Social dialogue on winter suspension of hotel workers' employment

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In April 2005, the Cypriot Ministry of Labour and the social partners met to discuss the implementation of a 2003 agreement on the temporary suspension of the employment of hotel workers during the winter season. The Ministry has identified a number of problems in applying the agreement and proposed a new procedure to remedy the situation.

In October 2003, the government, employers’ organisations and trade unions concluded an agreement amending arrangements for the payment of unemployment benefits to hotel employees whose employment is suspended for the winter season. On 5 April 2005, a first meeting took place between the Ministry of Labour and Social Security and the social partners regarding the implementation of this agreement (CY0311102N). A second meeting was planned for 19 April, with the aim of finding a mutually accepted solution with respect to problems that have arisen in the implementation of the agreement.

Implementation problems

With regard to the implementation of the agreement on 'suspended employment' for hotel workers, during the two-year period 2003-5 the Ministry of Labour and Social Security has found the following problems:

• most hotels violate article 2.1 of the agreement, which concerns the obligation of employers to notify the Department of Labour in writing of any suspended employment;

• in the cases in which the obligation to give written notice is observed by employers, sufficient data is not provided about all employees and, consequently, the Department of Labour makes decisions based on incomplete data;

• on the basis of informal and illegal agreements between employers and employees, some employers evade their financial obligations (eg payment of annual leave). Thus, with the beginning of suspended employment, workers are automatically registered as unemployed and the unemployment fund is consequently affected;

• in many cases of partial suspended employment, Cypriot nationals are dismissed while immigrant workers keep their jobs, though the opposite should occur; and

• upon the resumption of employment in hotels that have closed down fully during the winter season and which require a small number of employees to carry out their operations, priority is given, in many cases, to the hiring of immigrant workers.

Recommended procedure

Given these findings, the Industrial Relations Service of the Ministry of Labour and Social Security recommends that a more effective procedure be implemented with regard to the implementation of 2003 agreement, in order to ensure that similar problems are avoided in the future. According to the Ministry, if the current problems persist, they will damage the viability of the unemployment fund. The procedure recommended by the Ministry, which would be implemented on the basis of the provisions laid down in the Industrial Relations Code, is as follows:

• reconfirmation of the criteria, as introduced by the Department of Social Security on 11 November 1996, regarding the payment of unemployment benefits to hotel workers suspended while the hotel unit concerned continues operating (ie 'partial suspension') - see below for details;

• based on the provisions of the Industrial Relations Code, employers should negotiate with trade unions regarding their intent to suspend employment during the winter season (which extends from 1 November to 31 March annually). The basic topics of negotiation should be the type of suspension (partial or general) and, based on records provided by the employer in respect of all workers, the period of suspended employment of each employee, as well as the remaining days of leave, holidays and deferred holidays due to each worker;

• in the case of an agreement being reached in these negotiations, the employer would be obliged to give written notice to the local District Labour Office of the exact content of thus agreement at least one week before the beginning of hotel employment suspension; and

• in the event of disagreement during the direct negotiations, the employer would be obliged to inform the local District Labour Office in writing, at least two weeks before the projected date of the hotel’s employment suspension, of the exact content of the demands made in the negotiations. In a subsequent hearing, each side would have the opportunity to express its views and recommendations to the local District Labour Office. Upon completion of this procedure, the Department of Industrial Relations would submit its final findings to the local District Labour Office.

Payment criteria for unemployment benefit

The criteria for the payment of unemployment benefit to hotel workers when the hotel unit continues operating (partial suspension), as introduced by the Department of Social Security on 11 November 1996, are as follows:

1. the payment of unemployment benefits to hotel workers in these circumstances applies solely to the period from 1 November of each year to 31 March of the following year;

2. during this period, the hotel cannot dismiss any employees who are members of its permanent staff, if they have been employed for a minimum of six months by the same hotel;

3. during the period from 1 April until 31 October of each year, the working week of the workers involved is increased from five days to six days. The sixth day of work, as well as work on Sundays and during holidays, is compensated in paid time off during the period from 1 November to 31 March;

4. the number of employees who are temporarily suspended cannot exceed 50% of the total number of employees in the hotel unit;

5. the period of suspended employment for each employee may not exceed six weeks;

6. during the period of employment suspension, the employer will pay a basic 2.8% of the basic wage and price indexation as well as the corresponding contributions to the Social Security Fund, as provided by the 2003 agreement;

7. the payment of unemployment benefit to hotel workers in certain units by the Social Security Fund requires the registration of the employees as unemployed with the Department of Labour;

8. hotel units that intend to operate with a reduced staff after November 2005 must, during the preceding tourist season, have implemented criteria 2 and 3 above, though these criteria do not apply to hotels in Nicosia.

Commentary

The competitiveness of the Cypriot economy depends primarily on the tourism sector, so the problems that have arisen from the implementation of the agreement on suspended employment for hotel workers during the winter season will probably cause severe economic problems if they are not resolved. There will also probably be a negative effect on employment in the sector. For trade unions, the hiring of immigrant workers - primarily from Poland, the Czech Republic, Slovenia and Lithuania - at the expense of employing Cypriot nationals takes on problematic dimensions. However, as the Union of Hotel and Recreational Establishment Employees (SYXKA) affiliated to the Pancyprian Federation of Labour (PEO) points out, what is most troubling is not the employment of immigrant workers but rather their employment under labour terms and conditions that are far below acceptable standards - in other words, the exploitation of these workers as cheap labour with the objective of further reducing labour costs. This phenomenon both contravenes the principle of equal opportunities for all employees and serves as a source of pressure against unionising Cypriot employees, favouring the deregulation of industrial relations as well as the eventual abolition of the sectoral collective agreement. In this framework, the finding of a mutually acceptable solution by employers and unions is seen as extremely important. (Eva Soumeli, INEK/PEO)