White Paper on labour relations generates controversy among social partners

In January 2008, the Portuguese social partners reacted to the recommendations for reform of the Labour Code contained in a government White Paper on Labour Relations. Given their very different reactions, it seems that the process of concertation launched by the government over Labour Code reform will not be a easy one. The social partners are divided over issues such as the relationship between law and collective agreements, limits to fixed-term contracts, the regulation of dismissals, the duration and adaptability of working time, and rules on the lapsing of collective agreements.

In January 2008, the social partners reacted to the recommendations made by the White Paper on labour relations2007 (Livro Branco das Relações Laborais), which was presented for discussion on 20 December 2007 by the Minister of Labour, Vieira da Silva. The White Paper on labour relations comprises two parts, one examining the labour market situation in Portugal (summarised in PT0802029I) and the other making recommendations, which are now being discussed with the social partners at the tripartite Standing Commission for Social Concertation (Comissão Permanente de Concertação Social, CPCS). Following this discussion, it is expected that the government will present a draft bill on the revision of the Labour Code by the end of the first quarter 2008. Therefore, the social partners’ initial reactions, examined below, should be seen as the starting positions of the social partners in this process of concertation.

Background to White Paper Recommendations

The White Paper’s recommendations are mainly inspired by the recommendations contained, six months before, in the first draft of the White Paper on labour relations(Relatório Preliminar da Comissão do Livro Branco das Relações Laborais), which raised a strong controversy among the social partners. The trade union confederations – the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP) and the General Workers’ Union (União Geral de Trabalhadores, UGT) – expressed their general disagreement with the proposals, while employers welcomed partially some of the proposals (PT0706059I; PT0708029I). The employer confederations – the Confederation of Portuguese Industry (Confederação da Indústria Portuguesa, CIP), the Portuguese Trade and Services Confederation (Confederação do Comércio e Serviços de Portugal, CCP), the Confederation of Portuguese Farmers (Confederação dos Agricultores Portugueses, CAP) and the Confederation of Portuguese Tourism (Confederação do Turismo Português, CTP) – adopted a common position on the reform of the Labour Code (document (in Portuguese)) expressing their main concerns and demands in relation to the reform (PT0708029I).

Controversy over proposals

The White Paper presents a very wide range of detailed proposals. Those that have caused most debate among the social partners relate to: the relationship between labour law and collective bargaining; the regulation of fixed-term contracts; individual and collective dismissals; working time duration and adaptability: and the period of validity and lapsing of collective agreements.

In general terms, the trade unions and employers confederations do not agree with each other in their assessment of the White Paper. The union confederations argue that the White Paper’s recommendations undermine workers’ rights and collective bargaining rights, while employers believe that the recommendations do not give enough room for flexibility and enhancing competitiveness.

The secretary-general of CGTP, Manuel Carvalho da Silva, stated that the recommendations of the White Paper ‘are basically, unacceptable’ because, instead of giving answers to the problems identified, the document ‘presents proposals for the worse (…) gives more power to employers, reduces the salaries of employees, makes working hours uncontrollable for workers, and facilitates redundancies.’ According to CGTP, which is the organisation that has come out most strongly against the White Paper, this document ‘is the most cunning structured offensive for the destruction of workers’ fundamental rights and labour law, which are essential elements in the organisation of people’s working and family life.’

The secretary-general of the UGT, João Proença also called the White Paper ‘unacceptable’, arguing that the central objectives are to increase flexibility and facilitate redundancies. The leader of UGT stated that the document ‘ignores the adaptability of working conditions through collective bargaining, preferring the flexibility imposed through the direct employer-employee relation’. Furthermore, UGT claimed that the document ‘contributes to a greater imbalance in labour relations… advocating a reduction of trade union rights and intervention, ignoring entirely the regulation of trade union organisation, which is essential for the sound functioning of the labour relationssystem (…)’.

The chair of the CIP, Francisco Van Zeller, regretted what he saw as a ‘concession [by the commission that drew up the White Paper] favourable to the unions’, stating that the final proposal was ‘less courageous’ than had earlier been proposed. The leader of CIP stated that ‘the original text was more daring than the final text, probably due to the reactions’, adding that CIP ‘wants more flexible labour relations’. CTP regretted that a ‘flexicurity’ approach was not taken by the White Paper.

The White Paper’s most controversial recommendations, and the social partners’ views on them, are summarised below.

Relationship between labour law and collective agreements

Article 4 of the current (2003) Labour Code changed the traditional role for collective bargaining of securing more favourable treatment for workers than that provided for by law. Article 4 states that ‘the regulations of this Code may be superseded by collective bargaining instruments, unless these would have the opposite effect’. This arguably means that, as a rule, the regulations of the Code are ‘voluntary’ in nature — in other words, the provisions of a collective agreement can supersede the Labour Code, both when the agreement is more favourable for workers and when it is less favourable. The formulation proposed by the White Paper maintains the voluntary principle, but defines a number of areas where collective agreements cannot establish less favourable rules than those defined by law.

For CGTP, the principle that collective agreements may only provide more favourable conditions than the law should be extended to all labour relations issues, while UGT considers the White Paper’s proposals positive, but demands their improvement. The employer confederations want to maintain Article 4 as it stands in the 2003 Labour Code.

Fixed-term contracts

The trade union confederations agree, in general, with the White Paper’s proposals on fixed-term contracts. These are that fixed-term contracts should be allowed only to meet company’s temporary needs and that the total duration of such contracts should be limited to three years and two renewals (as was the case before the current rules were introduced). The employer confederations are against such limitations and demand more freedom to use fixed-term contracts.

Individual and collective dismissals

CGTP and UGT are against the White Paper recommendations on facilitating individual dismissals (in procedural, as well as, in substantive terms) while the employer confederations consider that, while it proposes some improvements, the White Paper should go further in facilitating dismissals. The employers criticise the commission that drew up the White Paper for withdrawing earlier proposals to allow dismissals on the grounds of employee’s ‘inaptitude’ from the final version of the Paper (PT0706059I). Furthermore, according to CIP, it should be possible to dismiss employees on the grounds not only of inability to adapt to functional changes, but also of losing capacity to work, thereby affecting productivity and performance quality.

In addition, the employer confederations demand the complete abolition of compulsory reinstatement for workers found to have been unlawfully dismissed (which is in most cases is allowed by the White Paper’s recommendations). They also criticise the White Paper for not allowing collective dismissals based on companies’ staff replacement plans. These are two major employers’ demands (PT0708029I).

Working time duration and adaptability

Regarding the duration and adaptation of working time, the final version of the White Paper retains, in general, the measures proposed in the first draft (PT0706059I). These include not fixing the maximum number of daily working hours by law, but leaving the issue to collective bargaining or management decision (taking into account the suggestions of employee representatives).

Trade union confederations are very concerned that such provisions would undermine working conditions by abolishing the statutory rules on the maximum working day. Employer confederations agree with the White Paper in this area, but also make suggestions to increase the flexibility of working time and management prerogatives in this regard.

Validity and lapsing of collective agreements

The 2003 Labour Code (PT0305101N) abolished the rule – known as sobrevigência – which provided that collective agreements remained in force until they were substituted by a new agreement signed by the same partners. Therefore, collective agreements now expire if they are denounced by one of the parties and if they are not renewed. These rules have affected collective bargaining developments very negatively in recent years (PT0501202F; PT0604019I). The White Paper proposes new guidelines in relation to the lapsing of collective agreements, taking into account situations where the parties may want to initiate negotiations on revision of an agreement but not want the agreement to lapse if they fail to agree. It proposes that an agreement that has not been revised should not lapse for a period of 18 months after the end of its term, and that collective agreements should have a set duration of up to 10 years, in cases where there is no agreement on their revision. CIP considers both proposed periods (i.e. 18 months and 10 years) too long in a context where companies need to make changes rapidly.

Maria da Paz Campos Lima, Dinâmia

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