New Labour Code proposed

Download article in original language : PL0510105FPL.DOC

In October 2005, a government-appointed Labour Law Codification Commission presented proposals for a new Polish Labour Code. Alongside a codification of individual and collective labour law, the proposals include changes to current rules in a number of areas, including dismissals, and the introduction of a right for employers to conduct lock-outs. The social partners have given a mixed response to the plans.

A Labour Law Codification Commission was appointed for a four-year term by the government on the basis of an August 2002 cabinet regulation. The Commission consisted of nine experts, including representatives of the Ministry of Economy and Labour (Ministerstwo Gospodarki i Pracy, MGiP), and its brief involved:

• recodification of individual labour law;

• codification of collective labour law; and

• preparation of acts regarding the codification of individual and collective labour law that take into account the legal standards of the European Union.

The Minister of Economy and Labour was given a right to present the Commission with labour law bills prepared during the course of the Commission's work, so that the latter could express its opinion on the compliance of those bills with the assumptions of its codification work. The Minister was also entitled to familiarise the Commission with legally contentious issues concerning labour law so that the Commission could take positions on these matters.

From its first meeting in October 2002, it became evident that the Commission’s main task would be the preparation of a new Labour Code (PL0311108F) and the codification of collective labour law. The Commission's work came to an end in October 2005, when it presented the government with proposals for a new Labour Code.

Proposed new Labour Code

The proposed new version of the Labour Code includes:

• a reduction in the number of cases in which employers are not allowed to terminate an employment contract (at present, there are 37 such cases). It is proposed that employers should have a right to make an employee redundant without prior consultation with trade unions - moreover, instead of re-employing such an employee, they would be able to pay higher financial compensation;

• a power for employers to divide work between two or more employees, who would take turns at a specific post;

• regulations regarding telework and temporary employees (PL0308103N) (the Code would be supplemented with an Act on the employment of temporary employees);

• enhanced rights for workers employed on civil law contracts (PL0210109F). For example, they would be entitled to annual leave, though it would vary in length from that of employees proper, based not on working days but on calendar days;

• an exemption for small enterprises from the general obligation to pay wages for 33 days of sick leave. They would pay only for a part of this period, with the rest covered by social insurance; and

• members of company management boards would not be subject to the Labour Code's provisions on working time in the same way as other employees.

The proposed new Labour Code's collective labour law provisions would regulate:

• employees’ associations;

• company and supra-company 'labour law negotiations';

• conformity of 'negotiated labour law' with that regulated by the Code;

• collective bargaining; and

• collective dismissals.

The proposed Code would specify the circumstances under which employers in companies where there are no trade unions would be obliged to consult employees’ representatives. At present, trade unions have exclusive rights to conduct collective bargaining and hold strikes (this is secured by the Constitution). However, the authors of the proposals state that the majority of private companies lack trade unions, and these rights should thus be vested in non-union employees’ representatives (ie employee councils elected by the employees themselves, as required by EU law) (PL0411102N). Moreover, the Commission proposes a reduction in the number of categories of people benefiting from special protection against dismissals.

A controversial proposal is that the new Labour Code should specify a right for employers to conduct a lock-out. At present, the admissible means of exerting pressure that can be applied by employers and the employees in collective bargaining are regulated by the Act on collective bargaining, which does not mention the institution of the lock-out (PL0207103F). The Senate, under strong pressure exerted by trade unions, had earlier vetoed the introduction of the lock-out. Similarly, international documents ratified by Poland do not require it to allow lock-outs. Article 6.4 of the Council of Europe's European Social Charter mentions the right of employers and the employees to take collective action in the event of a conflict of interests, but Poland has not ratified this specific part of the Charter and therefore is not obliged to introduce provision for lock-outs into its labour law system. According to the Commission, it is evident that employers do not dispose of means strong enough to counteract illegal strikes effectively. However, in order to be able to hold a lock-out, employers would be obliged to bring a case to court to ascertain the illegal character of a strike. Only after the strike was confirmed as illegal could the employers call a lock-out.

The fact that the proposed Code would provide for lock-outs or similar actions is regarded as a success for employers. However, it is also believed by some experts that it would be extremely hard to implement these measures.

Social partners’ views

The responses of the social partners to the Commission's proposals have varied considerably. The employers have reacted especially warmly to the plan to allow lock-outs. The Polish Confederation of Private Employers 'Lewiatan' (Polska Konfederacja Pracodawców Prywatnych Lewiatan, PKPP Lewiatan) is in favour of allowing the use of 'defensive' lock-outs in Polish law. According to PKPP, at present in Poland it is the employers that bear the financial risk in the event of any protest action in their company. It is the employer that incurs a loss as a consequence of the employees’ protest. It is practically impossible to take appropriate measures against the organisers of illegal strikes and, what is more, trade unions do not repair damages arising from protest actions, it is claimed. According to PKPP Lewiatan, this situation is unfair and the organisation thus supports the introduction of a right to implement a defensive lock-out.

However, it seems that it will be hard to win the majority of parliamentary deputies and trade unions over to the Commission's proposals. Unions have expressed their strongest criticism with respect to the part concerning collective labour law. If it is the case that the Independent and Self-Governing Trade Union Solidarność (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność) has entered into close cooperation with the Law and Justice Party (Prawo i Sprawiedliwość, PiS), which is the largest party after the September 2005 parliamentary elections (PL0510103F), it is more than likely that work on the proposed new Labour Code will come to a standstill in the Sejm (lower house of parliament).

Commentary

It seems that achieving stability of labour law is the primary objective of the proposed codification. However, in view of the proposals outlined above, it is hard to believe that they will bring about the desired stability of employment conditions. On the one hand, the authors of the proposals state that the law will be adjusted to new forms of employment, and on the other they reduce the standards of employment conditions with respect to the forms originally established by labour law. It is evident that the Commission’s proposals reflect a spirit of liberalisation of labour relations.

Moreover, it seems quite alarming that the Commission conducted its work under some secrecy. The Commission did not discuss specific solutions with the social partners and public opinion. Though the chair of the Commission held a number of meetings with various institutions, he did not organise a debate over the proposals that would engage wider circles. If his assurances are to be fulfilled, the proposals must be subject to further consultation. The duration of the consultation depends on several factors, such as a favourable opinion from the new government - otherwise the proposed new Labour Code will follow its predecessors and end up in a drawer. However, even in the case of a favourable opinion, the consultation process will not commence until 2006. Consequently, a new Labour Code would come into force in 2007 at the earliest. (Rafał Towalski, Institute of Public Affairs [Instytut spraw Publicznych, ISP] and Warsaw School of Economics [Szkoła Główna Handlowa, SGH])