Conflict continues over brewery strike ban

Trade unions representing workers at Lithuania’s biggest brewery, UAB Svyturys-Utenos Alus, have complained to the government and international organisations that a court ban on their planned industrial action restricts the constitutional right to strike. The strike was announced in June 2011 after unions failed to reach an agreement with management on pay. However, the company successfully challenged the strike in the courts where it has been declared illegal.

Background

UAB Svyturys-Utenos Alus is the biggest brewery in Lithuania with around 450 permanent employees. The company’s main shareholder is Danish brewing giant Carlsberg.

The collective agreement in place at the brewery was signed in October 2008 and provides for an annual wage review taking into account both the inflation rate and ‘external competitiveness of the wages, company performance, the macro-economic situation and the national average wage.’

However, in spring 2011 management rejected a trade union demand for a 12% increase in wages for production workers with qualification levels 1–7. The unions said this would compensate for inflation which had occurred since the previous pay round at the beginning of 2009. Unions also pointed out that the company had paid its shareholders LTL 100 million (€29 million) in 2010.

However, management agreed to increase wages only by 1.8%, although it also offered complementary private medical insurance and sports benefits. Unions reduced their claims to 7% but no agreement was reached.

Unions then began to prepare to strike, saying that the company had not complied with the collective agreement. Secret ballots were held in June 2011, with more than half of the brewery’s production workers backing the strike. On 15 June, unions told the brewery they would strike on 23 June.

Court decisions

District court ruling

This led to the brewery taking their case to Klaipeda City District Court claiming the planned strike was illegal because the company had complied with the collective agreement. Article 78, section 3 of the Lithuanian Labour Code stipulates:

It shall be prohibited to declare a strike during the term of validity of the collective agreement if the agreement is complied with.

The court ruled on 20 June that the strike should be postponed for 30 days. The sectoral trade union of Lithuanian Food Producers (LMP), which was actively supporting the company’s trade unions, and the Lithuanian Trade Union Confederation (LPSK) said they were shocked that the courts had made the postponement on the grounds that the brewery was ‘satisfying the vital needs of society’.

However, on 5 July another sitting of the Klaipeda City District Court ruled that the strike was legal. This ruling was to come into effect after 30 days, in August, but the unions decided to strike on 25 July.

Regional court ruling

The brewery then went to Klaipeda Regional Court which, on 22 July, announced an interim ban on the strike until a final judgment was made.

The chamber of judges held that:

While the right to strike to enable employees to protect their economic and social interests is safeguarded by the Constitution of the Republic of Lithuania, it is not an absolute right and might be exercised subject to certain conditions and restrictions.

The chamber of judges supported the brewery’s claim that the strike would have affected not only the operations of the company, but also its employees’ well-being. Therefore, in order to safeguard the enforcement of the judgment and to conform with the principles of cost-effectiveness and proportionality, the court made an interim judgement banning the strike for at least the length of time stipulated in the court judgement of 5 July, which had permitted strike action, but no sooner than 30 days afterwards.

Then, on 5 August, Klaipeda Regional Court ruled that the strike was illegal because the brewery had complied with the collective agreement. The court judgment read:

The failure by the parties to reach a common agreement concerning wages through negotiations neither renders the collective agreement invalid nor implies its violation and non-compliance with the agreement.

Initiatives of the trade unions

The unions, dissatisfied with the suspension of the strike pending various court decisions, and also by what they saw as general interference by the courts in social dialogue, applied to the government and to international organisations, organised pickets, held press conferences and made radio broadcasts to promote their views.

The offices of breweries were picketed in Vilnius, Klaipeda and Utena. During July and August, representatives from the LMP and the brewery’s unions lobbied a number of organisations and officials about the dispute.

They met the Chief Labour Inspector of the State Labour Inspectorate (VDI) to discuss the strike planned for 25 July and possible cooperation between unions and the VDI.

Allegations of restrictions on the right to strike and breaches of the Lithuanian constitution and human rights were made to the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) and European Economic and Social Committee (EESC).

Union officials met the Lithuanian Minister of Justice Remigijus Šimašius to discuss necessary amendments to the Labour Code and Code of Civil Procedure and lobbied the advisers of Lithuanian President Dalia Grybauskaitė.

The brewery unions’ efforts to defend their right to strike was supported by LPSK, a number of Lithuanian sectoral and enterprise-level trade unions, allied foreign trade unions and some members of the Parliament of the Republic of Lithuania (LRS).

Employer’s position

The brewery’s management says it consistently complies with the collective agreement, and that the unions’ demands are incompatible with the market situation. It also points out that inflation is not the only factor that must be taken into account when setting wages. Other criteria specified by the collective agreement include:

  • comparison with wages in other companies;
  • company performance;
  • the macro-economic situation;
  • national average wage levels.

The management says the average wage, before tax, for employees with qualification levels 1–7 is LTL 3,298 (€956) per month – 55% more than the national average.

It also says that the controversy originates from a disagreement over the meaning of one paragraph in the collective agreement, about the obligation to revise employee wages annually.

‘It is a situation when allowing the courts the right to decide is a civilised solution’, said Dainius Smailys, Director of Corporate Affairs at UAB Svyturys-UtenosAlus.

At the end of August, the Utena police headquarters were asked by brewery management to charge the nine employees picketing the brewery offices on 25 July with administrative offences.

Commentary

Although there have been strikes in the public service sector in the last decade (notably in 2007–2008, when approximately 100 strikes were organised in the education sector) this strike attempt is the first one in a private manufacturing company. Its success or failure will have a major influence on developments in Lithuanian industrial action. The Association of Lithuanian Lawyers published a paper in June 2011 entitled ‘On the ability of a court to stop a strike’, and in October it organised a round-table discussion – ‘Social dialogue in Lithuania: what is within the law and what is not?’ – in which the lawyers, together with the social partners and researchers, tried to discuss and evaluate the situation in Lithuania.

Inga Blažiene, Institute of Labour and Social Research

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