different from other sectors, highlighting: (a) contingency, as the labour relation is not permanent and lasts for the period of the labour for which the workers have been contracted or for the duration of the work; and (b) relative location, as there is no fixed and permanent place where construction work is carried out.
7. As a result, during his labour activity, the civil construction worker provides services for a number of different employers, rendering the possibility that he/she can rely on a trade union organization at the enterprise level unclear, and therefore practically non-viable that he/she can bargain several times a year. As a result of this, given the particular situation of the civil construction sector and in order to prevent collective bargaining from becoming inoperable, it is reasonable and justified that the State intervene, establishing measures that favour effective bargaining. Therefore, they shall remove from our regulations those measures that are incompatible with an effective promotion of collective bargaining in the civil construction sector, and, should that be the case, issue regulations that, without disregarding that the level of bargaining should be fixed by mutual accord, establish as the level of bargaining that of the branch of activity when this cannot be reached by said accord.
8. For this reason, the different reasoning that the State uses in this case does not constitute, in itself, any influence on the right to equality, or the right to collective bargaining, as it is based on reasonable and objective criteria. (...)
9. 1225. The Committee recalls that measures should be taken to encourage and promote the full development and utilization of machinery for voluntary negotiation between employers or employers’ organizations and workers’ organizations, with a view to the regulation of terms and conditions of employment by means of collective agreements [see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 781].
10. 1226. The Committee recalls that, with regard to the level of collective bargaining, the Collective Bargaining Recommendation, 1981 (No. 163), provides, in Paragraph 4(1), that “measures adapted to national conditions should be taken, if necessary, so that collective bargaining is possible at any level whatsoever, including that of the establishment, the undertaking, the branch of activity, the industry, or the regional or national levels”. The Committee also recalls that, on previous occasions, it has considered that “according to the principle of free and voluntary collective bargaining embodied in Article 4 of Convention No. 98 the determination of the bargaining level is essentially a matter to be left to the discretion of the parties and, consequently, the level of negotiation should not be imposed by law, by decision of the administrative authority or by the case-law of the administrative labour authority [see Digest, op. cit., para. 851]. The Committee has considered that the best procedure for safeguarding the independence of the parties involved in collective bargaining is to allow them to decide, by mutual agreement, the level at which bargaining should take place. Nevertheless, it appears that, in many countries, this question is determined by a body that is independent of the parties themselves. The Committee considers that in such cases the body concerned should be truly independent [see Digest, op. cit., para. 855]. For its part, the Committee of Experts has stated the following:
11. The principle of voluntary negotiation of collective agreements, and thus the autonomy of the bargaining partners, is the second essential element of Article 4 of Convention No. 98. The existing machinery and procedures should be designed to facilitate bargaining between the two sides of industry, leaving them free to reach their own settlement. However, several difficulties arise in this respect, and an increasing number of countries restrict this freedom to various extents. The problems most frequently encountered concern unilateral decision as to the level of bargaining; the exclusion of certain matters from the scope of bargaining; making collective agreements subject to prior approval by the administrative or budgetary authorities; observance of criteria pre-established by the law, in particular as regards wages; and the unilateral imposition of working conditions.
12. As was pointed out in Chapter VII, the right to bargain collectively should also be granted to federations and confederations; any restriction or prohibition in this respect hinders the development of industrial relations and, in particular, prevents organizations with insufficient means from receiving assistance from higher level organizations, which are in principle better equipped in terms of staff, funds and experience to succeed in such bargaining. On the other hand, legislation which makes it compulsory for collective bargaining to take place at a higher level (sector, branch of activity, etc.) also raises problems of compatibility with the Convention. The choice should normally be made by the partners themselves, since they are in the best position to decide the most appropriate bargaining level, including, if they so wish, by adopting a mixed system of framework agreements supplemented by local or enterprise-level agreements [see General Survey of the Reports on 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), 1994, paras. 248 and 249].
13. 1227. In these circumstances, the Committee requests the Government to take the necessary steps to change article 45 of Decree-Act No. 22593 and article 46 of Act No. 27912 to bring them into conformity with the international labour standards and the principles indicated, so that the level of collective bargaining is determined freely by the parties concerned. With regard to the issue of the level of collective bargaining when the parties are not in agreement, the Committee notes the arguments of the decision of the Constitutional Court of 26 March 2003, favouring in such cases collective bargaining at the level of the branch of activity in the construction sector. The Committee notes the Government’s interest in promoting collective bargaining in accordance with the national Constitution and with Article 4 of Convention No. 98. However, the Committee believes that, when there is no agreement between the parties as to the level of negotiation, rather than a general decision by the judicial authorities favouring negotiation at the level of the branch of activity, it would be more in keeping with the letter and the spirit of Convention No. 98 and Recommendation No. 163 to have a system established by common accord of the parties in which in each new collective bargaining they may assert their interests and points of view in a specific way. The Committee requests the Government to invite the most representative workers’ and employers’ organizations to establish a mechanism to resolve conflicts relating to the level at which collective bargaining should take place.

The Committee's recommendations

1. 1228. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government to take the necessary steps to amend article 45 of Decree-Act No. 22593 and article 46 of Act No. 27912 to bring them into conformity with international labour standards and the principles of the ILO with regard to the level of collective bargaining.
   • (b) The Committee requests the Government to invite the most representative workers’ and employers’ organizations to establish a mechanism to resolve conflicts relating to the level at which collective bargaining should take place.