Differentiating rights and interests disputes is one of the fundamental roles of the Arbitration Council (‘AC’), as it profoundly affects the legal principles applied to a dispute and the effect of any award, yet making such determinations is a difficult task that often requires Arbitrators to balance complex and competing issues.

Difficult definitions

The Labour Law 1997 (‘the Labour Law’) is the primary legal source in determining how rights and interests disputes are to be treated by the AC, yet its provisions in this area are ill-defined and cede authority to the AC for interpretation. Article 312(2) of the Labour Law it states,

"The Council of Arbitration legally decides on disputes concerning the interpretation and enforcement of laws, or regulations or of a collective agreement. The council’s decisions are in equity for all other disputes."

While it is clear from this article that rights and interests disputes are distinguishable, the AC has found that “no provision of the law specifically defines rights and interests disputes”, and so this issue is left to the AC’s discretion as is the consequent question: what legal principles should be applied in order to make this determination? See 31/12 B&N.

In the recent arbitral award 132/12 Great Honour, the AC attempted to provide workable criteria in defining rights and interests disputes. It states, "A rights dispute concerns existing rights in the law, an agreement or a collective agreement, and it is legally resolved by the Council… An interests dispute, on the other hand, refers to a dispute which has no basis in the law, an agreement, or a collective agreement, and it is resolved by the council on equitable principles."

In this instance, the AC has extended the documents that may be used to determine rights issues to include ‘agreements’ outside of collective agreements and attempts to differentiate interests. We can also see in practice that while rights disputes are generally based on documents and can be about past, present or future disputes, interests disputes are generally about the future concerns of workers; those concerns that are not presently covered by the law, and are often the subject of negotiations.

The necessity of definition

Employers are only obligated to comply with the minimum legal requirements in providing for their workers unless and until there is a circumstance that renders that minimum standard inequitable: see Article 13 of the Labour Law. In the instance of interests disputes, this means that the failure to differentiate correctly between rights and interests disputes could result in employers making provisions for their workers above what is legal, and possibly be inequitable. Conversely, the wrong characterisation could see workers erroneously being denied fundamental labour rights. It is also possible that the requirement to distinguish rights and interests at Article 312(2) is procedural rather than substantive in nature, and is therefore a requirement with which Arbitrators must comply in accordance with Clause 47B of Prakas on the Arbitration Council 99/04 and which, if not fulfilled, may provide a basis for appeal to the courts.  This has not yet been tested by the AC or the courts.

There is potential for parties to be disadvantaged by the mischaracterisation of a dispute. In the case of interests disputes, the AC will only examine issues where workers or their union(s) represent the “absolute greatest number of workers and employees”, also known as most representative status (‘MRS’): Article 6 of Prakas on the Representativness of Professional Organisations of Workers and employees in enterprises and Establishments and the Right of Collective Negotiation to Conclude a Joint Convention for Enterprises and Establishment 305/01. One of the rationales behind this requirement is that employers should not be unfairly burdened with different agreements for multiple parties. Also the implication for any arbitral award which settles an interests dispute takes the place of a collective bargaining agreement and shall remain in effect for one year from the date on which it becomes final.

Unless a subsequent agreement is made by consent: see Clause 43 of Prakas No. 99/04. As all workers are bound by a collective agreement, whether they were part of the union that made the demands or not, they lose their right to strike in relation to any issues which are the subject of that agreement. This may be an undesirable  outcome for workers who did not present demands to their employer, yet one that is advanced in the law on the basis of utilitarianism and expediency.

However, there are negative consequences that may result from this policy. In particular, for an interests dispute to be heard, parties must reach the high MRS threshold, and if they are unable to do so the AC will decline to address the dispute, and thus they may miss out on the enforcement of their rights and be denied a chance at a remedy. Further to this, even if a party can achieve MRS status, they must meet the standard of ‘equity’ which is not defined in the Labour Law and if applied inconsistently, can result in a situation lacking certainty for the parties. These problems arising from distinctions are not merely academic as differentiation is not a simple process and involves many factors, as highlighted by a recent case study.

Case study: 31/12 B&N

In Arbitral Award 31/12 B&N, two demands were made on behalf of pregnant workers. The first demand was that pregnant workers be allowed to leave 15 minutes early each day to avoid potential injury from other workers leaving in a rush at the same time, such as falling over. Secondly, the pregnant workers demanded that they be granted two days of leave every month on full benefits in order to undertake medical checks for their pregnancy, rather than the half day that they were currently receiving from the employer.

As the workers had MRS, the Arbitral Panel was able to examine these issues. In determining whether this was an interests or rights dispute, the Arbitral Panel found that there was, “no provision in the Labour Law, a collective agreement or an agreement between the parties,” that would allow pregnant workers to leave 15minutes early or grant two days of leave on full benefits for medical checks, therefore making these interests disputes.  

In relation to the first issue, it is possible to see that the health of pregnant workers may equally fall under the health and safety provisions of the Labour Law, namely at Article 230 which states, “All establishments and workplaces must be set up to guarantee the safety or workers…[including] risks of falling”. Yet because the demand was not outlined in the law, the Arbitral Panel found it to be an interests dispute. As the workers were unable to show the need for pregnant workers to leave 15 minutes early, and the Arbitration Council could not find an equitable basis to allow such a demand, the request was denied.

In relation to the latter issue, the Arbitral Panel acknowledged the workers’ argument that public hospitals are overcrowded, and relied on the government’s emphasis on maternal health to show that a half day’s leave for health checks is insufficient. However, despite these strong public policy and health considerations, it was determined that since the employer is already providing benefits for half a day and the law has no such requirement at even this minimum level, pregnant workers were only entitled to pay and benefits for a half day, though leave was granted for a full day.

It is therefore possible to see that while health and safety are fundamental workplace issues, this does not necessarily translate into a characterisation as a rights dispute, and indeed requires a careful balancing by the Arbitrators.

Despite the necessity of demarcating rights and interests disputes, the law has not adequately catered for this area and therefore relies on the Arbitral Panel to make nuanced and difficult determinations that address the intention of the law and result in fair and reasonable outcomes. The AC would be assisted in this regard by submissions from workers and employers regarding these rights and responsibilities.