7 comments on planned amendments to the Labor Code

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Gigi Chikhladze

 

This week the Parliament of Georgia continues its debate on the planned amendments to the labor legislation. Comments and recommendations proposed by interested parties, including us at Transparency International Georgia (TI Georgia), have been taken into account by the authors of the draft Law; an undoubtedly positive step. Nevertheless, issues remain which still require improvement in order to achieve the key objective of the Labor Code: to make the relations between an employer and an employee as balanced and as equal as possible. Below we would like to outline some problematic issues in the current version of the Code:

1. Fixed-Term Contracts

Section 12 of Article 6 of the draft Code imperatively defines the bases for concluding a fixed-term labor contract, which means that a contract can be executed for a defined term only if it relates to: a) performance of a concrete volume of work; b) seasonal work; c) temporary increase in the volume of work; d) replacement of an employee temporarily absent from the job due to suspension of labor relations; e) other objective circumstances.

The initial objective of this article was to eliminate the practice of concluding unjustified short-term contracts (such as, for instance, three-month contracts concluded with school teachers, etc.). The offered formulation of the draft law, however, imposes the same limitations on long-term  (for example 15-month) contracts, and obligates employers to justify why they do not conclude a contract for an unlimited term.

We believe an employer should justify the conclusion of a fixed-term contract only when a short term (less than a year) contract is being drawn up.  If the contract term exceeds one year, however, we think such additional limitations should not apply to an employer.

2. Collective and Individual Labor Contracts

A collective contract is a contract executed between an organization and its employees, which provides, amongst other things, certain social benefits to the employees (e.g. insurance).

Pursuant to Section 10 of Article 6, if an individual labor contract contradicts this Code or a collective contract executed with the same employee, it shall be made void, unless an individual labor contract improves an employee's condition.

Such a formulation of the norm only annuls those individual labor contracts which do not improve the condition of an employee under the collective contract. It does not, however, annul those contracts which deteriorate an employee's condition: for instance, when health insurance is provided instead of an annual bonus.

We consider it is better for the formulation of the norm to focus on cases that deteriorate an employee's condition. It is reasonable for a contract to be annulled only in such instances.

3. Remuneration for Overtime Work

Draft amendments obligate an employer to remunerate overtime work (over 40 hours in a week) either by an increased hourly salary rate, which will have been determined in agreement with the employee, or by giving extra rest time.

This regulation is especially criticized by employers of organizations where shift work is required, as it considerably limits their flexibility in dealing with the work regime.

In this case, we think a compromise could be found. The objective of limiting the maximum duration of work to 40 hours and introducing the obligation to remunerate overtime work was to protect the employees on low-pay positions.  Due to a huge competition in their respective labor markets, these employees are especially vulnerable before an employer and may even agree to improper labor conditions in order to keep their job. It is for this reason that these people in particular need extra legislative guarantees. In our opinion, it is better to differentiate employees by their remuneration and impose different regulations on them. We find it reasonable to apply the  current version of the norm’s imperative regulations only to those employees whose labor remuneration does not exceed five times the subsistence level, i.e. to those employees who are the priority addressees of the norm's protection. More flexible regulations, however, should apply to employees with remuneration over the mentioned threshold. This means, for instance, that one can remunerate overtime work not only by salary or extra rest time, but by any other benefit of adequate value agreed by the parties involved.

4. Holidays

Pursuant to Section 3 of Article 20 of the Code, working during the holidays shall be regarded as overtime work, regardless of whether the working duration of an employee exceeds a 40-hour limit per week or not.

In light of the fact that the amendments introduce a maximum threshold of duration of the work, and that the remuneration of overtime work becomes mandatory, we believe that automatically considering work during holidays as overtime work, even in cases when an employee works less than 40 hours per week, is an unreasonable burden for an employer and therefore this norm should be removed.

5. Burden of Proof

Provisions of Section 3 of Article 402 of the draft Law, pursuant to which the burden of proof in discrimination claims filed by the employees against the employers lies on an employer, require interpretation.

In such labor disputes, employers shall be obligated to prove in court that they did not discriminate against an employee, and in case of failure they shall compensate the damage through a civil procedure. However, discrimination is also a criminal offence, and if criminal proceedings on the same case are initiated, the court should not use the fact of discrimination (discriminatory treatment by an employer towards an employee) established through the civil law procedure as evidence. This is due to the fact that the criminal justice process requires a much higher degree of proof. Furthermore, in the draft law, the person carrying the burden of proof is different, and thus referring to it in the criminal justice process would result in the breach of presumption of innocence warranted by the Constitution.

The same is stipulated in Article 19 of the 5 July 2006 Directive 2006/54/EC of the European Parliament and of the Council, "1. [...] when persons who consider themselves wronged because the principle of equal treatment has not been applied to them establish, before a court or other competent authority, facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the respondent to prove that there has been no breach of the principle of equal treatment. 2. Paragraph 1 shall not prevent Member States from introducing rules of evidence which are more favourable to plaintiffs. [...] 5. This Article shall not apply to criminal procedures, unless otherwise provided by the Member States."

6. A Collective Labor Contract

Under the draft amendments, "a collective labor contract shall be executed between one or more employers, or the union of one or more employers, and one or more professional unions."

Hence, the norm suggests that an employee will be able to conclude a collective contract only after being, or becoming, a member of some professional union. As a result, a union of employees consisting of one or more persons who are not members of any professional union, will be unable to conclude a collective labor contract.

We find this approach to be wrong and consider that similar unions should also enjoy the possibility to enter into collective contracts.

7. Origination of the Right to Strike/Lockout

Amendments under the draft Law closely connect the origin of the right to strike or lockout with the Ministry's mediator (the right to strike can be exercised only after 21 days from addressing the Minister on appointment of the mediator; or after 21 days from the appointment of the mediator by the Minister at his/her own initiative) and the strike is allowed only if the Ministry's mediator was involved in the conciliatory procedures.

Accordingly, if conciliatory procedures are carried out without the Ministry's mediator (which is absolutely possible pursuant to the draft Law), the right of the parties to strike or lockout is restricted, as there is no specific date (the day of addressing the Ministry), from which 21 days should be counted off. On its own, a strike/lockout is the right safeguarded under the Constitution of Georgia, and substantial grounds are required for its restriction in any form; grounds which are not evident in this case. Thus, it is more logical to consider the moment of sending the notification to the other party as the basis for the right to lawful strike. For a broader analysis of this problem, please refer to the opinions in our previous blog post.