Report in which the committee requests to be kept informed of development - Report No 384, March 2018

Case No 3244 (Nepal) - Complaint date: 17-NOV-16 - Follow-up cases closed due to the absence of information from either the complainant or the Government in the last 18 months since the Committee examined the cases

Allegations: The complainant organization denounces the adoption in 2016, without consultation of the workers’ organizations, of the Industrial Enterprises Act and the Special Economic Zone Act, which deny the right to strike to workers in industrial enterprises and in the special economic zone, as well as the publication of the 2016 notification under the Essential Services Act prohibiting the exercise of the right to strike in 17 sectors

1. 409. The complaint is contained in a communication from the Joint Trade Union Coordination Centre (JTUCC) dated 17 November 2016.
2. 410. The Government forwarded its response to the allegations in a communication dated 22 May 2017.
3. 411. Nepal has ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), but has not ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87).

A. The complainants’ allegations

1. 412. In a communication dated 17 November 2016, the complainant organization indicates that the JTUCC is a common centre for all registered trade union confederations (the General Federation of Nepalese Trade Unions (GEFONT), the Nepal Trade Union Congress (NTUC), the All Nepal Federation of Trade Unions (ANTUF), the Confederation of Nepalese Professionals (CONEP), the Madhesi Trade Union Confederation (MTUC), the National Employees Federation of Nepal (NEFON), the National Democratic Federation of Nepalese Trade Unions (NDFONT), the National Democratic Confederation of Trade Unions-Independent (NDCONT-I), the Nepal Inclusive Trade Union Federation (NITUF) and the National Democratic Confederation of Nepalese Trade Unions (NDCONT) of Nepal).
2. 413. The complainant states that, recently, Parliament has adopted the Industrial Enterprises Bill in line with the draft submitted by the Ministry of Industry. According to the preamble of the Bill, the main aim is to provide facilities concessions and a tax rebate to industry by the Government and to create an investment-friendly environment, increase export and enhance national productivity and employment opportunities. The Bill contains no provisions on rights, remuneration and benefits of the workers nor their duties and responsibilities. However, section 47 of the Bill (in the final text it will be section 45) contains the provision entitled “Industrial Human Resources” under the chapter “Miscellaneous Provisions”. The section reads as follows:
   • Industrial Human Resources
     • (1) The human resources required for any industry shall be recruited from among Nepali citizens.
     • …
     • (6) The principle “No work, no pay” applies in the Industry to increase industrial productivity and create sound industrial relations. It shall be implemented as per the existing labour and other prevailing laws.
     • (7) The workers and employees of the Industry should not involve in any activity which create obstacles to the operation of the Industry or any action like strike or “bandh”.
     • However, this subsection may not have any adverse effects on peacefully submitting a genuine demand before management by workers and employees and settling it mutually.
     • (8) In case the dispute under subsection (7) could not be settled, the dispute shall be referred to the tribunal constituted under the prevailing law, and the decision of the tribunal shall be final and binding.
3. 414. The complainant organization indicates that Parliament also adopted the Special Economic Zone Act 2073 BS (2016), which contains a similar provision banning all strikes by workers.
4. 415. According to the complainant, the Government normally consulted trade union confederations on all matters relating to labour and employment and discussed them within the framework of the Central Labour Advisory Committee. Nepal has ratified the Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144), on 21 March 1995. The JTUCC was consulted during the elaboration of the Labour Act and the Social Security Act, but never during the drafting of the Industrial Enterprises Act 2073 BS (2016), which contains the anti-labour provision cited above. During the discussion called by the relevant parliamentarian subcommittee on the Act, the JTUCC requested in vain the removal of the anti-labour provision.
5. 416. The complainant organization provides context to the situation in the country indicating that Nepali industry is faced with mass actions of social protest (bandh in Nepali language) called by political parties, caste groups, regional groups and parties, and employers themselves. In 2016, a more than five-month-long bandh was called by Madheshi parties in the southern part of Nepal, and the local unit of the employers’ organization was equally involved. In 2017, almost the whole transport sector has been paralysed due to employer protest action entailing closure of enterprises, called by the Transport Employers Federation to reduce the traffic fines. During the last decade, out of the total actions called by all groups, around 64 per cent were called by political parties and allied organizations; 30 per cent were called by the Federation of Nepalese Chamber of Commerce and Industry and its affiliate industrial federation or local chapter; and only 6 per cent were strikes called by the trade union federations and affiliates in Nepal. The ratio of strikes may be even less when calculating it according to the Work Days Lost formula.
6. 417. The complainant denounces that, notwithstanding the above, the Act does not prohibit: (i) bandh called by political parties and allied organizations; (ii) national bandh or bandh in any region called by the employers’ organization; and (iii) any lockout called by an employer in any industry. Moreover, the Act imposes the so-called “No work, no pay” principle, even where actions have been called by employers, political parties and allied organizations. The complainant therefore believes that this provision is an anti-labour provision, which cannot be accepted.
7. 418. According to the complainant, a strike is suspension of work on the part of workers. It is an inherent right of workers to suspend the work if the remuneration or benefit or work environment is not favourable to them. Similarly, workers should not be made liable for any kind of forceful stoppage of work by employers or political parties and caste or regional groups. It is a gross injustice to workers if their payment is stopped (in the name of the so called principle of “No work, no pay”) due to a bandh or other action, which is not called by workers.
8. 419. In the complainant’s view, the 2016 Industrial Enterprises Act recently passed by Parliament is not in conformity with the provisions of the Constitution of Nepal and ILO Conventions Nos 87 and 98. Article 34 of the Constitution of Nepal reads as follows:
   • Right to labour
     • (1) Every worker shall have the right to be protected by fair labour practice.
     • Explanation: For the purposes of this article, “worker” means a labourer or worker who does physical or mental work for an employer in consideration for remuneration.
     • (2) Every worker shall have the right to fair remuneration, facilities and contributory social security.
     • (3) Every worker shall have the right to form and join trade unions and to engage in collective bargaining, in accordance with the law.
9. 420. The complainant believes that, without the right to strike, the right to bargain collectively could not exist, and that the prohibition on the right to strike by the 2016 Industrial Enterprises Act and the 2016 Special Economic Zone Act is a clear violation of Convention No. 98, ratified by Nepal. As a member State of the ILO, Nepal is also obliged to respect and enforce the provisions of Convention No. 87, because it is a fundamental labour standard under the ILO Declaration on Fundamental Principles and Rights at Work of 1998. Similarly, the provision of the recently passed Bill runs counter to the Labour Act and the Trade Union Act, which guarantee the unions’ right to organize, assemble, peacefully demonstrate, and bargain collectively, including the legitimate right to strike. It also violates the agreement between the employers’ organization and trade unions signed on 14 October 2014 and submitted to the Ministry of Labour during the drafting of the Labour Bill 2014, which is still under the consideration of Parliament.
10. 421. The complainant criticizes that, despite the repeated recommendations made by the Committee in Cases Nos 2120 and 2340, the Government still violates Conventions Nos 87 and 98. The Government has curtailed the rights of workers, for instance through the misuse of the Essential Services Act in the following 17 services by publishing a notification in the Official Gazette of 25 April 2016: postal service; all types of broadcasting and print media; telecommunication and mass media service; transportation including road, air and marine; work related to civil aviation and maintenance of aircraft and security; service on railway station and government storages; mint and government print service; manufacturing equipment of defence and allied; electricity supply service; drinking water supply service; hotel, motel, restaurant, resort and other tourism-related similar services; import and distribution of petroleum goods; hospital, health centres and manufacturing of medicines and establishment of distributive services; banking services; garbage collection, transfer and recycling service; insurance service; and import, export, storage and distribution of daily consumer goods (foodstuff, lentils, rice, salt, edible oil).
11. 422. In the complainant’s view, not every service can be considered essential. Moreover, the 2016 Industrial Enterprises Act has banned the right to strike in all sectors, in direct violation of the fundamental principles and rights at work. In Cases Nos 2120 and 2340, the Government had already been requested by the Committee to take the necessary measures to repeal its notification in the Official Gazette declaring hotel, motel, restaurant, and tourist accommodations as falling within the scope of essential services and thus prohibiting strikes in these services by virtue of the Essential Services Act. However, the Government continued to violate the recommendations made by the Committee and to enforce the Essential Services Act prohibiting strikes every six months, with the last notification published in 2016.
12. 423. The complainant believes, therefore, that: the anti-labour provision under the 2016 Industrial Enterprises Act (clause on Industrial Human Resource) should be repealed; the provision containing a ban on the right to strike in the 2016 Special Economic Zone Act should be repealed; the Essential Services Act and the notification published under it should be repealed; all unfair practices such as the repeated issuing of orders prohibiting strikes should be stopped; and the right to prior consultation with trade unions on issues affecting their interests should be ensured.

B. The Government’s reply

1. 424. In a communication dated 22 May 2017, the Government states that articles 33 and 34 of the Constitution of Nepal guarantee the right to employment and the right to labour as fundamental rights and, with a view to enforcing these fundamental rights, article 46 provides the right to constitutional remedies in accordance with articles 133 and 144.
2. 425. The Government indicates that section 46(6) of the 2016 Industrial Enterprises Act provides for the principle “No work, no pay” to increase industrial productivity and create sound industrial relations. Section 46(6) is not, in itself, an independent provision – it shall be implemented as per the existing labour and other prevailing laws. The principle does not run counter to the Labour Act and other prevailing laws and does not infringe the rights of workers.
3. 426. As far as section 45(7) of the 2016 Industrial Enterprises Act is concerned, which provides that the workers and employees of the industry should not be involved in any activity which creates obstacles to the operation of the industry like a strike or bandh, the Government highlights that the proviso ensures that workers and employees are not prevented from peacefully submitting their genuine demands to the management and settling them by mutual understanding. According to the Government, since section 45(8) provides that, in cases where a dispute fails to get settled pursuant to section 45(7), it may be referred for the purposes of dispute settlement to the Tribunal constituted under the prevailing laws, and the decision of the Tribunal shall be final and binding on both parties, section 45(7) has not affected the rights of workers and employees to submit their demands in a peaceful manner.
4. 427. The Government further refers to section 42 of the 2016 Special Economic Zone Act which provides that, notwithstanding anything contained in the existing laws, the workers and employees of an industry established in the special economic zone shall not have the right to be involved in any activity which creates obstacles to the industry and its production like a bandh, strike or agitation. The Government believes that this provision should also be taken positively, since, pursuant to this Act, which is applicable to the special economic zone where exports are encouraged by establishing an export processing zone and export promotion house, a contract shall be signed with the workers and employees working in the special economic zone (section 40(1)), and facilities and welfare benefits under the contract signed in accordance with section 40(2) shall not be less favourable than the ones guaranteed by the existing laws.
5. 428. In the Government’s view, even if an Act enacted fulfilling the procedures and formalities required by the existing laws is faulty, a petitioner should, in the first place, resort to the remedies provided by the existing laws of Nepal. The action of the petitioner to resort to the international mechanism immediately, without resorting to the national mechanism, is, in itself, faulty.
6. 429. The Government adds that a separate Trade Union Act, 2049 (1993) is in place, in order to make legal provisions for the registration and operation of trade unions, with a view to protecting and promoting the professional and occupational rights and interests of the workers and the self-employed. These legal provisions have ensured trade union rights. Similarly, the Labour Act is in force to make provisions for the rights, interests, benefits and security of the workers and employees. This Act has ensured such rights as the right to collective bargaining and the right to launch strikes. The Government has, with a view to making provision for the rights, interests and benefits of the workers, and to develop good labour relations by making clear provisions on the rights and duties of the workers and employees, introduced a new Labour Bill to Legislature (Parliament), which was prepared also taking into consideration the recent discussions held with the employees and trade unions. The Government emphasizes that it is responsible and sensitive to labour matters.
7. 430. In conclusion, the Government states that the provisions contained in the recently enacted 2016 Industrial Enterprises Act and the 2016 Special Economic Zone Act have, in no way, affected the rights enshrined in Conventions Nos 87 and 98 as afforded by the Constitution of Nepal and the Labour Act.

C. The Committee’s conclusions

1. 431. The Committee notes that, in the present case, the complainant organization denounces the adoption in 2016, without consultation of the workers’ organizations, of the 2016 Industrial Enterprises Act and the 2016 Special Economic Zone Act, which deny the right to strike to workers in industrial enterprises and in the special economic zone, as well as the publication of the 2016 notification under the Essential Services Act prohibiting the exercise of the right to strike in 17 sectors. In this regard, the Committee notes the context in the country as described by the complainant, with recurrent mass actions of social protest called by various stakeholders, including political parties and other groups (64 per cent), employers’ organizations (30 per cent) with 6 per cent being strikes called by trade unions, but observes that the complainant’s allegations centre upon whether the abovementioned legislative restrictions to the exercise of workers’ right to strike, run counter to the principles of freedom of association.
2. 432. As regards the alleged failure of the Government to consult the relevant workers’ organizations prior to the adoption in 2016 of the Industrial Enterprises Act and the Special Economic Zone Act, the Committee notes that the Government neither contests nor responds to this allegation and recalls that it had previously drawn the attention of the Government to the importance of prior consultation of the workers’ organizations before the adoption of any legislation affecting their rights [see 340th Report, Case No. 2412 (Nepal), para. 1139]. The Committee once again emphasizes the value of consulting organizations of employers and workers during the preparation and application of legislation which affects their interests [see Digest of decisions and principles of the Freedom of Association Committee, fifth (revised) edition, 2006, para. 1072] and urges the Government to ensure the full application of this principle in the future.
3. 433. Furthermore, the Committee observes that, in the Government’s view, the adoption of the abovementioned legislation does not violate the rights of workers, since workers in industrial enterprises may still peacefully submit their genuine demands to management and settle them by mutual understanding or before the Tribunal, and since the contract to be signed with the workers in the special economic zone will afford them facilities and benefits no less favourable than those provided by law. In this regard, the Committee recalls that the right to strike is one of the essential means through which workers and their organizations may promote and defend their economic and social interests [see Digest, op. cit., para. 522]. Nevertheless, the right to strike is not an absolute right and may be restricted or prohibited in certain conditions. The Committee recalls that the right to strike may be restricted or prohibited: (1) in the public service only for public servants exercising authority in the name of the State; or (2) in essential services in the strict sense of the term (that is services the interruption of which would endanger the life, personal safety or health of the whole or part of the population). What is meant by essential services in the strict sense of the term depends to a large extent on the particular circumstances prevailing in a country. Moreover, this concept is not absolute, in the sense that a non-essential service may become essential if a strike lasts beyond a certain time or extends beyond a certain scope, thus endangering the life, personal safety or health of the whole or part of the population. The Committee has indicated on previous occasions the services that do not constitute essential services in the strict sense of the term. The Committee further recalls that the principle regarding the prohibition of strikes in essential services might lose its meaning if a strike were declared illegal in one or more undertakings which were not performing an “essential service” in the strict sense of the term, that is services whose interruption would endanger the life, personal safety or health of the whole or part of the population. The Committee also recalls that salary deductions for days of strike give rise to no objection from the point of view of freedom of association principles [see Digest op. cit., paras 522, 576, 583, 582, 587 and 654].
4. 434. Observing the extensive scope of application of the two Acts, in particular the fact that the 2016 Industrial Enterprises Act covers virtually all national industries, the Committee requests the Government: (i) to provide information as to how the strike prohibitions in the 2016 Industrial Enterprises Act and the 2016 Special Economic Zone Act interact with the newly adopted 2017 Labour Act, which the Committee understands guarantees the right to strike; and (ii) to take all necessary measures to amend the provisions generally banning strike action in the 2016 Industrial Enterprises Act and the 2016 Special Economic Zone Act to bring them into line with the abovementioned principles, and to keep it informed of the progress made in this respect. As regards the 2016 notification issued under the Essential Services Act, the Committee notes that the list of sectors where strike may be prohibited is excessively broad, and recalls that, in previous cases concerning Nepal, it had requested the Government to take the necessary measures to repeal similar notifications in the Official Gazette [see 328th Report, Case No. 2120 (Nepal), para. 540, and 336th Report, Case No. 2340 (Nepal), para. 647]. The Committee deeply regrets the repeated actions of the Government despite its previous recommendations, and urges the Government to immediately take the necessary measures to restrict the prohibition on strike action to essential services in the strict sense of the term, and to keep it informed of the measures taken in this regard.

The Committee’s recommendations

1. 435. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee urges the Government to ensure in the future the full application of the principle that organizations of employers and workers should be consulted during the preparation and application of legislation which affects their interests.
   • (b) The Committee requests the Government to provide information as to how the strike prohibitions in the 2016 Industrial Enterprises Act and the 2016 Special Economic Zone Act interact with the newly adopted 2017 Labour Act, and to take all necessary measures to amend the provisions generally banning strike action in the 2016 Industrial Enterprises Act and the 2016 Special Economic Zone Act to bring them into line with the principles on freedom of association. The Committee requests to be kept informed of the progress made in this respect.
   • (c) As regards the 2016 notification issued under the Essential Services Act, recalling the need to take measures to restrict the prohibition on strike action to essential services in the strict sense of the term, the Committee urges the Government to take the necessary measures without delay and invites it to avail itself of the technical assistance of the Office in this regard. It requests the Government to keep it informed of the measures taken in this respect.