Report in which the committee requests to be kept informed of development - Report No 348, November 2007

Case No 2497 (Colombia) - Complaint date: 31-MAR-06 - Closed

Allegations: The Single Confederation of Workers (CUT) and the Confederation of Pensioners of Colombia (CPC) allege that the successor companies to Pereira Public Enterprises (Pereira Waste Management SA, Pereira Telecommunications SA, Pereira Electricity SA and Pereira Water and Sanitation SA) abruptly and unilaterally suspended payment of a pension benefit which had been established under a collective agreement signed in 1963 and endorsed in subsequent collective agreements concluded in 1970, 1978, 1986, 1989, 1990, 1996 and 1997

379. The complaint is contained in a joint communication of March 2006 from the Single Confederation of Workers (CUT) and the Confederation of Pensioners of Colombia (CPC).

1. 380. On 6 October 2006, the Government sent a communication in which it questioned the trade union nature of the complaint. This notwithstanding, the Government was invited to respond to all the questions raised in the complaint, given that the complaint referred to failure to comply with a collective agreement. The Government sent its observations in a communication of 4 September 2007.
2. 381. Colombia 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. 382. In their communication of March 2006, the CUT and the CPC indicate that: (a) the workers (mentioned by name in the communication) had worked for more than 20 years in the waste management unit of Pereira Public Enterprises (Department of Risaralda); (b) Pereira Public Enterprises had adopted two decisions by which it granted retirement pensions to those workers, in accordance with the collective agreement concluded in 1963 between Pereira Public Enterprises and the trade union; (c) in its paragraph 9, the collective labour agreement of 1970 established a pension system for retirees whereby pension benefits which had previously been granted to retirees with 20 years of service were extended to staff members with ten years of service in that company, in an amount proportionate to their period of employment; (d) the abovementioned arrangement was further endorsed in the agreements concluded in 1978, 1986, 1989, 1990, 1996 and 1997; and (e) Pereira Public Enterprises was divided into four independent companies (Pereira Waste Management SA, Pereira Telecommunications SA, Pereira Electricity SA and Pereira Water and Sanitation SA). The new companies replaced the previously existing one, retroactively assuming the obligations that it had entered into in respect of retired staff members, with each company paying retirement benefits in a timely manner in accordance with the terms and conditions set out in the collective agreements.
2. 383. The complainant organizations add that the companies abruptly and unilaterally suspended payment of the benefit accorded under the agreement. Payments were suspended by Pereira Electricity SA in December 1998; by Pereira Waste Management SA in June 1999; by Pereira Telecommunications SA in December 1998 and by Pereira Water and Sanitation SA in June 2001.
3. 384. The Association of Pensioners of Pereira Public Enterprises initiated legal proceedings to secure payment of the benefits. Nevertheless, the Second Labour Circuit Court of the City of Pereira acquitted the company on the grounds that, subsequent to the establishment of the pension system under the 1970 agreement, it was decided under Act No. 4 of 1976 that another month’s payment would be granted in addition to the December payment; this benefit was endorsed by section 50 of Act No. 100 of 1993. The judicial authority recalls in its decision that, in accordance with section 16, paragraph 2, of the Labour Code, “when a new law establishes a benefit which has already been granted under an agreement or arbitration award, the more favourable benefit will be paid to the worker”. This principle is in line with the ruling of the Pereira Judicial District High Court that, in accordance with section 50 of Act No. 100 of 1993, the payment of statutory benefits rules out the payment of benefits established by collective agreement.
4. 385. The complainant organizations point out that, since the adoption of the abovementioned legislation, pension payments continued to be covered by collective agreements and that the pension payment was suspended recently, between 1998 and 2001, in other words a number of years after the adoption of the legislation in question.
5. B. The Government’s reply
6. 386. In its communication dated 6 October 2006, the Government indicates that, as the complaint in question refers to the protection of wages, it does not fall within the Committee’s competence.
7. 387. In its communication of 4 September 2007, the Government states that the non-application of the ninth point of the collective labour agreement by Pereira Public Enterprises (Pereira Waste Management SA, Pereira Telecommunications SA, Pereira Electricity SA and Pereira Water and Sanitation SA) is based on domestic legislation. In effect, section 16 of the Labour Code provides as follows: “Effect. 1. Given that labour standards concern public order, they have immediate general effect, and thus also apply to any employment contracts in force or ongoing at the time when said standards come into force, but these standards shall not be retroactive, that is to say, they shall not affect situations defined or finalized in line with previous legislation”.
8. 388. Section 16, paragraph 2, of the Labour Code, adds that “when a new law establishes a benefit which has already been granted under an agreement or arbitration award, the more favourable benefit will be paid to the worker”.
9. 389. The Government adds that, for its part, section 7 of the collective labour agreement provides as follows: “Favourability. Any future law granting the Trade Union of Workers and Employees in Public and Autonomous Services and Decentralized Institutions of Colombia (SINTRAEMSDES) or the workers more favourable benefits than those stipulated in this agreement, shall be applied by preference and in such a way as to prevent accumulation of both benefits granted under agreements and legal benefits with regard to the same matter; if the future legal benefits prove to be lower than the benefits contained in the agreement then the latter shall be applied by preference, yet again with there being no possibility of the accumulation of benefits”.
10. 390. Section 50 of Act No. 100 of 1993 provides as follows: “Monthly allowance. Old age pensioners, retirees, those having retired owing to invalidity and replacement or receiving survivor’s benefits shall continue to receive each year, together with the monthly allowance for the month of November, in the first fortnight of December, a sum corresponding to an additional monthly allowance on top of their pension”.
11. 391. Section 142 of the abovementioned Act provides as follows: “Additional monthly allowance for those currently receiving a pension. Old-age pensioners, retirees, those receiving invalidity and survivors’ benefits, from throughout the public, official and semi-official sectors, the private sector and the Institute of Social Security, as well as retirees and pensioners from the armed forces and the national police, shall be entitled to the recognition and payment of thirty (30) days’ worth of pension corresponding to their respective regimes, which shall be included in the June monthly payment each year, as of 1994. This additional monthly allowance shall be paid by whoever is responsible for pension payments but shall not exceed fifteen (15) times the minimum monthly wage”.
12. 392. The legal framework described and the fact that the legislation contained in the sections referred to above presupposes the improvement of benefits in favour of pensioners meant the incomes of beneficiaries increased, and the abovementioned enterprises suspended the pension payment outlined in section 77 of the collective labour agreement indefinitely. The enterprises did not denounce the collective agreement, as they did not believe that they were at odds with the benefit as defined in section 77 of the collective labour agreement in force, and moreover, they did not wish to see the disappearance of the benefit established under the agreement.
13. 393. Pereira Public Enterprises applied the law directly in favour of the retirees, taking into consideration the fact that section 7 of the collective agreement clearly and precisely determines that enterprises are obliged to apply by preference any benefit more favourable than that provided for by law, solely through direct application, and without accumulation of legal benefits and benefits contained in agreements relating to the same issue. It should be pointed out that this application excludes the obligation to denounce the agreement, giving way to favourability in favour of those persons covered by the agreement. According to the Government, the abovementioned provision provides, in its final part, that in the event of a possible and future reduction, that is to say the disappearance of the most favourable legal provision, recognition of the agreement remains final, and thus the benefit in favour of the retirees is maintained regardless of the situation.
14. 394. The Government is of the opinion that there was no violation whatsoever of the terms of the ILO Collective Bargaining Convention, 1981 (No. 154), in light of which Pereira Public Enterprises had to take into consideration section 7 of the collective agreement (dealing with favourability) when directly applying the law.

C. The Committee’s conclusions

1. 395. The Committee notes that, in the present case, the CUT and the CPC allege that the successor companies to Pereira Public Enterprises (Pereira Waste Management SA, Pereira Telecommunications SA, Pereira Electricity SA and Pereira Water and Sanitation SA) abruptly and unilaterally suspended payment of a pension benefit which had been established by a collective agreement signed in 1963 and endorsed in subsequent collective agreements concluded in 1970, 1978, 1986, 1989, 1990, 1996 and 1997. This payment was suspended from December 1998 in the case of Pereira Telecommunications SA and Pereira Electricity SA, from June 1999 in the case of Pereira Waste Management SA and from June 2001 in the case of Pereira Water and Sanitation SA.
2. 396. The Committee notes in the first place that the Government raises objections as to the competence of the Committee to examine this case because it concerns questions relative to the protection of wages. In this respect, the Committee must clarify that the question which is the object of examination in this case is not the protection of wages but the failure by various enterprises to apply a collective agreement which they had concluded with regard to certain clauses concerning pension benefits.
3. 397. The Committee notes that legal proceedings were initiated to secure payment of the pension benefit but that the judicial authority rejected the case on the grounds that, subsequent to the establishment of the abovementioned benefit, Act No. 4 of 1976 was introduced, establishing an additional month’s payment, which was endorsed by section 50 of Act No. 100 of 1993. According to the judicial authority, under the provisions of section 16, paragraph 2, of the Labour Code, when a new law establishes a benefit which has already been granted under an agreement or arbitration award, the more favourable benefit will be paid to the worker.
4. 398. The Committee notes that, according to the Government, section 50 of Act No. 100 of 1993 established an additional month’s payment of the pension, in light of which, and in line with the application of section 16 of the Labour Code and section 7 of the collective agreement in force establishing the principle of favourability, the pension benefit in place up to that point was suspended, being replaced by the additional month’s payment of the pension (the latter being more favourable). The Committee notes that, according to the Government, Pereira Public Enterprises were of the opinion that the new legislation was more favourable and consequently suspended payment of the pension payment without denouncing the collective agreement in force or removing the establishing clause. The Committee notes that, according to the Government, the public enterprises do not wish to see the disappearance of this provision of the agreement owing to a possible future change in legislation which would eliminate the payment of the additional month, in order to maintain protection for the workers who would then go back to receiving the pension payment again.
5. 399. The Committee observes further that, as the complainant organizations point out, the provisions relating to the pension benefit covered by the agreement continued to be included in subsequent collective agreements concluded after the adoption of the abovementioned legislation, and that the pension payment was suspended only recently, between five and eight years after the adoption of Act No. 100 of 1993. The Committee is of the opinion that if the new legislation establishing the payment of an additional month replaced the pension payment established under the collective agreement, then this pension bonus should have been removed from the clauses of the collective agreements negotiated following the issuance of the new legislation.
6. 400. In this regard, the Committee recalls that collective agreements should be binding on all parties. The Committee further recalls, as it has done in the past in another case relating to Colombia, that a legal provision allowing the employer to modify unilaterally the content of signed collective agreements, or requiring that they be renegotiated, is contrary to the principles of collective bargaining [see 344th Report, Case No. 2434, para. 791]. In keeping with these principles, the Committee requests the Government to take the necessary measures to ensure that the workers in the Pereira Waste Management SA, Pereira Telecommunications SA, Pereira Electricity and Pereira Water and Sanitation SA, successor companies to Pereira Public Enterprises, receive the pension benefit established in the collective agreements concluded following the approval of the new legislation, for the period during which the said agreements have been in force while ensuring that the same benefit is not paid twice. The Committee requests the Government to keep it informed in this respect.

The Committee's recommendations

1. 401. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendation:
   • The Committee requests the Government to take the necessary measures to ensure that the workers in the Pereira Waste Management SA, Pereira Telecommunications SA, Pereira Electricity and Pereira Water and Sanitation SA, successor companies to Pereira Public Enterprises, receive the pension benefit established in the collective agreements concluded following the approval of the new legislation, for the period during which the said agreements have been in force while ensuring that the same benefit is not paid twice. The Committee requests the Government to keep it informed in this respect.