Law No. 20,145 -approved on May 10-, recently entered into force, which introduces important changes in the Collective Bargaining Law for the private sector (No. 18,566 of 2009 "LNC"), collecting some of the observations made in March 2010 by the International Labor Organization (ILO), based on the complaint duly submitted by the Chamber of Industries and the Chamber of Commerce and Services.

Characteristics of the Negotiation System of the 2009 Law. Aspects that demanded its revision.

In general, the LNC establishes rules for setting general minimum wages and by category, as well as updates and adjustments. It also provides for the articulation of collective bargaining at three levels.

• The first level of negotiation is given by the Superior Tripartite Council (article 7), the second is carried out in the Wage Councils, organized by branches of activity, and the third is in the bipartite or company sphere. It occurs between the employer and union organization.
• With regard to minimum wages and adjustments, the government is in charge of calling, presenting, and defending the economic guidelines. Establishes the guidelines regarding deadlines and other elements of the negotiation.
• The working conditions must be negotiated by the “social actors”, that is, the professional organizations of workers and employers (article 12 of the LNC). Subsequently, if there is an agreement, the respective Council adopts and incorporates into the agreement what was negotiated, and which will be applicable to all companies in the branch of activity. This “erga omnes” effect (“applicable to all third parties”) occurred (until now) once the agreement was registered and published by the Executive Branch.
• Regarding the validity of the agreements (the product of collective bargaining), in article 17 of the 2009 regulation, it adopted the criterion of "ultraactivity", which can be defined as the persistence and permanence after the expiration of the term, except express agreement to the contrary. In other words, if the loss of effectiveness of the normative part of the agreement was not explicitly agreed upon, they remained in full force and transcended, until a new one replaced it. This gave rise to countless debates, between those who understood that it was a practice that provided security while allowing its repeal to be agreed (if it was the will of the parties), and those who disagreed because they understood that this restricted freedom.
• Finally, specifically regarding the legitimacy to enter into collective agreements. In particular, the solution provided for in the 2009 Law for negotiation in the company, when there is no workers' organization. In this hypothesis, the authorized subject was only the most representative organization of the higher level. This solution was harshly criticized because it completely ignored the right to bargain of the collective that did not want to join the branch union (“negative union freedom”), for example. Likewise, it imposed some interference from third parties outside the company's labor reality, in the negotiation of the most “intimate” level, which is the bipartite one.

This meant the impossibility of workers being able to bargain (collectively) with their employer in the absence of a union. Let us imagine, for example, the case of an agreement to reduce working hours as an alternative to unemployment benefits for lack of work. Would that agreement be valid? The answer so far was negative.

In turn, the functioning of the unions as a subject of law - directly related to their obligations and responsibilities - also needed to be reconsidered. Since it was not mandatory for workers' organizations to have legal status, apparently they could not respond to violations of rights. It should be borne in mind that the International Labor Convention No. 87 on freedom of association establishes that, when exercising the rights recognized in said Convention, "workers, employers and their respective organizations are obliged, as well as other persons or organized communities, to respect the law”.

Something similar occurs with respect to the “duty to negotiate in good faith”. Specifically, with regard to the exchange of information, the 2009 Law does not establish guarantees regarding confidentiality in the handling of this, nor what would be the possible sanctions for non-compliance. This must be agreed between the parties, establishing in advance the consequences for its breach.

Regarding the positive aspects of the system to be highlighted, it should be noted that it seems correct that collective relations and especially bargaining, freedom of association and strikes (which historically lacked formal legal regulation) have become (at least partially) regulated . However, Law 18,566 clearly did not have the consensus of all social actors, constituting a weakness of the system over the years. Indeed, the standard was issued without considering one of the parties (employers), who was not consulted or participated in the drafting of the text.

Modifications intruduced by the new law

The rule should then be revised to meet the interest of all parties (of course always with the understanding that inequalities that characterize labor relations exist and will exist). It has now finally been adapted, following some of the observations of the Committee on Freedom of Association of the International Labor Organization.

In substance, the norm approved last May (Law No. 20,145) establishes five changes to the Collective Bargaining Law, some of them with enormous weight and significance for collective labor relations:

I. Exchange of information during the collective bargaining process. Legal status of unions:

For the purposes of exchanging necessary information within the framework of collective bargaining (financial data, for example) the standard had already provided (as we said) the obligation of secrecy regarding confidential information and liability for non-compliance (in article 4). However, a subparagraph was now added providing that, for this exchange, the organizations (both) must have legal status. This requirement seeks to ensure the responsibility of the organization in the event that the confidentiality duty is breached with respect to shared confidential information.

II. Repeal of one of the powers of the Tripartite Superior Council:

Its competence to set the level at which the parties would negotiate has been repealed. With this, the freedom that the determination of the level of negotiation depends entirely on the will of the social actors is reestablished.

III. The obligation to negotiate with the higher level union in the absence of a company union is eliminated:

As analyzed, this was one of the greatest weaknesses of the collective bargaining system of the 2009 Law. With its modification, workers collectively (even without union organization) will finally be able to negotiate directly with their employer in the company, without interference from trade unions. In short, the new rule now makes it possible for its workers to negotiate a collective agreement appointing their representatives if the branch union does not have representation in the company. At this point, it should be mentioned that this eventual agreement could in no case have conditions lower than those enshrined in the awards and agreements agreed in the Wages Council of the sector.

IV. Validity of the collective agreement. Repeal of the "Ultraactivity" by default:

Article 17 of Law No. 18,566, which established the “ultraactivity” of collective agreements, has been repealed. The duration or term of future agreements becomes an aspect that is clearly the responsibility of the parties. If a term of validity is agreed, the agreement will expire at the end of it, unless the parties expressly agree to its extension. The principle that governed the previous rule has been reversed (if the parties said nothing, it was understood to be extended until a new agreement replaced it).

V. Mandatory disclosure of the Agreement:

Finally, the Law clarifies that the process of registration and publication in the Official Gazette of collective agreements and other resolutions adopted by the Wage Councils does not constitute any requirement for authorization, homologation and/or approval by the Executive Power. This is consistent with what the doctrine has indicated repeatedly, regarding the non-existence of the Institute for the homologation of collective agreements and means that an agreement can come into force (with force throughout the national territory) even without the homologation of the MTSS.