Government’s final proposal on modernising industrial relations

In November 2010, after more than four years of social dialogue, the government has presented the social partners with its final proposal on the modernisation of the industrial relations system. Trade union membership has dropped in recent years and illegal work has increased. The government draft bill therefore seeks to strengthen rights to bargain collectively and to give trade union representatives access to workplaces, while still respecting employers’ rights.

Historical evolution

In February 2006, in a joint memorandum entitled Legal Enactment and Legislation of the Right of Workers to Join a Trade Union Organisation and Bargain Collectively, the country’s main trade union organisations – the Democratic Labour Federation of Cyprus (DEOK), Pancyprian Federation of Labour (PEO) and Cyprus Workers’ Confederation (SEK) – requested that the Ministry of Labour and Social Insurance initiate social dialogue on the modernisation of the system of industrial relations in Cyprus (CY0602104F). The joint memorandum proposed new procedures to ensure the right to organise and to regulate trade union recognition/representativeness for collective bargaining purposes. The trade unions also proposed that collective agreements should become legally enforceable, thus obliging employers to comply with the relevant collective agreements. Although a request to speed up the procedures was also put forward later in July 2006 (CY0607019I), it was only in May 2008 that the issue was referred for examination to a Tripartite Technical Committee (TTC) under the chairmanship of the Department of Labour Relations, when a first preliminary working document was submitted.

There were several joint and individual meetings about the draft bill on the Recognition of Unions and the Right to Provide Union Facilitation for Recognition Purposes. Significant progress was achieved by the TTC but essential issues remained outstanding. These must be regulated so that the draft bill is applicable to a substantial number of enterprises and workers. Specifically, trade unions felt that the provisions of the draft bill should apply to enterprises employing at least 10 employees, while employers wanted the regulations limited to enterprises with 250 or more workers. In response, on 17 November 2010 the ministry presented the social partners with a number of proposals which are presented below.

Ministry’s reasoning

Ministry officials feel that since 2004, when Cyprus joined the EU, changes in the labour market mean that steps must be taken to rebalance power between employers and employees, which in recent years has been disrupted. It should be stressed that the continuing decrease in trade union membership (CY0901029Q) has been further accentuated by the dramatic increase in workers from other EU Member States and third-country nationals, many of whom do not join trade unions.

There has also been an equally dramatic increase in illegal and undeclared work (CY0901039I), which has led to worrying levels of unequal treatment and exploitation. This affects not only workers but also enterprises facing unfair competition from a small group of employers who ignore or even exploit the weaknesses of the existing industrial relations system. This is a problem which was also indentified by the two main unions PEO and SEK as early as July 2006 (CY0607019I).

It is because of this that the ministry regards the draft bill as an additional tool that will help both sides to develop healthy relations. It is stressed, however, that for any legislation to be able to achieve its basic objectives, for example to safeguard the right and ability of workers to organise in unions and negotiate with employers in order to conclude collective agreements, it must be widely applicable. In this context, apart from the government’s draft bill, and even though International Labour Organization’s (ILO) Convention 98 on the right to organise and collective bargaining and Convention 135 on workers’ representatives have been ratified and are widely applied and fully respected by the social partners, the ministry wants to amend legislation to strengthen the right to bargain collectively in line with Convention 98. It also wants to guarantee the right of trade union representatives to access workplaces (with due respect for the rights of management), so that trade unions can communicate with workers in order to inform them of the potential advantages of unionisation, in line with Convention 135.

Main provisions of draft bill

It is proposed that the scope of the draft bill will apply to enterprises with at least 30 employees. This level was also, in the past, the basis for compromise in the tripartite social dialogue for the adoption of the harmonising Law Establishing a General Framework for Informing and Consulting Employees, Law 78(I)/2005 (CY0710029Q). It is considered a good point of reference for the implementation of specific rights that may be acquired by a substantial number of enterprises, such as the enforcement and acknowledgement of the right of trade unions to bargain collectively.

It should be noted that the implementation of the procedure provided for by the draft bill does not affect the rights of workers employed in enterprises with fewer than 30 employees. Employees in smaller enterprises must not be deprived of their rights as enshrined in law, such as the right to organise and bargain collectively, and for that reason the ministry feels it necessary for the issue to be clearly stated and regulated by amending the provisions of the legislation already in place to ratify Conventions 98 and 135.

In interpreting the term ‘bargaining unit’, it is proposed that the definition should refer to the enterprise level rather than that of the establishment, or that of a part of an enterprise or establishment. Furthermore, the specific provision in correlation with the scope of the draft bill restricts, to a great extent, the possibility of practical implementation of this provision, since in Cyprus the number of establishments or parts of enterprises or establishments with more than 30 employees is very small. It should also be highlighted that, based on the overall institutional/legislative framework already applicable in Cyprus, the right of trade unions to submit requests for the conclusion of a collective agreement at the level of establishment or part of an enterprise or establishment has already been satisfactorily guaranteed.

The basic criteria for acceptance of an application for recognition includes a proposal that at least 40% of employees must already be members of the union submitting the application. If more than 40% of the employees are already members of the applicant union, then the Trade Union Registrar can, if deemed appropriate, issue a recognition decree without the need to hold a ballot. Finally, if a ballot is held and over 40% of the employees in the enterprise vote in favour, then a decree of recognition will be issued.

It should be emphasised that, for the purposes of determining the abovementioned percentage, specific decisions by the ILO’s Committee on Freedom of Association were taken into account. This means that if no union achieves recognition, any union representing any number of employees in that enterprise still has the right to bargain with the employer on behalf of its members to try to conclude a collective agreement. The ministry wants to strengthen, in practical ways, the procedure through which the employer and union will be enabled to agree on terms and conditions of employment, by negotiating a collective agreement applicable to the greatest possible number of a company’s workers. For this reason, the proposed draft bill provides an incentive for unions to collaborate and to apply jointly for recognition, thus giving them a better chance to represent employees in a given company and achieve a collective agreement.

After consulting with the employer and union sides, the ministry will recommend penalties that will be considered strong enough to ensure the enforcement of the law. These penalties will be applied to an employer refusing to apply a recognition decree, or refusing to negotiate with the recognised union/unions, or in general acting in such a manner that trade union representative rights are not fully recognised or applied.

Amending laws ratifying Conventions 98 and 135

The ministry carried out a meticulous study of laws applicable in Cyprus, guided mainly by a clarification and full understanding of the rights emanating from the ratification of specific ILO Conventions, as interpreted by the competent ILO committee (the Committee on Freedom of Association). On this basis, the ministry feels obliged to propose draft bills amending the laws ratifying Conventions 98 and 135 to strengthen the fundamental rights ensured by the two conventions.

It should be remembered that, in order to achieve the implementation of the provisions of Convention 135, amendments were introduced which listed the obligations of the employer in the framework of the application of the ratifying law, and at the same time introduced sanctions for any violations regarding the application of the law (CY0602101N).

In relation to Convention 98 and the 1966 Ratifying Law on the Implementation of the Principles of the Right to Organise and Collective Bargaining, a minimum level of collective bargaining rights should be guaranteed. Specifically, and again based on decisions of the ILO’s Committee of Freedom of Association, it has become clear that the freedom to bargain collectively cannot be translated into a refusal by the employer to come to the bargaining table, or a refusal to recognise a trade union organisation that wants to conclude a collective agreement.

The objective of Convention 135 is to put on record the rights acquired by trade union representatives based on the provisions of the Convention. This has not been done yet but it is urgently needed since it is not clear what rights union representatives can claim under the Convention. The new draft bill will support and strengthen cooperation between employers and trade unions at company level, by guaranteeing access of trade union representatives to workplaces, so that trade unions can communicate not only with their members, but also with non-members to inform them of the potential advantages of unionisation.

Commentary

So far the social partners have not commented on the ministry’s proposal. It is believed that during the next meeting, to be held in January 2011, the social partners will submit their opinions with a view to finding a mutually acceptable solution. In any case, all parties agree that the proposed legislative changes are by no means intended to alter the underlying philosophy of the existing industrial relations system. The basis of this, viewed as crucial by employers, unions, and the government, remains free collective bargaining, tripartite cooperation and determination of the terms and conditions of employment through the conclusion of collective agreements.

Orestis Messios, Ministry of Labour and Social Insurance, and Eva Soumeli, INEK/PEO

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