The Supreme Court of the Republic of Lithuania, sitting as a Chamber/Judicial Panel composed of: Birutė Janavičiūtė, Zigmas Levickis (Chairperson of the Chamber) and Antanas Simniškis (Presenter), all judges of the Department of Civil Cases
Have heard the civil case
By way of written procedure under the Cassation Appeal of the Defendants – the Trade Union Organisation of Švyturys AB, the Workers‘ Union of Utena Brewery and the Joint Representation of the Trade Union Organisation of Švyturys AB and the Workers‘ Union of Utena Brewery regarding the revision of the decision of 5 August 2011 adopted by the Judicial Panel of the Department of Civil Cases of the Klaipėda Regional Court in a civil case under a claim brought before the Court by the Plaintiff „Švyturys–Utenos alus“ UAB against the Defendants – the Trade Union Organisation of Švyturys AB, the Workers‘ Union of Utena Brewery and the Joint Representation of the Trade Union Organisation of Švyturys AB and the Workers‘ Union of Utena Brewery regarding the declaration of an indefinite strike unlawful.
The Judicial Panel
H e l d :
I. THE CIRCUMSTANCES OF THE CASE/ DISPUTE
The issue whether the declaration of the strike while a collective agreement was valid in the company was lawful has been raised in this case.
The Plaintiff Švyturys–Utenos Alus UAB had asked to declare the strike announced on 15 June 2011 unlawful and the strike voting results over the approval to declare a strike at the Plaintiff‘s facilities organised during the workers‘ meeting of Švyturys–Utenos Alus UAB held on 9-10 June 2011 unlawful too. The Plaintiff stated that on 20 October 2008 a collective agreement was signed between the Plaintiff and the Defendants. On 21 March 2011 they received the Defendants‘ demand to index basic wages for workers of categories 1–7 by 12.4 %., i.e., 7.2 % for 2008 , taking into account the interim wage increase, 3.4 % for 2009, 1.8 % for 2010. The Plaintiff refused to do that as in 2008 there were separate negotiations held over the remuneration package, during which the Plaintiff committed himself to securing jobs and kept his pledge; in 2009 separate agreements and arrangements were made – the revision of the variables, the inclusion of the principle of annual performance appraisals. Upon agreement on those issues, the question of the revision of wages was finished; in 2011 the parties met twice in relation to the revision of wages, the Plaintiff provided some information about the situation in the country and the decreasing wages on the labour market. The Plaintiff stated, that there were some violations during the secret workers‘ ballot over the declaration of a strike held at the facilities in Utena and Klaipėda on 9-10 of June 2011. On 15 June 2011 they received the Defendants’ decision to declare a non-definite strike at the Plaintiff‘s production facility starting on 23 June 2011. The Plaintiff maintains that the Collective Agreement has been abided by as their workers‘ wages are higher than the average on the market, bonuses have been paid, there have not been redundancies or wage cuts, basic wage cuts, salaries for the administration staff have not been increased either. The Collective Agreement provides exceptionally/ exclusively favourable working remuneration conditions for the employees in comparison with other enterprises. The Plaintiff is of the opinion that since the outset of the conflict the defendants have not been willing to resolve this dispute in a peaceful manner and preferred to declare a strike. The plaintiff contends that it has not been established by law that they have failed to perform their duties and obligations properly under the Collective Agreement.
It has been established in the case that in the Plaintiff‘s company under the agreement between the Workers‘ Union at Utenos Alus and the Trade Union Organisation at Švyturys AB and the protocol of 18 December 2007 there is a joint representation of the Trade Union Organisation of Švyturys AB and the Workers‘ Union of Utenos Alus which was formed in order to prepare a collective agreement at the plaintiff‘s company and control the fulfilment of the commitments assumed in the Collective Agreement. The agreement was concluded on 20 October 2008. It was agreed that workers‘ wages would depend on the amount and quality of the work done, the results/ performance of the enterprise and the supply-demand ratio on the labour market (Clause 5.1). Workers would get paid under the Remuneration Regulations which were Annex 4 of the Collective Agreement (Clause 5.4). The Remuneration Regulations also provided for the terms and conditions of payment and revision of wages. The principles of the remuneration system are determined there – interior/inside fairness, exterior/outside competitiveness, consideration of the financial capabilities of the enterprise, the business strategy, technologies, productivity and efficiency along with incentive schemes for employees and effective use of the company‘s financial resources (Clauses 1.4.1–1.4.5). Factors affecting individual wages were determined as well (Clauses 1.5.1–1.5.10). Under Clause 3.1 of the Remuneration Regulations, in order to ensure the application of the principles of the remuneration system, wages were reviewed once per year; the bargaining process over the revision of wages starting during the first week of February and the new wages were set from 1 April except the case provided for in Clause 3.6; wages were reviewed in order to ensure/secure: the outside competitiveness of wages paid to the employees (Clause 3.1.1), differentiation of wages (Clause 3.1.2), the achievement of the company‘s targets through the employees‘ incentive schemes (Clause 3.1.3). Under Clause 3.3 of the Regulations, when revising wages developments of the macroeconomic situation should also be taken into account (Clause 3.3.1), the financial-economic performance of the enterprise (Clause 3.3.2), every and each employee‘s work and performance for the previous year under the Performance Appraisal System in place (Clause 3.3.3), during the revision of wages they should be raised by no less than the amount of the average annual inflation rate/ value (source of information – the Statistics Department under the Government of the Republic of Lithuania) taking into consideration the average annual wage growth at national level and if there has been interim revision of wages (under Clause 3.6), during the annual revision of wages the interim revision increase is deducted from the average annual inflation value (Clause 3.3.4). Under the resolution adopted at the plaintiff‘s workers‘ conference held on 25 March 2009 the validity and application of Clause 3.3.4 of the Remuneration Regulations of the Collective Agreement was suspended for one year, i.e. until 1 April 2010. The plaintiff and the defendants by Protocol No 4 of 11 May 2010 agreed that revision of wages for the year 2009 was considered finalised.
The Joint Representation of the Trade Unions on 21 March 2011 applied to the Plaintiff by alleging that Clause 3.1 of the Collective Agreement and Clause 3.3.4 of the Remuneration Regulations had been violated by the Plaintiff. The Joint Representation demanded to have the basic wages for categories 1-7 indexed by 12,4 %, i.e., 7,2 % for the year 2008, taking into account the interim wage increase, 3,4 % for the year 2009 and 1,8 % for the year 2010. On 4 April 2011 the Plaintiff informed in writing that the revision of wages had not been planned as the average wage for workers of categories 1-7 in 2010 was 3298 Lt, i.e. 36,4 % above the average wage in the whole country, in 2008-2009 there were no redundancies and the wages remained at the same level; besides, the company‘s figures were worse than in 2009. The Joint Representation of the Trade Unions on 15 April 2011 responded in writing that its claim was well-founded and reasonable as in 2009 the number of workers of categories 1-7 decreased from 345 down to 307, their average wage had been cut by 20 Lt whereas the average wage in the company had increased by 450 Lt with salaries for the administration rising by 1300 Lt. On 22 April 2011 the Plaintiff indicated in writing that the levels of the wages had been influenced by the country‘s economy, the labour market and the performance inside the company. Thus, when considering the demand put forward by the Trade Unions, Clauses 3.3.1–3.3.3 of the Collective Agreement should be referred to. On 28 April 2011 the Joint Representation of the Trade Unions demanded in writing that the Plaintiff should form a conciliation committee on the ground that the Plaintiff had refused to index the wages, failed to provide any particular arguments, the parties had not reached any agreement. The conciliation committee met on 12 and 31 of May 2011, the demand of the Joint Representation of the Trade Unions to abide by the provisions of the Collective Agreement regarding wage revision and indexation brought before the Plaintiff was discussed. At first the Plaintiff proposed to increase wages by 0,5 %, later – 1,8 proc. (by the average inflation rate of 2010) and arrange for health insurance for its employees. Representatives of the Joint Representation of the Trade Unions proposed to have wages increased by 7,3 %. The parties agreed that a mutually acceptable solution on the issue in question was not reached. The Joint Representation of the Trade Unions informed the Plaintiff that on 8-9 June 2011 a secret ballot over the declaration of a strike at the production and logistics units was going to be held. It took place on 9-10 of June 2011. Referring to/ on the basis of the resolutions adopted at the conference of the Trade Union at Švyturys AB on 4 June 2011 and by the board of the Workers‘s Union at Utena Alus on 14 June 2011 as well as by the resolution of 14 June 2011 to declare a strike at the Plaintiff‘s production facility and demanding to index the wages for workers of categories 1–7 by 12,4 %; this decision and resolutions were submitted to the Plaintiff in compliance with the terms provided for in Article 77 § 3 of the Labour Code. The declared strike was supposed to start on 23 June.
II. SUMMARY OF THE JUDGMENTS ADOPTED BY THE COURTS OF FIRST AND APPEAL INSTANCES
The Klaipėda City District Court by its decision of 5 July 2011 dismissed the claim. The Court held that the Employer‘s obligation/ duty to revise wages and the terms when that must be done were stipulated in Clauses 5.2, 5.4 of the Collective Agreement, in Clauses 1.1, 1.2.2, 3.1, 3.3.4, 3.4, 3.5, 3.6, 3.7 of the Remuneration Regulations; the Employer‘s duty during the revision process to increase wages by no less than the annual inflation rate taking into account the average wage level developments in the country, provided for in Clauses 3.3.4, 3.4 of the Remuneration Regulations. The parties to the Collective Agreement also agreed that other indicators which should be considered had influence on the fulfilment of this obligation (Clauses 3.3.1–3.3.3 of the Remuneration Regulations). However, the Court did not treat those conditions as having any influence on the neglect of the Employer‘s duty to revise wages. Under the Labour Code when the parties failed to reach an agreement, the dispute was handed over to the Conciliation Committee, and when it failed to resolve the dispute, under the law the Defendants were entitled to declare a strike. (Articles 69, 70, 76, 77 of the Labour Code). Assessing the parties‘ submissions after failing to reach an agreement about the Collective Agreement, the Court considered the fact that the Plaintiff paid 200 million Litas in dividends for the previous dispute year. The Court concluded that the Defendants had had the right to declare a strike (Articles 62 & 77 of the Labour Code). Taking into consideration the circumstances established in the case the Court held that the Plaintiff had failed to prove that there had been any violations in the secret ballot procedure prepared by the Joint Representation of the Trade Union at Švyturys–Utenos Alus UAB and which had been applied when conducting the secret strike ballot among the workers.
The Judicial Panel of the Department of Civil Cases at the Regional Court of Klaipeda after having heard the case originated in an appeal claim by Švyturys–Utenos Alus UAB, the Plaintiff, by its decision of 5 August 2011 quashed the decision adopted by the Klaipeda District Court on 5 July 2011 and held that the strike declared by the Joint Representation of the Trade Union Organisation at Švyturys AB and the Workers‘ Union at Utena Brewery on 15 June 2011 and which was supposed to be organised at the production facility of Švyturys–Utenos Alus UAB was unlawful. The Court also declared the strike ballot results at the production facility of Švyturys–Utenos Alus UAB held during the workers‘ meeting on 9 -10 June 2011 Švyturys–Utenos Alus UAB unlawful.
The Judicial Panel found that on 25 March 2009 there was a workers‘ conference held in order to have the Collective Agreement revised and amended. 58 delegates out of 60 attended the event. Representatives of the Trade Union did not come. During the conference by a majority vote (with 54 voting in favour of the changes, 3 delegates abstaining, approved the amendment of Clause 3.3.4 of Annex 4 (Remuneration Regulations ) of the Collective Agreement signed on 20 October 2008. It was agreed to add one sentence: „this article 3.3.4 shall come into force and become applicable only as of 1 April 2010“; on 25 March 2009 the wording/text of the Collective Agreement of Švyturys–Utenos Alus UAB was amended respectively. The Judicial Panel noted that rights and obligations of a trade union in labour legal relations were acquired by the represented, however, it is possible to waive this right while representing in legal relations. When the majority of the workers agreed directly with the Employer about Clause 3.3.4 regarding pay conditions coming into force as of 1 April 2010, the Trade Union lost its right while representing the workers to demand the Employer to agree on issues they had already agreed themselves. The amendment to the Collective Agreement had been approved by the majority of the Plaintiff‘s company workers, i.e. the will of the majority had been expressed to revise Clause 3.3.4 of Annex 4 (regarding Remuneration Regulations) of the Collective Agreement; however, the conclusion could not been drawn that those workers rejected the opportunity to protect their rights by being represented by the Trade Union. The Judicial Panel arrived at the conclusion that by the resolution of the Workers‘ Conference held on 25 March 2009 the validity/ application of Clause 3.3.4 of Annex 4 regarding Remuneration Regulations of the Collective Agreement was suspended for one year, i.e. until 1 April 2010. Thus, under Clause 3.3 of the remuneration Regulations the Plaintiff was not obliged to increase wages in the years of 2008 and 2009. The Defendants had not required to declare the Workers‘ Conference held on 25 March 2009 unlawful. The Judicial Panel also found that the Plaintiff had not cut wages – the average wage for workers under Categories 1-7 was 3298,30 Litas for the fourth quarter of 2010, i.e. 55 % higher than the average; although the company‘s performance had been going down since 2008, bonuses and other employee benefits had been paid as well (various special occasions, holidays, etc). The Plaintiff offered either to arrange for health insurance for its employees (250 000 Lt – 400 000 Lt per year) or increase wages by 1.8% for 2010. The Defendants declined the offers. After having analysed the provisions of the Labour Code, the Collective Agreement, the Remuneration Regulations and taking into consideration all the circumstances established the Judicial Panel concluded that negotiations of the parties over pay revision had taken place (the minutes of the meetings of 25 January 2011 and 23 February 2011, a meeting with the Trade Union on 15 April, the minutes of the Conciliation Committee meetings of 12 and 31 of May 2011), and because the Defendants failed to prove that the Collective Agreement had been violated/ breached, the Collective Agreement had been abided by.
The Judicial Panel stated that the different interpretation/ construction of the Collective Agreement was a contributing factor for the dispute between the parties to arise too. In the minutes of the negations over the Collective Agreement held on 15 July 2008 there was a record that the Employer agreed to have a clause entered into the Collective Agreement that while revising wages they would be increased by no less than the average inflation rate and different levels would be negotiated separately. In the minutes of the meeting held on 31 July 2008 it was written that „the Employer agrees to have a clause entered into the Collective Agreement that during the revision of wage levels they shall to be increased by no less than the average inflation rate taking into account the average growth of wage levels“. Under Clause 3.1 of the Remuneration Regulations of the Collective Agreement in order to ensure that the principles of the Remuneration System were met, wages were revised once per year; in Clause 3.3 it is clearly stated that when revising wages the entirety of various factors are to be analyzed: developments in the macro economy (the average annual inflation rate, the consumer price index, the growth of wages at national level, the situation on the labour market); the company‘s business and financial performance; every and each employee‘s performance appraisal for the previous year under the Performance Appraisal System in place and taking into account the company‘s remuneration policy (Clauses 3.3.1–3.3.3); Clause 3.3.4 stipulates that during revision wages are raised by no less than the average inflation rate taking into consideration the average wage growth nationally. The clause of the Remuneration Regulations by employing the rules of interpretation/construction of contracts provided for in the Civil Code, were explained by the Judicial Panel in a systematic way considering the interrelations among them rather than considering Clause 3.3.4 in isolation. The conduct after the conclusion of the Agreement (agreement on 11 May 2010 that the pay revision was over for the year 2009 proves that the parties related the revision of wages not only to the inflation rate but having in mind other conditions provided for in Clauses 3.3.1–3.3.3 of the Remuneration Regulations). The Plaintiff‘s company‘s performance since 2008 had been deteriorating, the GDP decreased, the Consumer Price Index plunged/ dropped, the unemployment rate in the country had been growing with the average wage going down significantly. Despite all that, the Plaintiff had not slashed wages for his employees. In the light of the foregoing considerations and the Remuneration regulations, the Judicial Panel dismissed the Defendants‘ argument that the Plaintiff had committed himself to increasing wages unconditionally by at least the average annual inflation rate. Moreover, during the conference held on 25 March 2009 the employees and the Employer agreed that Clause 3.4.4 of the Remuneration Regulations would come into force and be applied only as of 1 April 2010, i.e. wages for the years 2008 and 2009 would not be raised and during the negotiations conducted in 2011 the Plaintiff agreed with the Defendants‘ demand and offered to raise wages by 1.8 % for the year 2010. Therefore, there are no grounds to allege that the Collective Agreement had been breached. Pursuant to Article 78 § 3 of the Labour Code declaration of a strike during the validity of a collective agreement is forbidden provided that it has been observed and abided by. Referring to the established circumstances, the Judicial Panel held that the strike declared by the Trade Union on 15 June 2011 was unlawful.
III. LEGAL ARGUMENTS OF THE CASSATION APPEAL
AND OBSERAVATION TO THE CASSATION APPEAL
By their Cassation Appeal the Defendants – the Trade Union Organisation at Švyturys AB, the Workers‘ Union at Utenos Alus and the Joint Representation of the Trade Union Organisation at Švyturys AB and the Workers‘ Union at Utenos Alus request to have the decision adopted by the Judicial Panel of the Department of Civil Cases of the Klaipeda Regional Court on 5 August 2011 quashed and to have the decision adopted by the Klaipeda City District court on 5 July 2011 upheld. The Cassation Appeal has been based on the following arguments:
1. Under the provisions of Article 48 § 1, Article 60, Article 63 § 1 and Article 66 § 1 of the Labour Code a conclusion must be drawn that workers of a company cannot independently conduct collective bargaining, i.e. to bargain over the conclusion or revision of a collective agreement, to draft the contents of a collective agreement, supervise its application. In defining who are workers‘ representatives in collective bargaining we should refer to Convention No 135 of the International Labour Organisation (hereinafter referred to as the ILO) „Regarding protection and facilities afforded to workers’ representatives in the undertaking“ in which workers‘ representatives are divided into two categories – trade union representatives (a workers‘ organisation) and elected representatives; Article 5 provides that elected representatives shall not be used to undermine the position of the trade unions concerned or their representatives. Article 3 § 2 of the ILO Convention No. 154 “Regarding Promoting Free and Voluntary Bargaining” stipulates that, wherever necessary, appropriate measures shall be taken to ensure that the existence of these elected representatives is not used to undermine the position of the workers‘ organisations concerned. Under Article 2 of the ILO Recommendation No 91 “Regarding Collective Agreements”, a collective agreement is an agreement between an employer, a group of employers or an employers’ organisation, on the one hand, and one or more representative workers‘ organisations. The Committee on Freedom of Association of the ILO declares that this recommendation emphasises the role of workers‘ organisations as parties to collective agreements. Delegates elected by workers may sign an agreement only if there is no respective trade union; otherwise, in the Committee‘s view, there is an alleged violation of the ILO Convention No 154 where there is a duty imposed by the states to promote collective bargaining. The Committee has also declared that direct negotiations between the employer and workers of an enterprise excluding trade unions is detrimental to the principle of promoting collective bargaining between workers‘ organisations and employers. The same provisions are enshrined in Article 6 § 2 of the European Social Charter. The aforementioned legislation acknowledges only collective bargaining with trade unions (employees‘ organisations) or elected workers‘ representatives (work councils) rather than direct talks with the workforce in the undertaking. In compliance with international instruments, Article 19 of the Labour Code envisages that in Lithuania only trade unions or in some cases elected workers‘ representatives who establish a work council can act a workers‘ representatives. The conclusion drawn by the court of appeal instance that workers can directly enter into negotiations and agree over some changes in a collective agreement which has been concluded by the employer and trade union violates not only the above-mentioned legal norms but the provisions of Article 64 of the Labour Code which stipulates that the terms and conditions of revising or amending a collective agreement may be carried out in the manner set forth in the collective agreement (Clause 1.3 of the Collective Agreement at Švyturys–Utenos Alus UAB provides that that a collective agreement may be amended when the Employer and the Trade Union agree about that in writing). Moreover, the fact that 162 workers out of 301 were in favour of a strike over pay at the Plaintiff‘s facility suggests that the real workers‘ will/attitude at the Workers‘ Conference held on 25 March 2009 in order to have certain clauses over pay in the Collective Agreement amended was not expressed.
2. The court of appeal instance was wrong in identifying representation in collective labour relations and representation in civil legal relations. The foundation of representation in collective labour relations is not established by an agreement being concluded, but by law or in the company constitutional documents. Furthermore, not only the represented have rights and obligations but the representatives as well. The subject matter of the representation differs too – a special mandate is granted to trade unions to bargain over collective agreements and conclude them, conduct collective labour disputes. Under the Labour Law a representative must do what he or she has committed to do for the represented, however, they may also do what is not prohibited by law, collective agreements or other arrangements. Such representation is determined by the fact that employees or a group of employees being independent bodies under the labour law have rights which cannot be exercised without the involvement of trade unions at all or which may be exercised only with the assistance of trade unions, for example, the right to strike. Thus, the extent of powers of trade unions acting under the provisions of the Constitution are determined not only by workers, but by rules of law as well, so a group of workers are not entitled to reject the representation of trade unions in collective labour relations – this representations is envisaged by legal acts without individual expression/ voicing of employees’ will.
3. The court of appeal instance was right in ruling that Clause 3.1 of the Remuneration Regulations stipulates that bargaining over the revision of pay starts during the first week of February and new wages are fixed as from 1 April, i.e., during the revision process new wage levels are not determined by applying some fixed formula or a particular ratio, but by way of bargaining when the parties are entitled to put forward their demands regarding pay levels. If the parties fail to agree on the demands raised, then under Article 67 § 2 and Article 68 of the Labour Code the dispute is not over law, but rather economic interests of the employer and its employees. As neither state governance bodies nor courts can decide whose – the employees‘ or the employer‘s – economic interest is more important and must be satisfied, the Labour Code provides that such a dispute shall be resolved under the procedure of collective disputes. However, the court of appeal instance considering the demands in the cassation appeal over pay rise being excessively high and the Plaintiff‘s proposed 1.8 per cent pay rise being sufficient, exceeded its competence and infringed the principle of free collective bargaining, i.e. maintaining that the demands to increase wages were unsubstantiated or excessive, by its decision the court fixed the levels of pay the employees at the Plaintiff‘s company should get. By way of analogy, citing the interpretation of the cassation court that it is not within its competence to assess the reasonableness or expedience of restructuring inside a company (Ruling by a judicial panel of the Civil Department of the Supreme Court of Lithuania adopted on 30 March 2010 in the civil case J. B. v. UAB „TELE-3“, No. 3K-3-139/2010), a conclusion must be drawn that a court has no competence to assess the expedience and reasonableness of demands raised by employees over pay rise; that must be decided by the parties themselves through negotiations. Moreover, the court of appeal instance by referring to the performance of other enterprises in Lithuania and maintaining that the Plaintiff had created a very favourable remuneration package in comparison with other employers engaged in similar business activities failed to take into account the fact established by the first instance court that the employer had paid 200 million Litas in dividends and its profitability had been three times higher that the average profitability of other Lithuanian companies. By doing so the court violated the evidence assessment rules.
4. The court of appeal instance infringing the rules of contract interpretation/construction found that the mere fact that there had been negotiations over pay levels, although no agreement over had been reached, was a sufficient ground to state that the Collective Agreement had been adhered to. The court of appeal instance was right in observing that the protocols of 15 July and 31 July of 2008 and Clause 3.3.4 of the Remuneration Regulations cannot be considered in isolation from the other clauses of the Collective Agreement concerning remuneration; however, it arrived at the wrong conclusions. The linguistic construction of the Remuneration Regulations means that wages shall be increased by no less than by the average annual inflation but taking into consideration other conditions indicated by the Plaintiff they may be raised even more and concrete levels are fixed during the bargaining process. The Plaintiff‘s actions while attempting to suspend the validity of Clause 3.3.4 of the Remuneration Regulations support such interpretation of the Agreement.
5. The court of appeal instance wrongly held that failure to reach mutual agreement over wages by the parties during the bargaining process did not render the Collective Agreement invalid and did not mean it had been violated or departed from. By participating in the bargaining process over the revision of pay and during the conciliation procedures to resolve the collective dispute, the Plaintiff acknowledged by his actions that the Defendants had had a right to bargain over the level of wages annually (it was recognised by both courts as well), and in case of failure to reach an agreement – to initiate a collective dispute with a strike as a possible outcome. The dispute between the parties over how much wages should be raised or whose – the employees‘ or the employer‘s – economic interest should be satisfied or whether an agreement may be hammered out could be settled by the parties themselves employing economic levers (in this particular case – the employees by exercising their right to strike).
In his observations of the Cassation Appeal the Plaintiff Švyturys–Utenos Alus UAB requests to dismiss the Cassation Appeal and uphold the decision of 5 August 2011 adopted by the Judicial Panel of the Department of Civil Cases of the Klaipėda Regional Court . The following arguments against the Cassation Appeal have been submitted:
1. After having thoroughly assessed all the circumstances of the case the court of appeal instance found that the Collective Agreement binding the parties had been abided by and applied properly. That is a point of fact which cannot be heard at the cassation instance (Article 353 § 1 of the Civil Procedure Code). Under 78 § 3 of the Labour Code it is forbidden to strike during the validity of a collective agreement provided it has been respected, therefore all the arguments of the Cassation Appeal over the lawfulness of the strike must be dismissed. The Cassation Appellants have alleged that the Plaintiff has breached the Collective Agreement by not increasing wages for the workers up to the extent demanded, however, under Clause 3.1 of the Remuneration Regulations the revision of wage levels is subject to negotiations; in the given case the bargaining process ended in preserving the status quo since the parties failed to agree. Thus the Plaintiff could not have violated something which had not been set during the bargaining talks. If the parties do not agree otherwise, the existing provisions of the Collective Agreement remain in force. Since the provisions have been adhered to, it is forbidden to strike. The parties by concluding such an agreement assumed the risk that the desirable results may not always be reached during the bargaining process over the revision of wage levels and that does neither render the Collective Agreement invalid nor means that it has been violated. By the Agreement concluded the Employer did not commit himself to meeting all new demands put forward by the Trade Unions or their Joint Representation. If by raising new demands during the period of a collective agreement trade unions were entitled to call a strike, the principle of stability of legal labour relations would be completely undermined.
2. The Remuneration Regulations must be interpreted systematically taking into account the interrelation of the stipulations, the entire essence and goal of the Agreement (Article 6.193, Part 2 of the Civil Code ). The court of appeal instance correctly interpreted Clause 3 of the Remuneration Regulations, assessed the whole of the clauses stipulated. The Remuneration Regulations of the Collective Agreement provide for a number of criteria regarding wage revision (the average annual inflation being just one of them). Considering some of the criteria, the remuneration package should have been decreased rather than increased (the company‘s performance had been deteriorating, the unemployment rate in the country had been growing), whereas the employees were paid year-end bonuses for 2010; besides, their wages had not been cut. It means that the Employer was not obliged to raise wages under the Collective Agreement. If all the conditions provided for in Clauses 3.1.1–3.3.3 of the Remuneration Regulations determining pay revision had been met, the Plaintiff should have been obliged to raise wages by the average annual inflation rate (in 2010 the average annual inflation rate was 1.3 per cent.); however, it was not the case. Nevertheless, during the negotiations at the Conciliation Committee the Plaintiff proposed to raise wages by 1.8 per cent, however, the Cassation Appellants declined the proposal. Moreover, the unreasonableness of the demand to increase wages was confirmed by the fact established by the court of first instance that Clause 3.3.4 of the Remuneration Regulations of the Collective Agreement regarding average annual inflation as one of the criteria for pay review came into force as from 1 April 2010.
3. The validity of the amended Clause 3.3.4 of the Remuneration Regulations of the Collective Agreement and the Workers‘ Conference held on 25 March 2009 is a point of fact. Therefore, there are no legal grounds to consider it at the cassation instance. Furthermore, neither of the parties challenged the lawfulness of the Workers‘ Conference.
4. The amendment of the Collective Agreement approved at the Workers‘ Conference on 25 March 2009 is valid. In case of divided opinion between the workers (in favour of the amendment) and the Trade Unions as the workers‘ representatives (against the amendment), the priority must be given to the workers‘ decision. The submission, that such an amendment without the Trade Unions‘ approval of the workers‘ decision should be considered invalid, would make the role of trade unions unjustifiably absolute. In the case-law of the Supreme Court of Lithuania it has also been held that powers of trade unions as workers‘ representatives are not absolute (Judgment adopted by a judicial panel of the Civil Department of the Lithuanian Supreme Court on 31 January 2011 in the civil case Autrolis AB v. Trade Union of Kaunas Troleybuss Drivers, Case No. 3K-3-15/2011). Moreover, Article 2 § 10 of the Labour Code where the principle free and voluntary collective bargaining is enshrined, stipulates that it aims at reconciling workers‘ (not their representatives‘) interests along with the interests of their employers‘ and those of the state. The allegations, that giving priority to the workers‘ expressed will, the rights of trade unions would be violated are ill-founded. The Trade Unions may challenge the amendment of the Collective Agreement in question in the manner provided by law, however, such a claim has not been lodged. Such a claim cannot be brought before the court of last resort.
5. Amounts of dividends paid to shareholders are not relevant to the case and has no connection to the lawfulness of the strike called for by the Cassation Appellants. Under the provisions of the Collective Agreement revision of wages is not related to the amount of dividends paid in any way. Besides, it is the company‘s duty to pay the dividends fixed by the decision of the shareholders (for three years, not for one as the Cassation Appellants have alleged) so this amount belongs to the company shareholders rather than to the company itself; the Plaintiff was not in the position to decide whether to pay out dividends to the shareholders or to increase pay to his workforce.
The Judicial Panel
H o l d s :
IV. ARGUMENTS AND INTERPRETATIONS BY THE COURT OF CASSATION
Regarding restrictions on the right to strike
The Court of Cassation has ruled that worker‘s right to strike enshrined in Article 51 § 1 of the Constitution of the Republic of Lithuania is a fundamental right of workers and their organisations enabling them to safeguard their economic and social interests; however, under the Constitution this right is not absolute – restrictions on it, enforcement conditions and the procedure are established by law. The Labour Code is the law in question; Articles 76–85 of Chapter X on Collective Labour Disputes directly govern strikes, their legal framework and their declaration, restrictions on them, leading strikes and their course, the lawfulness of strikes and other legal relations concerned with the right to strike. On the other hand, the norms of Chapter X of the Labour Code provide for a system of bargaining talks, conciliation and other instruments and ways which should be applied in the first place when resolving collective labour disputes and a strike as ultima ratio, is possible only after all the other measures have been exhausted. The main/fundamental international instruments declaring the right to strike are the International Pact of Economic, Social and Cultural Rights (Part d of Article 8) and the European Social Charter (the Amended European Social Charter as well) (Article 6 § 4). Workers‘ right to strike is expressly enshrined in these documents. There is a principle observed in the European Social Charter that collective actions are possible only when there is a conflict of interests, but even in such a case the right to strike is not absolute since the states themselves may determine the boundaries of the enforcement of this right. The right to strike in the European Union is enshrined in the Charter of Fundamental Rights of the European Union (Article 28 ), which became binding to the Member States after the Lisbon Treaty came into force. In this charter such workers‘ right is only envisaged, however, as with other international agreements, the specifics are not elaborated further. Taking into account the division of competences between the European Union and the Member States, it is up to Member States to establish legal regulation of strikes in the framework of their national legal systems; however, the States may not deny this right or modify improperly by its legislation (Judgment by a judicial panel of the Civil Department of the Lithuanian Supreme Court adopted on 3 March 2008 in the civil case Vilnius City Police Headquarters v. Trade Union of Vilnius County Pre-Trial institutions; Case No. 3K-3-141/2008; judgement adopted on 31 January 2011 in the civil case Autrolis AB v. Trade Union of Kaunas Trolleybus drivers, Case No. 3K-3-15/2011). Thus, restrictions on strikes established by national legal systems are acknowledged by international instruments, provided that these restrictions are well-grounded and do not deny the essence of the right to strike. The Committee on Freedom of Association of the ILO hold the view that conditions which must be determined by law so as to declare a strike lawful must be reasonable and actually without restrictions/ limiting methods for actions available for/to trade unions.
It should be noted that the right to strike as any other individual‘s right has certain boundaries/ limitations and cannot be exercised arbitrarily, i.e. the conditions of its enforcement provided by law should be met. In considering the issue of the lawfulness of the strike, first of all, rules of law governing collective labour relations and determining the conditions for a lawful strike and the restrictions on strikes must be applied.
It has been established in this case the Cassation Appellant – the Joint Representation of the Trade Union Organisation at Švyturys AB and the Workers‘ Union at Utenos Alus – adopted a decision to declare a strike at the production facility at Švyturys–Utenos Alus UAB during the period when the Collective Agreement concluded by the parties was valid; the Cassation Appellant’s demands raised were connected to the performance of the provisions of the Collective agreement. The right to strike is enshrined in Article 78 of the Labour Code. Under paragraph 3 of this article it is forbidden to declare a strike during the validity of a collective agreement provided it has been abided by. This legal rule is imperative/ mandatory. It means that if it has been established in the case that the strike was declared during the validity of the collective agreement, the issue of its lawfulness will be considered taking into account inter alia whether the collective agreement had been abided by. In the case under consideration this issue should be analysed from a few perspectives. First, the issue of the validity of Clause 3.3.4 of the Remuneration Regulations – an annex of the Collective Agreement concluded by the parties – was raised in the Cassation Appeal; it means that it is necessary to identify the contents of the Collective Agreement during the dispute. Second, certain issues over the interpretation of the Collective Agreement have been raised since the parties interpret/ construe the above-mentioned clause of the Remuneration Regulations differently. Third, after having identified the contents of the Collective Agreement and the real meaning of its provisions it is necessary to determine whether it had been applied properly. All the three issues identified are related to the interpretation and application of legal rules. It is a subject matter of cassation and the Judicial Panel of the Court of Cassation submit their opinions in the case being considered.
Regarding the competence of the Workers‘ Conference to agree with the employer about revising/amending the provisions of a Collective Agreement
It has been established in the case that Švyturys–Utenos Alus UAB Workers‘ Conference held on 25 March 2009 by majority vote approved the amendment of Clause 3.3.4 of Appendix 4 (Remuneration Regulations) of the Collective Agreement concluded on 20 October 2008. It was decided to amend it by adding one sentence „ this clause 3.3.4 shall come into force and become applicable only from 1 April 2010“; on 25 March 2009 the text/wording of the Collective Agreement of Švyturys–Utenos Alus UAB was amended respectively. In their Cassation Appeal the Appellants contest the lawfulness of the amendment to the Collective Agreement and contend that a workers‘ conference is not a subject under law which could represent workers while concluding or revising a collective agreement. The Judicial Panel of the Court of Cassation agree with this argument of the Cassation Appeal.
Agreement to conclude of a collective agreement is a result achieved through collective bargaining. Under of the Labour Code parties to a collective agreement of a company are its workers and the employer who are represented by a trade union functioning in the undertaking and the manager of the undertaking or some authorised officials from the administration. Under Article 60 § 2 if there are a few trade unions in the company, a collective agreement is signed by the joint representation of the trade unions and the employer. Under Article 60 § 3, if there is no trade union operating in the company and representation of workers‘ rights has not been delegated to the trade union of the respective branch of economic activity or, a collective agreement may be concluded between the employer and a works council. Thus in this legal rule a trade union (in the absence of such an organisation – a works council) is expressly named as representing the company workers as a party to an agreement, rather than the workers by themselves has a mandate to conduct negotiations over a collective agreement and conclude it. After the draft of the collective agreement has been approved by both the employer and the trade union it is mandatory to present it to a workers‘ meeting or conference for consideration. A collective agreement shall be signed only after it has been approved by the workers of the company (Article 62 of the Labour Code). Such regulation clearly demonstrates that although workers of a company are a party to an agreement, they do not have a right/not entitled to bargain directly with the employer over the terms and conditions of the collective agreement since it is the exclusive prerogative of a trade union (or a works council‘s) as a body safeguarding workers‘ interests. Such a conclusion is supported by other provisions of the Labour Code and the practice of international organisations. Conducting collective bargaining and concluding collective agreements is one of the forms of social partnership (Article 43 § 3 of the Labour Code). Article 41 of the Labour Code stipulates that parties to social partnership – social partners – are considered workers‘ and employers‘ representatives and their organisations. Who is regarded as workers representatives is provided under Article 19 of the Labour Code – those are trade unions or works councils in the absence of trade unions. Those bodies of workers‘ collective representation have partly autonomous/independent obligations and rights granted by law necessary to fulfil the representative function (e.g., participation in collective bargaining, choosing the ways and forms, formulating collective demands, etc.). The scope and implementation conditions are governed by the provisions of the Labour Code. Article 18 of the Labour Code stipulates that representation in collective labour relations is governed by this Code and representation in individual labour relations is governed by the Civil Code provided such regulation is in compliance with this Code. Therefore, representation in collective labour relations in the Labour Law must not be identified with representation in civil relations and respectively – dealing with collective labour relations the provisions of the Civil Code governing representation cannot be applied directly. It should also be noted that under Article 18 § 2 of the Labour Code representation in collective labour relations applying the existing labour laws occurs without the need for each individual worker to express their will if such a body or individual represents the majority of the workers; joint commitments assumed during such representation are binding for all the employees within the scope of application of such commitments although separately the body of collective representation had not been given a special mandate by them. In the ILO documents it is also pointed out that parties to collective bargaining are employers or their organisations and representatives of workers‘ organisations (workers may get involved in collective bargaining when there are no workers‘ organisations). Under Article 5 of the Convention No. 135 of the ILO „Regarding protection and facilities afforded to of workers‘ representatives in the undertaking where there exist in the same undertaking both trade union representatives and elected representatives, appropriate measures shall be taken, wherever necessary, to ensure that the existence of elected representatives is not used to undermine the position of the trade unions concerned or their representatives. Article 3 § 2 of the ILO Convention No. 154 „Concerning promoting free and voluntary collective bargaining“ also states that, wherever necessary, appropriate measures shall be taken to ensure that the existence of these workers‘ representatives is not used to undermine the position of the workers‘ organisation concerned. The Committee on Freedom of Association under the ILO emphasises that direct/immediate negotiations between the company and its employees excluding the existing organisations representing workers , in certain cases may be damaging/detrimental to the principle of promoting bargaining between employers and workers‘ organisations. Attention is drawn to the fact that direct agreement, signed between the employer and its workers not belonging to a trade union when there is a trade union operating in the company fails to encourage and promote collective bargaining under Article 4 of the ILO Convention No. 98 „Concerning application of the principles of the right to organise and to bargain collectively.
Summarising the submissions laid down above a conclusion must be drawn that legal rules of Part II of the Labour Code on collective labour relations granting exclusive mandate/ powers to trade unions as workers‘ representatives in collective labour relations to participate in collective bargaining over conclusion of collective agreements are in compliance with the provisions of international instruments and must be interpreted/ construed in the way that workers alone have no right to agree directly with the employer on any amendments to the collective agreement by eliminating the trade union representing them. In this case the court of lower instances wrongly interpreted the above-mentioned legal rules, therefore, their conclusion that Clause 3.3.4 of the Remuneration Regulations was amended on 25 March 2009 at the Švyturys–Utenos Alus UAB workers‘ conference by fixing that this Clause would come into force only as from 1 April 2010 was ill-founded. It was not within the competence of the workers‘ conference to revise the provisions of the Collective Agreement, therefore the decision adopted at the workers‘ conference on 25 March 2009 did not have and could not have any influence on the validity of Clause 3.3.4 of the Remuneration Regulations.
Such a conclusion follows not only from the interpretation of the aforementioned provisions of the Labour Code, but also from Article 64 of the Labour Code where it states that the procedure of the revision of a collective agreement is stipulated in the collective agreement. Clause 3.1 of the Collective agreement signed by the parties provides that the agreement may be amended when the employer and the trade union agree about that in writing. From this clause of the Agreement it is obvious that amendments to this collective agreement could have been made only by agreement between the employer and the trade union rather than the employer agreeing directly with some workers‘ representatives by a decision of a workers‘ conference.
Regarding the interpretation of the provisions of the Collective Agreement
In the case a dispute between the parties arose over the interpretation of the contents of Clause 3.3.4 of an annex concerning Remuneration Regulations of the collective agreement. Clause 3.3.4 of the remuneration regulations states: „during the revision wages shall be increased no less than by the average inflation rate. (the source of information: the Statistics Department under the Government of the Republic of Lithuania), taking into consideration the average wage growth at national level. If there have been any interim pay revisions (under Clause 3.6.), during the annual revision of remuneration levels the interim increase shall be deducted from the average annual inflation rate/value“. The Appellants maintain that the court of appeal instance when drawing the conclusion that Clause 3.3.4 of the Remuneration Regulations did not mean the employer‘s commitment to increase wages no less than the average annual inflation rate wrongly interpreted this clause of the Agreement. They maintain that the linguistic construction of the Remuneration Regulations means that wages shall be increased no less than the average annual inflation rate, but having taken into account other conditions indicated by the plaintiff may be increased even more and the specific rates shall be fixed through negotiations. Such an interpretation should be regarded as ill-founded.
The court of appeal instance correctly established that as there were no special rules how to interpret contracts in labour legal relations under the Labour Code, the provisions of the Civil Code governing interpretation of contracts should be applied (Article 1.1.3 of the Civil Code, Article 9 § 2, the ruling adopted by a judicial panel of the Civil Department of the Lithuanian Supreme Court on 25 May 2010 in the civil case P. A. L. v. the Lithuanian Social democratic Party, case ref. No. 3K-3-235/2010), and in interpreting the contents of the Collective Agreement concluded by the parties reasonably followed/ referred to Article 6.193 of the Civil Code and the contract interpretation rules formulated by cassation case-law. The court did not interpret Clause 3.3.4 of the Remuneration Regulations in isolation, but rather taking into account the interrelationship between all the terms and conditions of the Agreement, the essence and aim of the Agreement and the circumstances while concluding the Agreement, the conduct by the parties before and after the conclusion of the Agreement referring to general principals of law enshrined in Article 1.5 of the Civil Code and its findings thoroughly elaborated in the court decision. Such interpretation has been recognised/ found reasonable, being in compliance with the requirements of the law. The Judicial Panel of the Court of Cassation does not see any ground to declare a violation of the contract interpretation rules.
Clause 3.3.4 of the Remuneration Regulations is an integral part of Part 3 called Procedure on the Revision of the Remuneration Package of the Annex of the Collective Agreement concluded by the parties. The Employer‘s duty to revise pay once per year to determine the period/ timeline for bargaining over it and the beginning of new wages being paid, the aims of pay revision are indicated (Clauses 3.1.1–3.1.3), criteria which must be considered while reviewing wages (Clauses 3.3.1–3.3.4), the employer‘s duty to negotiate with the trade union concrete rates of workers within job levels 1–7 (Clause 3.4), the duty to provide information (Clause 3.5) and others. Moreover, in Part 1 of the Remuneration Regulations provisions of general nature are provided for, related to the implementation and application of the remuneration system, among them being the principles of the remuneration system (Clause 1.4) and factors, having influence on individual wage rates (Clause 1.5). The Collective Agreement of the company and its annex – the Remuneration Regulations – are integral and consistent documents, the real will/intentions of the parties to the agreement expressed and enshrined in exactly this kind of agreement, therefore while interpreting the will of the parties it is necessary to take into consideration all the provisions of the Agreement the parties had entered into, so as not to depart from the real meaning attached to them by the parties. Interpreting one or another clause in isolation and referring to literal (linguistic) disclosure of the meaning of the text , it is a possibility to deviate from the true meaning and other terms and conditions which the parties had considered as important and included in the Agreement, may be denied. The court of appeal instance correctly observed that Clause 3.3.4 of the Remuneration Regulations should be interpreted by analysing all the terms and conditions of the Remuneration Regulations and reasonably took into consideration the fact that apart from the criterion set in Clause 3.3.4, a number of factors were indicated in other clauses as well influencing the decision whether there were any grounds to raise wages for the employees and if yes, by how much. The court drew a reasonable conclusion that the plaintiff had committed himself to increase pay only after having assessed the entirety of the criteria provided for in the remuneration regulations – the average wage growth developments in the country, positive business/economic and financial performance by the company, individual performance by employees in the previous year and the positive situation on the labour market. This conclusion was made by the court not only after the terms and conditions of the appendix/annex to the Collective Agreement had been systematically interpreted but taking into account the behaviour of the parties while performing the Agreement as well as after having evaluated/appreciated the fact that not a single employer would agree to commit himself to increasing wages for his employees if the company‘s business and financial performance, the general macroeconomic situation in the country would deteriorate, the average wage would go down at national level. The Judicial Panel of the Court of Cassation agrees with such an interpretation submitted by the court of appeal instance and holds that the reasoning and arguments put forward in the Cassation Claim about the misinterpretation of the Collective Agreement gives no ground to conclude otherwise. Thus, after having interpreted the Remuneration Regulations of the Collective Agreement concluded by the parties, it has been found in this case that the Plaintiff had not committed himself to increasing wages unconditionally every year by no less than the inflation rate.
Regarding the application of the Collective Agreement
Taking into consideration the above-mentioned, it should be stated that in the Collective Agreement (Part 3 of the Remuneration Regulations) the parties agreed to review the employees‘ wages annually and set principles, factors and criteria which should be considered when deciding on whether there is a ground to increase wages and determining concrete levels. It is obvious that that when making decisions related to wage increase, it is important to realistically assess the social-economic situation not only at company level, but at national level as well, not forgetting to evaluate the industry in question and the possibilities to secure social peace/rest. Referring to the interpretation of the provisions regarding revision of pay of the Collective Agreement submitted by the court of appeal instance and declared as well-founded by the Cassation Court, a conclusion must be drawn that in the Collective Agreement there are no obligations/commitments pre-determined in advance by particular amounts which could restrict/limit the process of free bargaining. However, both objective and subjective criteria should be assessed by the parties before adopting decisions concerning wages for the employees. The employer‘s direct duty which is expressly stated in Part 3 of the Remuneration Regulations– every year in compliance with the terms and conditions of the Agreement, to revise his employees‘ wages, i.e. to start the bargaining process at the time fixed and conduct them in good faith. Thus, in this particular case in order to determine whether the Collective Agreement concluded by the parties had been honoured and performed properly, the facts whether the parties had negotiated over the revision of wages and whether the process had been fair and honest must be considered.
Negotiations is a means to protect the parties‘ interests by way of mutual compromises (concessions) in order to find a mutually acceptable solution. On the other hand, the parties when starting the bargaining process must realise that a common solution may not be reached despite good faith, i.e., the fact that the parties have failed to arrive at an agreement does not necessarily mean bad faith. Under Article 40 § 2 of the Labour Code social partnership is based, among others, on the principles of free collective bargaining, volunteerism and independence when making commitments binding the parties, the equality of the parties, good faith and respect for the legitimate mutual interests. The principal of fair bargaining is enshrined in Article 48 of the Labour Code governing collective bargaining. The principle of good faith during collective bargaining means efforts to reach an agreement, honest and constructive conduct during the negotiations, avoidance of unjustifiable delays and mutual respect for the obligations/commitments assumed, bearing in mind the results of the negotiations. The principle of good faith provided for under Article 48 § 3 of the Labour Code is enshrined in compliance with the provisions of the ILO Convention No 154 regarding Promotion and Encouragement of Collective Bargaining. The Committee on Freedom of Association of the ILO in order to draw attention to the significance attached to the duty to take part in bargaining in good faith has established the following principles: 1) it is essential for employers and trade unions to make every effort to reach an agreement during the negotiations, moreover, realistic and constructive bargaining is an indispensable component to build and develop the bond of mutual trust between the parties; 2) any unreasonable/ill-founded delays should be avoided in the bargaining process; 3) the parties should be bound by the agreements/ commitments.
In the light of the criterion of good faith in collective bargaining and considering whether the Plaintiff fulfilled his obligation to review wages every year in good faith and take account of all the relevant circumstances established in the Agreement (factors and criteria) while conducting negotiations with the Trade Union, the decision adopted by the court of appeal instance that the Employer had not breached his obligation, thus there were no grounds to hold there had been a failure to perform the Collective Agreement or it had been applied improperly should be upheld. The court of appeal instance appreciated the Plaintiff‘s efforts to retain wages at the same level despite the overall social-economic recession in the country (the Plaintiff had not cut wages for his employees although they were significantly higher that the average at national level, the employees got bonuses, other benefits – financial support for families, holiday bonuses, etc, additional funds to improve working conditions had been allocated). Furthermore, while bargaining with the Cassation Appellants the Plaintiff proposed to arrange for health insurance for his employees (that would have amounted to around 250 000–400 000 Litas per year) or to raise wages for the year 2010 by 1.8 per cent (i.e. the inflation rate in 2010), however, the Cassation Appellants, in spite of having the same demands for the year 2010, rejected the offer. The court of appeal instance referred to the documents proving the course of the negotiations (minutes of the meetings on 25 January 2011 and 23 February 2011, minutes of the meetings of 12 May and 31 May 2011 at the Conciliation Committee) which prove that the Employer cooperated with the Trade Unions when addressing the issues related to the revision of wages: the Employer neither avoided or delayed the negotiations, he provided the relevant information about the economic figures and the situation on labour market and inside the company, discussed bonuses, first offered to raise wages by 0.5 per cent, later increased it up to 1.8 per cent, etc. According to the facts established in the case, on 8 May 2009 the minutes of the Conciliation Committee were drawn which revealed that the parties bargained over the revision of wages for the period of 2008 and the Trade Union proposed to have the jobs retained for one year and promised not to raise the issue of wages any more, the Employer considered the proposal and submitted his conditions, however, the parties failed to reach an agreement; by Protocol No 4 drawn on 1 May 2010 the parties agreed that having settled some issues, the revision of wages for 2009 would be considered finalised. Despite the fact that the Employer negotiated the revision of wages for the period of 2008-2009 and the decisions taken, on 15 June 2011 the Joint Representation of the Trade Unions decided to declare a strike demanding to have wages raised by 7.2 per cent for 2008, 3.4 per cent for 2009, 1.8 per cent for 2010, in total – 12.4 per cent. As mentioned above the Employer had agreed to raise wages by 1.8 per cent for 2010, however, the Cassation Appellants were not satisfied.
Under the given circumstances the Judicial Panel of the Court of Cassation holds that there are no grounds to draw a conclusion that the provisions of the Collective Agreement signed by the parties had been breached since the Employer had not violated his assumed obligation to revise workers wages once per year and take part in negotiations over that in good faith. The court of appeal instance rightly established that the Collective Agreement had been adhered to. It should be observed that the Cassation Appellants have unreasonably maintained that the court of appeal instance in assessing that the demands over the wage levels were excessive and the 1.8 per cent wage increase proposed by the Plaintiff was sufficient exceeded the competence granted to the court and infringed the principle of free collective bargaining. By claiming so the Cassation Appellants have misinterpreted the contents of the decision of the court of appeal. From the contents of the appealed decision adopted by the court of the appeal instance it is obvious that the court did not assess the reasonableness of the proposals and demands to increase wages by a specific percentage; it just pointed out that the proposal submitted by the Employer (to increase wages by 1.8 per cent) met the demands of the trade Union for the year 2010, and referring to this and other circumstances in the case held that negotiations, although without any results acceptable to the parties, had taken place.
The arguments of the Cassation Appeal concerning the violation of the Collective Agreement have been based on the improper interpretation of the provisions of the Collective Agreement, i.e. by the submission that by Clause 3.3.4 of the remuneration Regulations the Employer committed himself to raise wages every year by no less that the inflation rate. After the Court of Cassation having properly interpreted the provisions of the Collective Agreement concluded by the parties and established that there is no unconditional duty of the Employer to increase wages every year provided by the Agreement, having found no proof of bad faith on the Plaintiff‘s side during the barraging over revision of wages, there are no grounds to conclude that the Collective Agreement had been violated. In the absence of a violation of the Collective Agreement and in accordance with Article 78 § 3 of the Labour Code which prohibits declaration of a strike during the validity of a collective agreement, the Judicial Panel upholds the conclusion of the court of appeal instance that the strike declared by the Cassation Appellants declared as violating the restrictions provided by law and thus unlawful. It should be noted that the Cassation Appellants have been wrong in maintaining that in a situation when an agreement is not reached through bargaining a strike is the only legal lever available to trade unions. Under the Labour Code there are other means provided to protect workers‘ collective rights – hearing of labour disputes in industrial tribunals/labour arbitration courts, third party court or at the request of one of the parties to the collective labour dispute, employing a mediator (Article 71 of the Labour Code). The other arguments of the Cassation Appeal are irrelevant to the case under consideration; therefore, the Judicial Panel of the Court of Cassation provides no observations.
In the light the foregoing considerations, the decision by the Court of Appeal Instance has been found just and well-founded. The fact that the Court of Appeal Instance failed to correctly interpret and apply the norms of the Labour Code concerning the rights and obligations vested in trade unions and failed to apply the norms of the Civil Code over representation, in this case does not change the essence of the decision adopted by the Court, thus the court decision shall be upheld, merely amending the reasoning to an extent.
Regarding litigation costs
According to the certificate of 6 March 2012 submitted by the Supreme Court of Lithuania in respect of the costs related to the delivery/submission of procedural documents the Court incurred costs in the amount of LT 41,63. As the Judicial Panel has ruled that the Cassation Appeal shall not be satisfied, the costs shall be covered by the Cassation Appellants – the Trade Union Organisation of Švyturys AB and the Workers‘ Union of Utena Brewery (Article 88 § 1.3, Articles 93 and 96 of the Civil Procedure Code).
Under Article 359 § 1.1 and Article 362 § 1 of the Civil Procedure Code of the Republic of Lithuania the Judicial Panel of the Department of Civil Cases of the Supreme Court of the Republic of Lithuania
Delivers the following judgement:
To uphold the decision adopted by the Judicial Panel of the Department of Civil Cases of the Klaipėda Regional Court on 5 August 2011.
The State shall be awarded Lt 20,81 (Twenty Litas 81 cent) to cover the litigation costs by the Defendant – the Trade Union Organisation of Švyturys AB (legal entity code/ registration code 141955488) 20,81 Lt (twenty litas 81 ct).
The State shall be awarded Lt 20,81 (Twenty Litas 81 cent) to cover the litigation costs from the Defendant – the Workers‘ Union of Utena Brewery (legal entity code/ registration code 283866260).
This judgement delivered by the Supreme Court of the Republic of Lithuania is final, binding, it is not subject to revision and comes into force on the day of its adoption.
Justices Birutė Janavičiūtė
Zigmas Levickis
Antanas Simniškis