Rapport définitif - Rapport No. 294, Juin 1994

1. 39. The Danish Confederation of Professional Associations (AC) presented a complaint against the Government of Denmark alleging violations of freedom of association in communications dated 15, 27 and 30 April 1992. It provided additional information in communications of 5 November 1992, 24 February, 21 October and 24 November 1993 and 28 April 1994.
2. 40. The Government sent its observations on the allegations in communications dated 2 October 1992, 12 January and 30 June 1993, and 25 February 1994.
3. 41. Denmark has ratified the Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87), the Right to Organize and Collective Bargaining Convention, 1949 (No. 98) and the Labour Relations (Public Service) Convention, 1978 (No. 151).

A. The complainant's allegations

1. 42. In its letters of 15, 27 and 30 April 1992, the AC alleges that the Government has violated Conventions Nos. 87 and 98 by amending, on 27 December 1991, the 1991 Consolidated Act on Job Offers for Unemployed Persons. The amendment Act No. 929, which came into force on 1 January 1992, introduced new section 1(a) whereby persons employed in the public sector as part of the job offer scheme could not earn more than 80 Danish kroners per hour. The complainant explains that the job offer scheme in the public sector assured employment in that sector for an unemployed person for at least seven months.
2. 43. According to the complainant, persons benefiting from the job offer scheme in the private sector - who are not affected by this maximum wage limit measure - continue to receive wages according to existing collective agreements as in force in the different areas of employment. It admits that certain allowances are still payable within the public sector job offer scheme (such as overtime pay or night allowances), but stresses that this maximum wage limit measure in fact diminishes the level of pay. It cites two examples: both the 28 May 1991 Agreement between the Ministry of Finance and a number of AC affiliates and the 28 September 1991 Agreement between the regional authorities and municipalities and AC members establish pay scales for their workers; with the new hourly limit, after one year's employment the loss per hour over the established rates will be 9.56 Danish kroner, after eight years 53.85 kroner and after 15 years 83.65 kroner. The complainant expects 1,600 of its members to benefit from the public sector job offer scheme in 1992 and they will consequently face a lower level of pay when compared with colleagues employed under the terms of the existing collective agreements in their areas.
3. 44. The complainant alleges that the measure was not introduced as a result of negotiations or a collective agreement, but was imposed on the trade unions by an Act of Parliament. This fact was recognised by a number of speakers during the parliamentary debate inasmuch as it was emphasized that contact should be sought with the labour market organisations in order to see the Act implemented as envisaged.
4. 45. The amendment Act, states the complainant, constitutes an interference in an area covered by existing collective agreements. The fact that the new section 1(a) states that the hourly rate ceiling "shall not result in the dismissals of regular employees" confirms, in the complainant's view, that the job offer scheme covers job descriptions and functions which are identical to existing jobs, for if not, there would be no risk of so-called expulsion of already employed workers. The amendment Act was adopted to implement a reduction in the fiscal budget for 1992, without prior negotiation with the unions affected, and results in a considerably lower pay level than that being paid under the corresponding collective agreement in force: it therefore amounts to a forced setting aside of collective agreements in force at the time. The complainant adds that the amendment means that access to the completion of new and enforcement of existing collective agreements in the public sector is curtailed significantly as regards an area of vital interest to any trade union, namely, pay.
5. 46. Referring to Denmark's ratification of Conventions Nos. 87, 98, 122 and 151, the complainant states that the adoption of the amendment Act clearly did not fulfil the requirements of Article 8 of Convention No. 151. It also argues that Article 1(3) of Convention No. 122 requires the ratifying State to pursue an active policy aimed at combating unemployment, but only in so far as this can be done without violating other economic and social objectives, such as the protection and upholding of collective agreements in force. Thus schemes aimed at combating unemployment - such as the job offer scheme in this case - should not be used to dismantle existing collective agreements. It adds that the change introduced by the Act imposes differential treatment between workers performing work of equal value in the public and private sectors, contrary to the sense of Convention No. 111.
6. 47. The complainant supplies an English version of section 1(a):
7. (1) Job offer employment shall take place in accordance with the salary terms and working conditions provided for by collective agreements. (2) The payment of salary in connection with a job offer in the public sector (state, counties and municipalities) shall, however, only amount to maximum of DKK 80 per hour excluding holiday pay, etc. The maximum hourly rate shall be adjusted on a percentage basis in accordance with the adjustment of the public pay scales. (3) This type of salary payment shall not result in any dismissals of regular employees. (4) The Danish Minister of Labour shall have the authority to provide further rules and provisions regarding subsections 2 and 3.
   • The complainant also supplies an English version of Order No. 957 of 27 December 1991 issued under the amendment Act and in force on 1 January 1992, which amends the 1989 Order on Job Offers as follows:
   • Clause 11(1). A job with a private employer shall be offered at an ordinary place of work in accordance with salary terms and working conditions provided for by collective agreements. Clause 11(3). A job with a public employer shall be offered at an ordinary place of work and the employment shall take place on the usual terms provided for by collective agreements; however, the maximum salary payable shall be DKK 80 per working hour, excluding holiday pay, holiday allowance, and any possible payments for Sundays and public holidays.
8. 48. In its communication of 5 November 1992, the complainant expresses concern over certain passages of the Government's reply to which it had access. First of all, the complainant challenges the Government's claim to respect its ILO commitments and obligations, since the record of the Government as concerns implementation of ILO obligations is deplorable, as witnessed by the many cases in recent years where violations of ILO principles were found. It quotes parliamentary and public statements by the Minister of Labour in 1988 and 1989 inferring that the ILO's handling of the past cases was based on lack of knowledge of Danish labour market conditions and misconceptions of what had happened in the Danish collective bargaining situation.
9. 49. The complainant disagrees with the Government's argument that work undertaken as part of job creation schemes is not "work" in the sense of Danish labour law or in the sense of ILO principles. It claims that, from the ILO's point of view, it is irrelevant whether any measures are deemed to be "work" in domestic law or not. The determining factor is whether work undertaken as part of job offer schemes is "work" as viewed on the basis of ILO principles. In any case, the AC points out that in Denmark work undertaken as part of job offer schemes has, up until December 1991, been regarded as "work" in the ordinary legal sense and has been covered by ordinary labour market regulations including all trade union rights, such as the right to collective bargaining, application of collective agreements in force, etc. It cites section 1(a) of Act No. 929: "Job offer employment shall take place in accordance with the salary terms and working conditions provided for by collective agreements" (emphasis added). It argues that section 1(a)(2) introduces an amendment in that it takes away the rights of payment according to the collective agreements. According to the AC, it is a basic rule of Danish labour law that collective agreements - unless it is clearly stated in the agreement that it only applies to members of the relevant trade union - cover all work within the relevant area of work, notwithstanding who is actually performing the work and how it is performed. The collective agreements of 28 May 1991 and 23 September 1991 cited by the AC do not contain any clauses which explicitly or implicitly derogate from this basic principle.
10. 50. The AC cannot agree with the Government's reliance on the fact that (1) the job offer scheme is established by law and (2) the inclusion in certain guidelines of statements that "an employment contract shall be drawn up in which pay and working conditions shall be laid down, where appropriate, by reference to an existing collective agreement" are to be understood as implying a waiver from existing trade union rights. The fact that an Act may prescribe certain working conditions does not legitimize an interference with trade union rights guaranteed under ILO Conventions. Furthermore, the fact that the guidelines refer to applicable collective agreements supports the AC's view that ordinary trade union rights apply, including collective agreements in force.
11. 51. Recalling the principle of proportionality, the complainant stresses that if the Government chooses to adopt a job offer scheme rather than unemployment benefits, the work undertaken as part of the scheme should conform to international labour standards and obligations. The AC believes that this is reflected in ILO Convention No. 122, where the promotion of employment cannot be read as an escape clause to all other ILO Conventions. A job offer scheme cannot be used to circumvent established rights.
12. 52. The complainant concludes that no genuine negotiations were initiated before the adoption of Act No. 929, that the concept of "work" in Danish labour law and practice includes work undertaken as part of job creation schemes, that the choice between different labour market mechanisms to combat unemployment is a political one, but if the Government chooses to introduce job creation schemes, this can only be done with due consideration of internationally recognized trade union rights, and the concept of "work" in ILO principles should be construed independently of domestic concepts.
13. 53. In its communication of 24 February 1993, the complainant reiterates in particular that there is no agreement among the parties as to the interpretation of the relevant Danish law. Until the modification of this legislation, collective agreements applied to persons employed under the job offer scheme. These collective agreements were not only used as a method of fixing wage levels but were also recognized as the basis for work offered under the scheme. The complainant also reiterates that the social partners were not consulted and have not cooperated in the implementation of the Act. It emphasizes that there seems to be an understanding among the parties that the functions exercised under the scheme are identical to those undertaken outside the scheme. The only difference is the employment relationship and not the nature of the work. The job offer schemes in question are in effect offered not on the basis of a supply-demand model but on the basis of public policy. Consequently, they should conform with labour standards and, particularly, with collective agreements. If the ILO were to accept a narrow definition of work, this would have detrimental and far-reaching consequences for workers.
14. 54. In its communication of 21 October 1993, accompanied by a legal assessment on whether work carried out by AC members under the job creation scheme would have been covered by AC collective agreements in the public sector had legislation not contained express provisions restricting remuneration, the complainant challenges the Government's assessment that "it is first and foremost the character of the work which distinguishes employment schemes from ordinary employment". In its opinion, the general starting point is the assumption that all workers who carry out work falling within the professional scope of the collective agreement in question shall be treated and receive remuneration in accordance with the stipulations of the collective agreement. The complainant concludes that AC members carrying out work in a job offer which corresponds to the work which is carried out under the AC collective agreements should have received remuneration in accordance with the stipulations contained in these agreements. The remuneration could only be altered if the collective agreements contained either an express stipulation to this effect or if such an exception could otherwise be implied. The complainant further claims that amendment Act No. 929 effectively obliges persons to accept a job offer as refusal would imply forfeiture of future unemployment social support.
15. 55. In its communication of 24 November 1993, the complainant expresses further concern that Act No. 434 adopted on 30 June 1993 follows the same approach as the amendment Act No. 929 thus demonstrating that intervention in collective bargaining agreements as regards public sector job offers to the unemployed was not an isolated occurrence but rather has once again been an element of the Government's most recent labour market legislation.
16. 56. Finally, in a communication dated 28 April 1994, the complainant reiterates its position that the work undertaken as part of a job offer scheme is "work" in the ordinary legal sense and should continue to be covered by the collective agreements in force.

B. The Government's replies

1. 57. In its letter of 2 October 1992, the Government denies that it has infringed Conventions Nos. 87, 98, 111 and others. It explains that on 20 December 1991, after the third reading, the Parliament passed a Bill which introduced a maximum hourly wage for persons who are recruited to a job offer in the public sector under the Act on Job Offers to Unemployed Persons. This ceiling was introduced because the Government wished to adjust the job offer legislation for finance policy reasons and as an element of its general employment policy. At the time of this amendment, it was decided that all other terms and conditions in connection with job offers should correspond to the pay and working conditions fixed by collective agreement for work of the type concerned. It is clearly stated in the preparatory works of the Act that, as part of the political decision to introduce such a maximum wage scheme, "the parties to the collective agreement in the public sector shall initiate negotiations about the translation of the agreement into a new set of rules". Such negotiations - which have not aimed at negotiating the amount of the remuneration - have been conducted with the relevant parties and have formed the basis for Order No. 957 of 20 December 1991 issued by the Ministry of Labour. It is thus important to note that the social partners have participated in the actual implementation of this part of the job offer legislation. The Government states that the reason why the participation of the social partners was not more intensive is due to the fact that the Danish Finance Act and the necessary corollary legislation had to be adopted before the end of the year. There was thus no possibility for further consultations.
2. 58. The Government explains the background of the principal Act itself. The job offer legislation dates back into the late 1970s, a period of rapid growth in unemployment when a large number of unemployed persons who were members of the unemployment insurance schemes were running the risk of dropping out of the labour market and of losing their entitlement to unemployment benefits. To ensure the continued involvement in the labour market of these groups, the Parliament adopted an Act in 1978. That Act provided that long-term unemployed persons became entitled to "a job offer" with a view to retraining before they would lose their entitlement to unemployment benefits, typically after several years' unemployment. It was decided that recruitment in the job offer scheme should primarily take place in the private sector and at terms corresponding to the pay and working conditions fixed by collective agreement for work of the type concerned and that the employer should receive financial compensation. The retraining subsidy would compensate the employer, in part, for the reduced working capacity of the long-term unemployed whom the employer took on.
3. 59. The Government maintains that the job offers are not ordinary work and thus not covered by collective agreements. It explains that, from the very start, a basic feature of the job offer scheme was that it was introduced by legislation and it has been adjusted by legislation on a regular basis. The reason for this is a clear understanding of the fact that job offers to long-term unemployed persons cannot be considered to be ordinary work, and thus are not covered by any existing collective agreements. This means that it was statute which laid down what pay and working conditions should be in this particular job offer employment.
4. 60. According to the Government, the reason why the starting point has been that job offers are not ordinary work and thus not covered by any existing collective agreements is that the job offer scheme displays a number of special characteristics. The characteristic features are that: (1) the job offer scheme was introduced for the purpose of bringing down unemployment; (2) public subsidies are granted to employers who recruit long-term unemployed persons; (3) the measure is a temporary measure; (4) the scheme is an element of a general system of activation offers and unemployment benefits; (5) the work is not taken away from ordinary employees; and (6) the usual wage approval procedures on the employer side do not apply. These are all factors which underline that work in the job offer scheme is not a matter of ordinary work.
5. 61. In further support of this view, the Government mentions that when the more detailed guidelines had to be drawn up in connection with the introduction of the job offer scheme, this was done in agreement with the social partners. These guidelines state, inter alia, that "if an employment relationship is concluded, an employment contract shall be drawn up in which pay and working conditions shall be laid down (where appropriate, by reference to an existing collective agreement)". Furthermore, the guidelines state that "any other terms and conditions applying to similar jobs shall also apply to this employment relationship". This emphasises the fact that reference to collective agreements has taken place in agreement with and with the acceptance of the social partners on the assumption that the existing collective agreements did not cover this type of employment project.
6. 62. Although the job offer scheme is thus not covered by any collective agreement, it was decided at that time - especially for retraining and motivation considerations - that pay and working conditions should correspond to the general pay and working conditions applying within the occupational field concerned. It would have been possible - already at that stage - to choose a different solution, for instance that the remuneration for the work should only be a certain percentage of the ordinary wage or, for example, a specific (lower) hourly wage without this having been an infringement of existing agreements on the labour market.
7. 63. The Government states that as the persons who are covered by the job offer scheme have been unemployed for a long period of time (some up to three years), employers could not be expected to shoulder the full normal wage costs of the long-term unemployed considering their reduced working capacity. The solution to this problem was, as mentioned, that a substantial wage subsidy was granted to the employers and this made it possible for the long-term unemployed to receive, de facto, a wage corresponding to that fixed by collective agreement. Although work in the scheme is not ordinary work, it was considered at the time that it was appropriate in connection with employment of long-term unemployed persons to refer to the pay and working conditions fixed by collective agreement for similar work. This position was changed by the amending legislation introduced in December 1991 for the reasons described above.
8. 64. As regards the alleged infringement by this new Act of Conventions Nos. 87 and 98, the Government stresses that it pays great attention to any international commitment which Denmark has undertaken. However, the Government does not find that it can be argued that Conventions Nos. 87 and 98 have been infringed. The reason for this is that a job offer under the Act on Job Offers to Unemployed Persons is not "work" in the sense of the word used in collective agreements. Job offers are thus not covered by any collective agreement and thus no collective agreements have been violated, nor have ILO Conventions Nos. 87 and 98 been infringed. The Government emphasises in this connection that the job offer scheme has not had any negative impact upon existing collective agreements or on the negotiation possibilities of the parties to these agreements. It points out that no Danish worker has experienced a change in his rights under a collective agreement as a result of the Danish job offer legislation. This is further evidenced by the fact that it has always been a condition in connection with the job offer scheme that the person recruited in the job offer does not take the place of regular employees.
9. 65. With regard to other ILO Conventions, the Government explains that Denmark has a number of extraordinary, labour market policy-motivated employment schemes all of which aim at trying to preserve the involvement of the unemployed in the ordinary labour market. These schemes are characterised by the fact that it has been attempted by means of statutory regulation - and with the consent of the social partners - to try to alleviate the consequences of the downward trend in employment experienced in Denmark since the mid-70s. It adds that the ILO has recognised and even supported such a development. Special reference is made to Convention No. 122 which requires that member States shall "with a view to overcoming unemployment and underemployment declare and pursue, as a major goal, an active policy designed to promote full, productive and freely chosen employment". Furthermore, Convention No. 122 states that: "The said policy shall take due account of the stage and level of economic development and the mutual relationships between employment objectives and other economic and social objectives, and shall be pursued by methods that are appropriate to national conditions and practices." This is exactly what has been the case in connection with the introduction of the job offer scheme, where an employment measure has been introduced in the light of the general performance of the national economy with a view to combating unemployment in the best possible way.
10. 66. The Government recalls that Convention No. 151 establishes the right to organise and to negotiate for public employees. With the necessary adaptations within its field of application, this Convention deals with the same themes as Conventions Nos. 87 and 98 and this means that - for the same reasons as those stated above - there has been no infringement of this particular Convention.
11. 67. As regards Convention No. 111, the Government finds that any infringement of this Convention must be based on an assumption of a violation of the criteria listed in Article 1, paragraph 1(a). This is not the case in the Government's opinion, as the criteria listed in this Convention have no bearing on the facts of this case. Finally, the Government notes that it is not relevant to point to Convention No. 154 as Denmark has never ratified this Convention.
12. 68. In conclusion, the Government cannot accept that it has infringed any ILO Convention by the passing of Act No. 929 on 27 December 1991. This is because of the fact that a job offer is not ordinary work and is consequently not covered by any existing collective agreement. On the contrary, the Government maintains that it has tried to live up to the commitments flowing from Convention No. 122, since the alternative to the job offer scheme would, to a very large extent, have been either unemployment benefits or support through the social security system which would have placed the unemployed in a worse situation, both financially and as regards their future labour market prospects. In this context, the Government stresses that the job offer scheme has largely had its intended effect: the persons who have completed job training with public support have to a high degree stayed on in the labour force or gone into the education/training system.
13. 69. In its letter of 12 January 1993, the Government replies to the AC's further comments of 5 November 1992. It stresses that employment under the job offer scheme is not ordinary work in the national sense of that term or in the sense of the ILO Conventions. It repeats the reasoning behind this position, namely that the scheme was established with a view to reducing unemployment; that a public wage subsidy is granted to employers who take on long-term unemployed persons; that both the job offer and subsidy are limited in time; that no work is taken from regular employees; and that if the employment relationship is continued on expiry of the job offer then it will be governed by the ordinary terms of employment in force and thus, in the public sector, no longer subject to the DKK80 hourly rate. It adds that the fact that the Danish Parliament has for a number of years decided by legislation that the pay and working conditions in relation to job offers should correspond to those fixed by collective agreements is the result of a decision to do so. This was found to be an appropriate solution especially for considerations of retraining and motivation of the unemployed. However, the Government has not been under any obligation to fix pay and working conditions in accordance with those fixed by collective agreements, or to negotiate with the social partners prior to the introduction of such schemes. Nevertheless, the Government has in most cases found it appropriate and possible to have a discussion with the social partners prior to fixing pay and working conditions in connection with job offers.
14. 70. In its communications of 30 June 1993 and 25 February 1994, the Government reiterates that it is the nature of the work which distinguishes employment schemes from ordinary employment. It adds, however, that other factors such as the purpose of the work are important in determining whether collective agreements should be directly applicable. The remuneration offered for a limited period of time does not constitute a contestation of the substance of ILO Conventions as regards the terms which should apply to ordinary employment. Consequently, the chosen form of employment policy does not violate ILO Conventions. The Government emphasizes in its communication of 30 June 1993 that collective agreements will be applicable if an unemployed person obtains permanent employment on completion of retraining in the job offer scheme.

C. The Committee's conclusions

1. 71. The Committee notes that this case involves alleged interference with the content of conditions of work contained in collective agreements through the enactment of legislation which places a ceiling on the hourly wage rate for work done in the public sector pursuant to the acceptance of a job offer made within the statutorily established job offer scheme. It is clear to the Committee from the Government's reply and from the text of the legislation involved (Act No. 929 amending the Consolidated Act on Job Offers for Unemployed Persons, in force as of 1 January 1992) that the principal Act did not place such employees in exactly the same position as regular employees by applying collective agreements to them, but used the existing employment conditions as laid down in current collective agreements as a comparator for the fixing of wages of people in the scheme. As pointed out by the Government, the principal Act could have used various other indicators for this determination (such as setting an hourly rate in the legislation itself or by fixing wages as a percentage of the bargained wage). As it happens, the Government chose at the time to follow the rate agreed on in collective agreements for regular employees, and at the end of 1991 felt the need to change that comparator to a set figure of not more than DKK80 per hour.
2. 72. The Committee takes particular note of the Government's explanation that the contents of current collective agreements which continue to apply to regular employees - including members of the complainant union - are not in any way affected by the amendment Act, and that the bargaining machinery itself continues unaffected. Indeed, the two public sector collective agreements cited as examples by the complainant are untouched by the new Act and are used by the complainant only as a comparison to show how many kroner would be lost by workers who accept to participate in the job offer scheme over the hourly rate negotiated by the AC and still in force for those workers covered by AC collective agreements. It is thus clear that the allegation concerning interference in an area covered by existing collective agreements cannot be upheld.
3. 73. What the amendment Act has done is introduce a new set of rules for determining the wages of that particular category of job offer employees - otherwise facing long-term unemployment because of unfamiliarity with the labour market - who accept a public sector job, for a limited period, in the context of the Government's scheme. The question of whether it is fair to have temporary workers working alongside regular public employees in similar jobs but earning a different hourly rate is not for this Committee to decide. In fact the allegations concerning Conventions Nos. 111 and 122 were referred to the Committee of Experts on the Application of Conventions and Recommendations. The role of this Committee is to determine, on the basis of the facts presented to it, if this change in the rules amounts to a violation of the principles of collective bargaining.
4. 74. The Committee further notes that opinions differ on one crucial aspect of the case, the status of temporary job offer employees in relation to regular employees under collective agreements. This is of relevance for determining whether the adoption of the Act amounted to a violation of the principles of collective bargaining or not. The Committee is aware that this issue is currently debated in Denmark. It is unable to make a pronouncement on this complex and novel issue on the basis of the information available in this specific case.
5. 75. The Committee underlines that, according to the Act, the temporary employment of job offer workers must not jeopardize the posts of regular public servants. It notes that clause 11(10) of the Job Offer Order as amended by Order No. 957 of 27 December 1991 provides that the unemployed person shall be entitled to receive a job offer in the public sector of a minimum duration of seven months (according to the Government, the offer is limited to seven months) and that while clause 1(3) of the Consolidation Act No. 556 of 17 July 1991 on job offers provides generally that unemployed persons who have received a job offer shall not be entitled to a new job offer, exceptions are permitted for certain categories of unemployed persons. The Committee therefore hopes that the Government will ensure that, in practice, the job offer remains of a limited duration and does not become an opportunity to fill permanent posts with unemployed persons, restricted in their right to bargain collectively as regards their remuneration.
6. 76. Finally, the Committee notes with interest that, according to the Government, the social partners are now cooperating to ensure the implementation of the changes effected by the new legislation. It is to be regretted, nevertheless, that consultations were not held with the social partners prior to the submission of the amendment.