Interim Report - Report No 350, June 2008

Case No 2539 (Peru) - Complaint date: 14-NOV-06 - Closed

Allegations: Anti-union dismissals of leaders of the Owens-Illinois Perú SA workers’ union and unlawful suspension from work without pay of two leaders of the workers’ union of the SIDERPERU plant

1. 1494. The complaints are contained in communications of the General Confederation of Workers of Peru (CGTP) and the National Federation of Mining, Metallurgy and Steel Workers (FEDMINEROS) dated 14 November 2006 and 16 August 2007, respectively. The Government responded with statements dated 11 June, 9 August and 26 October 2007.
2. 1495. 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. Allegations of the complainant organizations

1. 1496. In its communication of 14 November 2006, the CGTP alleged that the company, Owens-Illinois Perú SA, is a transnational company with headquarters in the United States and has been established in Peru since 1993, when it became the owner of Vidrios Industriales SA (VINSA).
2. 1497. Subsequently, this multinational took over the administration of Manufacturera de Vidrio, the only competitor on the domestic market, thus becoming an extremely profitable monopoly; both acquisitions involved anti-union conduct.
3. 1498. The CGTP explains that the SITRADISA trade union, exercising its right and responsibility of representation on behalf of workers, in keeping with agreements of general assemblies and while exercising its autonomy with regard to the administration of the cafeteria, provided for in item 5 of the collective agreement, applied a deduction of a percentage of the profits of the plant cafeteria subcontractor. The union has held this right for more than 30 years and Owens-Illinois Perú SA had full knowledge of this. These proceeds were used to construct a union room and are reported in the union’s financial reports approved by chartered public accountants.
4. 1499. The CGTP alleges that, despite the foregoing, the company, demonstrating anti-union conduct, accused of allegedly serious misconduct 13 trade union leaders, eight from the current executive committee and five of the preceding one: Owens-Illinois Perú SA falsely adduced that the cause of dismissal was an alleged breach of good faith in employment, as well as alleged inappropriate use and consummate misappropriation of company property for personal profit, which, as has already been seen, is totally false since the executive committees were acting at all times in accordance with their collective autonomy.
5. 1500. On 18 October 2005, the CGTP went on, the company, rejecting the defence submitted by the concerned parties, proceeded with the dismissal of the seven leaders, who suffered the loss of their jobs for the sole reason of exercising or having exercised functions as trade union leaders. Such anti-union conduct on the part of Owens-Illinois Perú SA contravenes Peruvian legislation as well as ILO Conventions Nos 87 and 98. The CGTP points out the total incongruity of the conduct on the part of the company, which first falsely accuses the 13 leaders and then later reinstates only six of them without further explanation.
6. 1501. The CGTP argues that such conduct is not legitimate in so far as the misconduct may not be presumed unilaterally, but rather must first be examined by a court of law and only following a court ruling would the company be in a situation to dismiss the workers; this proves the company acted with frivolity, rashly and in bad faith, with the fundamental objective of punishing the leaders by dismissing them. Such action constitutes a violation of a fundamental human right, namely the right to work, for this dismissal deprived the persons concerned of the means to provide for the daily subsistence of their families.
7. 1502. The leaders dismissed are: Maximo Velarde Diaz (General Secretary, 2005–07); Gaspar Palacios More (Secretary for Discipline, 2005–07); Eddy Córdova Chian (Secretary for Economics, 2005–07); Ruperto Sánchez Gutiérrez (General Secretary, 2003–05); Sebastián Suclupe Yauce (Secretary for Organization, 2003–05); Jorge Luis Martínez Guevara (Secretary for Defence, 2003–05) and Juan Manayay Contreras (Secretary for Economics, 2003–05).
8. 1503. The CGTP points out that article 29 of Legislative Decree No. 728 stipulates that: “is null and void a dismissal motivated by affiliation to a labour union or participation in union activities; being a candidate as a workers’ delegate or acting or having acted in such a capacity”. Moreover, according to article 30 of the consolidated text of the Collective Labour Relations Act, Supreme Decree No. 010-2003, “trade union immunity guarantees that certain workers may not be dismissed without clearly demonstrated just cause or without their acceptance”.
9. 1504. The CGTP adds that labour union leaders have lodged court action before the labour tribunal demanding the dismissal be declared null and the workers be reinstated in their jobs and grades in the company. However, there is a danger, as in the case of so many other labour suits, that the case is held up for some time in Peruvian courts.
10. 1505. In its communication of 16 August 2007, the FEDMINEROS alleged that on 4 June 2007, by order of the plant manager of Empresa Siderúrgica del Perú SAA, Mr Luis Cubas (company supervisor), safety equipment was thrown into the waste bin with the argument of “cleaning up” the Elken furnace sector of the steel mill. As a result, the workers on that shift had to work without their respective safety equipment, placing the physical integrity of these workers in serious danger and violating the dignity of workers, because this sector is a furnace that operates at high temperatures and with toxic gases. These facts were brought to the knowledge of a hierarchal superior of the company who verbally promised to sanction the plant manager after having apologized in response to the complaints by union leaders.
11. 1506. The complainant added that, in response to these claims and after a unilateral, biased “investigation”, management decided to sanction the leaders of the trade union of SIDERPERU plant (the Secretary-General and the Secretary for Defence) as a “disciplinary measure”, suspending them from work for 30 days without pay, from 5 July to 3 August 2007, for having denounced the abuse committed, that is, for alleged serious misconduct, pursuant to article 25 of the Labour Productivity and Competitiveness Act. What is more, minutes were drafted in which misleading questions were presented favouring the company and without the presence of the union leaders, failing even to take into account the statement according to which “the lockers in which the safety equipment was stored were broken into forcibly using an iron bar …” in order to throw said equipment into the garbage dump.
12. 1507. The complainant indicates the union representatives filed a complaint on 16 July 2007 before the Ministry of Labour in Chimbote, as well as before the National Directorate of Labour Relations.
13. 1508. The complainant indicates that an out-of-court meeting called by the Office of the Ministry of Labour in Lima did not resolve this aspect in so far as the company confirmed the sanctioning of the trade union leaders, thus clearly making abusive exercise of a right; this action constitutes a warning to workers not to react to the violations by superiors who implement practices that infringe national and international labour legislation. The complainant is of the view that this fact is not a coincidence, since the company is creating a social climate wherein workers will not be able to defend the next list of claims for the period 2007–08 with the necessary assurances.
14. B. The Government’s response
15. 1509. In its communications of 11 June, 9 August and 26 October 2007, the Government states, with regard to the complaint submitted by the CGTP against Owens-Illinois Perú SA in relation to the dismissal of trade union leaders, that the labour authority summoned the parties in the dispute to an out-of-court meeting on 5 February 2007, at the request of the Secretary for Defence of the CGTP. However, the non-attendance of the representatives of the trade union organization (despite having been duly notified by regular channels and by fax) was placed on record. Company representatives reported that the dismissals were being reviewed by the judiciary. Therefore, the Government, having noted that the dismissals referred to in the present case are pending before a tribunal, is awaiting the latter’s decision and will inform the Committee on Freedom of Association as soon as it has further information.
16. 1510. The Government forwarded a communication of 9 July 2007 from Owens-Illinois Perú SA concerning the complaint by the CGTP, which is reproduced below:
17. Background
18. On 1 December 1993 the workers’ union and the company signed a collective agreement which, under item 6, provided for the following:
19. “Cafeteria concession – lunch –. The parties agree that the organisation and oversight of the kitchen for food service to employees shall be the direct responsibility of the trade union with regard to the independent monitoring and hiring of a subcontractor … the company agrees to grant employees the lunch plan on a permanent basis …”
20. Accordingly, our company’s trade union was entrusted with the exclusive responsibility to select, hire and supervise the subcontractor in charge of the company cafeteria and of providing meals to all staff.
21. The aforementioned collective agreement provided that the advantages thus granted to the trade union and the entire staff were of a permanent nature; they were not subsequently rescinded, and remain entirely valid to the present time. This is clearly provided for in item 23 of the agreement which literally states:
22. “Renewal clause. The parties reaffirm that, pursuant to the fourth transitional and final provision of Decree Law No. 25593 and its regulations, they have revised and/or amended all agreements and conventions ... whereby alone the benefits expressly mentioned in the present collective agreement are retained ...”
23. On 28 September 2005, a meeting was held on the plant premises between company officials and Mrs Marlene Hortella Morocho de Rodríguez, general manager of Menú Express, the current subcontractor of the plant cafeteria.
24. At this meeting, Mrs Morocho provided information and documentation establishing that the trade union had for several years been illegally taking a percentage of the subcontractor’s profits as a form of recompense for having granted them the concession to the plant cafeteria.
25. Based on the information provided by the cafeteria subcontractor, we were able to determine the names of the members of the executive committees who approved and carried out these actions and they are:
26. (a) Executive committee from 12 July 2003 to 11 July 2005:
27. – Ruperto Sánchez Gutiérrez (General Secretary);
28. – Juan Manayay Contreras (Secretary for Economics);
29. – José Luis Martínez Guevara (Secretary for Defence).
30. (b) Executive committee from 12 July 2005 and onwards:
31. – Maximo Velarde Diaz (General Secretary);
32. – Eddy Magno Córdova Chian (Secretary for Economics);
33. – Gaspar Armando Palacios More (Secretary for Discipline and Social Security);
34. – Sebastián Súclupe Yauce (Secretary for Organization).
35. It is important to point out that minutes were kept of all the meetings between the company and the subcontractor’s representative, copies of which are attached to the present communication.
36. Thus, in view of the information received and having identified those responsible for illegal receipt of payments, the company charged them with the following serious misconduct:
37. (i) Infringement of professional obligations, entailing a breach of good faith with regard to employment (article 25, subparagraph (a) of the consolidated text of Legislative Decree No. 728, the Labour Productivity and Competitiveness Act (LPCL), enacted by Supreme Decree No. 003-97-TR and subsequent LPCL).
38. (ii) Consummate misappropriation of company property for personal profit in disregard of its value (article 25, subparagraph (c) of the LPCL);
39. (iii) Improper use of company property for personal profit (article 25, subparagraph (c) of the LPCL);
40. Hence, we initiated the corresponding procedure of dismissal as provided for in article 32 of Supreme Decree No. 003-97-TR, consolidated text of Legislative Decree No. 728, the Labour Productivity and Competitiveness Act. We therefore sent the corresponding letters giving prior notice of dismissal to the workers concerned, received their respective letters of defence and, because the latter did not disprove the accusations against them, we decided to terminate the employment relationship.
41. The company’s grounds for dismissing the former employees
42. The former employees state that the dismissal by the company was mainly a measure to punish supposedly legitimate union activities. As we have shown in our summary of facts, the union, and more specifically, its leaders, made inappropriate use of a facility which the company had granted them.
43. The company intended to grant workers the right of choice and oversight with regard to the subcontractor, since, as they were the principal beneficiaries of the cafeteria services, it was their representative organisation who should choose the enterprise who was to provide this service.
44. However, as described above, the representative of the contracting enterprise showed us the subcontracting agreement of 28 February 2005 in which the labour union specified in paragraph 1 that it was the usufructuary of the company cafeteria.
45. It must be pointed out that it is not certain that the usufructuary of our plant cafeteria was the union, because this would place the union in a position to gain personal profit from its operation. As item 6 of the collective agreement of 1 December 1993 states, the “organisation and oversight” of the plant cafeteria is granted to the union, in order that it may directly and independently engage a cafeteria subcontractor.
46. Thus, the union has the authority to choose, engage and oversee the service provided by the enterprise operating the plant cafeteria which provides meals to all staff, but not to derive profit from it.
47. As a result, the union, in particular, the former employees, as members of the executive committee, are responsible for the proper administration of the subcontracting process, an elementary requirement of which is to obtain good service at the lowest possible price. Our company, in absolute good faith, granted this responsibility to the union, trusting that it would honour this responsibility precisely according to the objectives of any union: the defence and advancement of the interests of workers.
48. However, already in the first paragraph of the subcontracting agreement mentioned above, the clear intent of the union to wrongfully obtain personal profit from the administration of the cafeteria subcontracting process through the intermediary of the genuine usufructuary is apparent. This is emphatically revealed in paragraphs 16 and 17 of the contract:
49. “Paragraph sixteen: The SUBCONTRACTOR shall contribute, towards improvements to the union room, 5 per cent of the total value of the weekly register of cafeteria customers whose meals are submitted for deduction, and this sum shall be retained by the UNION.
50. Paragraph seventeen: The SUBCONTRACTOR shall contribute to the UNION 5 per cent of the total sum for certification and strategy meetings.”
51. With incredible callousness and a feeling of impunity, the union expressly negotiated with the subcontractor the payment to itself of two contributions, without receiving any service in exchange, apart from the mere benefit of having been awarded the contract as subcontractor by the union acting independently.
52. In addition, the representative of the subcontracting enterprise gave us a copy of the concession agreement of 30 May 2005 between the union and Menú Express. Signing for the union were Mr R. Ruperto Sánchez as the General Secretary, Juan Súclupe Yauce as Secretary for Organization, and Jorge Martínez Guevara as Secretary for Defence.
53. Paragraph 1 of the abovementioned contract again explicitly states that the union is the “usufructuary of the cafeteria located inside the Owens-Illinois Perú SA factory … by virtue of the collective agreement of 1 December 1993”. In paragraph 3, the subcontract of the abovementioned cafeteria is awarded to the enterprise.
54. Moreover, in paragraphs 17 and 18, exactly the same terms are stipulated as in the previous contract, that is, the payment of the irregular contributions to the union by the subcontractor is extended. According to paragraph 14 of the same contract, this situation is to apply until 30 August 2005.
55. As stated, our company agreed in the collective agreement of 1 December 1993 and in absolute good faith to entrust to the union the entire responsibility to choose, retain and oversee the enterprise given the task of providing food service to all staff, both unionised and non-unionised, offering the best quality at the lowest possible price.
56. The company even allocated 46.20 new soles per week to each worker towards meals. Because of the illegal claim on the part of the union to a percentage of profits, the cost of this service was inappropriately increased.
57. Since 1994 we had believed that the price of the food provided by the subcontractor was solely and exclusively determined by costs. But, due to the discovery of the irregularities committed by the union and, consequently, by the claimants in their capacity as members of the executive committee, we are convinced that the price paid by workers, who have the benefit of a lunch financed by the company, has been completely artificial and distorted by these contributions or “cuts”. Hence, indirectly, the union and in particular the claimants, have been appropriating company funds by having the company pay a sum for lunches which is greater than that really necessary for feeding our employees.
58. Once these facts had been brought to light, from 12 January 2006, the company began reimbursing staff the 5 per cent of the cost of meals which had been deducted on a weekly basis and passed on to the union as a “contribution” towards improving the union room.
59. Such restitution continued until our company and the subcontractor, by virtue of the collective agreement signed on 14 July 2006, agreed to return the responsibility for the organisation and oversight of the cafeteria to the company, and that, in addition, the subcontractor would attempt to maintain the executive menu at 4 new soles and the breakfast special would remain at 3 new soles.
60. Moreover, for the benefit of staff, the company is subsidising the meals in the cafeteria as follows: budget breakfast: 0.47 new soles per meal; deluxe breakfast: 0.57 new soles per meal; menu and dinner: 3.00 new soles per meal.
61. Every union has as its fundamental obligation the defence and advancement of workers. The claimants in their capacity as members of the executive committee have done just the contrary by taking advantage of a right entrusted to them in the abovementioned collective agreement in order to receive dishonest and illegal contributions or “cuts” from subcontracting enterprises on the basis of receipts on meals provided.
62. These facts were fundamentally sufficient in order that the company justifiably consider that the privilege granted to the union in the collective agreements had been completely diverted.
63. Consequently, it is not possible to allege that the company has committed an anti-union act, for it has merely exercised the right of sanction as provided for in labour legislation, by terminating the employment relationship with bad employees who misused the privilege granted by the company to the labour union.
64. It is our belief that our action cannot been seen as an anti-union act against members of the company trade union; this claim is false, and we have demonstrated and justified the grounds for termination of the contract of employment, as provided for in labour legislation.
65. Lastly, we must point out that the present matter is currently before a court of law, the dismissal of the former employees being contested as null and void. The docket number is 1628-2005 and the case is being examined by the 30th Labour Tribunal of Callao.
66. It will thus be a judicial body that, as the normal channel for the resolution of disputes according to our legal system, will establish whether an anti-union act has indeed been committed.
67. In addition, with regard to the proceedings already mentioned, we hereby inform you that we have reached an out-of-court settlement with Mr Jorge Luis Martínez Guevara, one of the claimants, who has abandoned proceedings and his claims. The relevant proofs are attached.

C. The Committee’s conclusions

1. 1511. The Committee notes that in the present case the complainant organizations submit allegations regarding: (1) the anti-union dismissal of seven (initially 13) leaders of the Union of Workers of Owens-Illinois Perú SA; and (2) the suspension from work without pay of two leaders of the trade union of the SIDERPERU plant for having reported the conduct of a company representative who placed the health of workers in jeopardy.
2. 1512. As regards the allegation of the anti-union dismissal of leaders of the union of workers of Owens-Illinois Perú SA, the Committee notes that the Government states that a court decision on the matter is pending and that the complainant organization did not attend the meeting convened at its request by the Ministry of Labour, with the result that representatives of the company alone attended. The Committee further notes that the company reported the abandonment of court action on the part of one of the trade union leaders in question and maintains that the dismissals are not based on anti-union motives, but rather, the improper application of a clause of the collective agreement concerning the organization and oversight of the cafeterias by the union and, specifically, by the indirect, effective appropriation by trade union leaders of company money by making the latter pay a higher amount for the food of its workers, due to the collecting of illegal and immoral contributions or “cuts” from the subcontracting enterprises providing food service to workers (the subcontracting agreement between the union and the catering company provided for 5 per cent to go towards the improvement of the union room and 5 per cent of the total amount for certification and strategy meetings); according to information provided by the company, the 2006 collective agreement provided for the return of the food service under company control.
3. 1513. The Committee notes that the version given by the CGTP, on the contrary, asserts that the leaders were dismissed illegally and in violation of freedom of association in the framework of their powers and responsibilities of representation, pursuant to agreements of general assemblies, and in the framework of their autonomous administration of the cafeteria conferred upon the union by item 5 of the collective agreement, providing for the deduction of a percentage of the profits of the cafeteria subcontractor. The Committee notes that according to the CGTP, the union has been exercising this right for over 30 years, that the company was aware of this and that the income was reported in the union’s general balance sheet.
4. 1514. Taking into account the divergence between the version of the CGTP and that of the company, and the fact that the question of the nullity of the dismissal has been submitted to the judicial authority, the Committee requests the Government to communicate the text of the court decision when it has been pronounced.
5. 1515. The Committee regrets noting that the Government has not responded to the allegation of the FEDMINEROS dated 16 August 2007, related to the illegal suspension from work without pay for 30 days of the Secretary-General and the Secretary for Defence of the trade union of the SIDERPERU plant, for having denounced conduct on the part of a company representative who placed the health of workers in jeopardy. The Committee urges the Government to send its observations in this respect without delay.

The Committee's recommendations

1. 1516. In the light of its foregoing interim conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government to communicate the text of the court decision in relation to the dismissal of seven leaders of the Union of Workers of Owens-Illinois Perú SA.
   • (b) The Committee regrets that the Government has failed to respond to the allegation by the FEDMINEROS of 16 August 2007 related to the illegal suspension from work without pay for 30 days of the Secretary-General and the Secretary for Defence of the trade union of the SIDERPERU plant, for having denounced conduct on the part of a company representative who placed the health of workers in jeopardy. The Committee urges the Government to send its observations in this respect without delay.