Observation (CEACR) - adoptée 2009, publiée 99ème session CIT (2010)

Article 2 of the Convention. Insertion of labour clauses in public contracts. The Committee has been commenting on the Government’s persistent failure to give effect to the provisions of the Convention in either law or practice. The Committee has also been requesting clarification as to whether the Executive Resolution of 10 June 1952 providing for the inclusion of fair wages clauses in government contracts, which previously gave effect to the provisions of the Convention, is still in force. In its last report, the Government indicates that it is currently reviewing the requirements of the Convention and that the Committee’s concerns are duly noted. In addition, the Government refers to the “Tripartite Advisory on Responsible Outsourcing Practices” which was adopted in 2008 by the tripartite committee on work-related benefits for low-wage workers and which seeks to ensure compliance with national employment laws by end-user companies when they outsource their business functions and buy services from third-party contractors. The Committee is bound to observe, in this connection, that this initiative bears little relevance to the Convention as it does not refer to public procurement contracts awarded through competitive bidding.

To help better understand the requirements of the Convention, the Committee wishes to refer to paragraphs 40 and 41 of its General Survey of 2008 on labour clauses in public contracts in which it explained that the essential purpose of the Convention is to ensure that the workers employed by a contractor and paid indirectly out of public funds enjoy wages and conditions of labour which are at least as satisfactory as those normally established for the type of work concerned, whether they are established by collective agreement or otherwise, in the locality where the work is done. The Convention requires that this be done through the insertion of appropriate labour clauses in public contracts. The intention is that labour costs are removed from competition between bidders and also that local standards higher than those of general application should be applied, where they exist. Accordingly, clauses within public contracts that merely restate the applicability and binding nature of national employment or labour laws – such as for instance the clause included in the Public Sector Standard Conditions of Contract (PSSCOC) formulated by the Building and Construction Authority – are not sufficient to meet the requirements of the Convention.

Along the same line of thought, in paragraphs 44 and 103 of the General Survey, the Committee observed that conditions not less favourable than the three alternatives offered by the Convention (i.e. collective agreement, arbitration award or national laws or regulations) in practice, in most instances, imply the best conditions of the three. In fact, the type of labour clauses prescribed by Article 2 of the Convention seek to ensure that the contractor applies the most advantageous pay rates, including overtime pay, and other working conditions, such as work hour limits and holiday entitlement, established in the industrial sector and geographical region in question. The concrete terms of this obligation incumbent on the selected bidder and any subcontractors, are to be reflected in a standard contractual clause which has to be effectively enforced notably through a system of specific sanctions. In light of the preceding observations, the Committee hopes that the Government will take the necessary steps without further delay in order to effectively implement the Convention and asks it to keep the Office informed of any progress made in this regard.

Finally, with a view to assisting the Government in its efforts to give effect to the Convention, the Committee attaches herewith a copy of the Practical Guide on the Convention prepared by the Office in September 2008 and based principally on the findings of the abovementioned General Survey. It also recalls that the Government may draw upon the advisory services of the Office if it so wishes.

[The Government is asked to reply in detail to the present comments in 2010.]