AMENDMENTS TO THE LABOR CODE
(SG, issue 48/June 13, 2006)
On July 1, 2006 the Amendments and Supplements to the Labor Code Act (ASLCA) entered in force. Changes cover almost all chapters of the Code. Major part of the reform is related to employees’ representatives in the enterprise. This fact imposes review of amendments divided in two main streams:
1. Types of employees’ representatives and their specific right to information and consultancy; and
2. Other major amendments of the LC.
ASLCA introduces a new type of employees’ representative (article 7a LC). At the same time, there are representatives participating in the discussion of matters falling within the sphere of company’s management (article 7, para 1 LC), representatives protecting employees’ labor and social security rights before the employer and competent authorities (article 7, para 1 LC) as well as trade union organizations. Employees’ interests are guaranteed at four levels. Each type of representatives disposes with specific rights relevant to the type of information received by the employer and consultancies it participates in. This, however, differentiates employer’s obligations related to providing information and consultancies.
The LC settles certain general rights and obligations for all types of employees’ representatives as specified in article 7c, para 1 and 2 and article 130, para 3 LC. It is worth mentioning that their right to request the provision of relevant information from the employer and participation in consultancy procedures (article 7c, para 1, points 1, 2, 3 LC) may be exercised if only a deliberate code provision envisages such possibility and determines which type of representatives may benefit such code provision. The lack of such provision shall release the employer from its obligation to provide information and conduct requested consultancies. Basic obligations of employees’ representatives are providing the latter with the information submitted by the employer as well as taking into consideration employees’ positions in the course of conducted consultancies. Informing representatives may be accompanied by a confidentiality clause. In such case, they shall be held liable for damages caused as a result of default of their obligation not to disclose submitted information. The amendments may result in the creation of agreement between employees’ representatives and the employer for decreased working hours, additional leaves and other privileges when necessitated for the implementation of representative functions.
REPRESENTATIVES PURSUANT TO ARTICLE 7, PARA 1 LC
The General meeting of employees may appoint representatives who shall participate in the discussions or resolutions of Company’s management (representatives pursuant to 7, para 1 LC). The possibility to exercise such rights should be explicitly provided in a statutory act. For instance, the Commercial Act (CA) provides for a right to advisory powers in the General meeting of employees’ representatives when employed persons within the company are more than 50. Representatives pursuant to article 7, para 1 LC may exercise general rights as stipulated in the new article 7c, para 1 and article 130, para 1 LC. They shall be appointed by simple majority and elected for indefinite term.
REPRESENTATIVES PURSUANT TO ARTICLE 7a LC
Such representatives shall be appointed by the General meeting of employees within companies having more than 50 employed persons or within departments differentiated in organizational and economic aspect with more than 20 employees. Following the provision of § 43 of the Final and Transitional Provisions of the Labor Code (FTPLA), by March 23, 2008 article 7a shall apply with respect to companies employing more than 100 persons and for differentiated departments with more than 50 employees. Representatives under article 7a shall be appointed by simple majority and shall serve from 1 to 3 years. Their only function shall be participation in the provision of information and consultancies under article 130c and article 130d LC, and such function, upon a decision of the general meeting of employees, may be allocated to trade union organizations or representatives under article 7, para 2 LC.
The employer undertakes to provide representatives under article 7a with the following information:
1. Amendments to the activity and economic status of the company;
2. Employment status within the company;
3. Possible material changes within the labor organization.
A mandatory element of the dynamic factual contents of article 130c LC is the conduct of consultancies with representatives related to employment and labor organization issues (points 2 and 3). Terms for providing information and consultancies are determined in a separate agreement and if no such is reached, the rules of article 130d, para 2LC shall apply. In case of default of employer’s obligations, representatives under article 7a may refer to the Executive Agency “Major Labor Inspectorate” for breach in the labor legislation. Article 130c, para 5 LC settles the possibility to refuse the provision of information or conduct consultancies in the presence of the envisaged prerequisites, namely risk of affecting company’s activity or employer’s legal interests. Grounds for the refusal shall be considered either by the Executive Agency “Major Labor Inspectorate” when the agency is referred for breach in the labor legislation or by the National Institute for Reconciliation and Arbitration where parties should agree on the arisen dispute.