Non-payment of wages during holiday

Transcription

1 Legal opinion Non-payment of wages during holiday by Laura Carlsson within LO-TCO Baltic Labour Law Project Case 76, Russia 27 December 2002

2 2 Summary: Labour legislation of the Russian Federation establishes a specific order of allocation of holidays to workers. Each firm has a schedule of allocation of holidays for workers. According to this schedule each worker is granted a holiday within a specific period. The following occurred within a place of employment in St.Petersburg. According to the holiday schedule the worker had to commence his holiday on May Prior to taking the holiday the worker should have received his holiday pay. However, in this case payment of the holiday pay was not made. The order of the employer concerning the allocation of holiday leave was already signed and the worker was informed of it. On 1 May 2001 the worker, who had not received the holiday pay, refused to take the holiday already assigned to him. In violation of the order of the employer he began to work. The employer refused to allow the worker to work. The above situation gives rise to the following question: Can a worker refuse to execute an order by the employer concerning taking an annual holiday, if the employer violates the norms of the labour legislation? INTERNATIONAL EXPERT OPINION I. Applicable National and International Law 1. Applicable Russian Law 1.2 LEGISLATION The Code of Labour Laws of the Russian Federation Article 66. Annual Vacations All employees shall be provided with annual vacations with a reservation of a place of work (post) and an average wage. Article 96. Terms of Wage Payment The wage for all periods of the vacation shall be paid at least one day prior to the commencement of the vacation. Draft agreed RF Labour Code Article 120. Procedure for granting annual paid leaves A paid leave is to be granted annually.

3 3 A worker shall be entitled to a leave for the 1st year of work upon the expiry of six months of continuous work in a particular entity. By the parties mutual agreement, a paid leave may be granted before the expiry of the six-month term. A paid leave shall be granted before the expiry of the six-month term upon the worker s application to: women prior to pregnancy and maternity leave or directly after it; workers under eighteen years old; in other cases provided by federal laws. A leave for the 2nd and subsequent years of work may be granted at any time of the working year in accordance with the timetable of annual paid leaves established in the entity. Article 122. Extension or transference of annual paid leaves At the worker s request a leave may be postponed to another date in the event of untimely payment for the period of leave to the worker, or if the worker was notified about the time his leave should start later than two weeks before the leave started. 1.2 NATIONAL FORA, NATIONAL CASE LAW: There are no examples of National Fora of Russian Federation and no examples of national case law of Russian Federation 2. Applicable International Law 2.1 INTERNATIONAL CONVENTIONS: (a) ILO Convention 132 Holidays with Pay Convention (Revised), 1970 Article 7 1. Every person taking the holiday envisaged in this Convention shall receive in respect of the full period of that holiday at least his normal or average remuneration (including the cash equivalent of any part of that remuneration which is paid in kind and which is not a permanent benefit continuing whether or not the person concerned is on holiday), calculated in a manner to be determined by the competent authority or through the appropriate machinery in each country. 2. The amounts due in pursuance of paragraph 1 of this Article shall be paid to the person concerned in advance of the holiday; unless otherwise provided in an agreement applicable to him and the employer.

4 4 Article 14 Effective measures appropriate to the manner in which effect is given to the provisions of this Convention shall be taken to ensure the proper application and enforcement of regulations or provisions concerning holidays with pay, by means of adequate inspection or otherwise. As of November 2001, the Russian Federation had not ratified ILO Convention C132. However, the Russian Federation in 1956 ratified ILO Convention C52 Holidays with Pay Convention of (b) ILO Convention 52 Holidays with Pay Convention, 1936 Article 2 1. Every person to whom this Convention applies shall be entitled after one year of continuous service to an annual holiday with pay of at least six working days. 2. Persons, including apprentices, under sixteen years of age shall be entitled after one year of continuous service to an annual holiday with pay of at least twelve working days. Article 3 Every person taking a holiday in virtue of Article 2 of this Convention shall receive in respect of the full period of the holiday either-- (a) his usual remuneration, calculated in a manner which shall be prescribed by national laws or regulations, including the cash equivalent of his remuneration in kind, if any; or (b) the remuneration determined by collective agreement. Article 4 Any agreement to relinquish the right to an annual holiday with pay, or to forgo such a holiday, shall be void. Article 9 Nothing in this Convention shall affect any law, award, custom or agreement between employers and workers which ensures more favourable conditions than those provided by this Convention. Article 15 (2) This Convention shall in any case remain in force in its actual form and content for those Members which have ratified it but have not ratified the revising Convention.

5 5 2.2 INTERNATIONAL FORA: 2.3 INTERNATIONAL CASE LAW: There appear to be no international cases dealing specifically with the issue of payment of holiday pay prior to the taking of a holiday according to ILO C132. II. Labour Law in Other Jurisdictions 1. Swedish Labour Law Swedish legislation regulating taking a holiday leave, Law concerning Holidays, Semesterlagen (1977:480), states in 26: The Employer shall pay holiday wages to the employee in connection with the holiday leave. In the event the employee is paid hourly, calculated on weekly or for a longer period basis, the Employer may in connection with the holiday taken pay the holiday wages with the accrued hourly wages during the holiday as well as at the holiday year-end at the latest pay any holiday wages which are unpaid. According to 32, an employer who violates this law, shall to the employee pay, in addition to the holiday wages or accrued but not taken holiday wages to which the employee is entitled, compensation for any damages arising. With an assessment as to whether and to what extent damages have arisen, consideration shall be taken also to the employee s interest in being free to take a vacation and to other circumstances other than those of simply an economic character. According to the case law, Svenska Byggnadsarbetareförbundent v. Byggförbundet et al., AD 122/1996, the use of the words, in connection with, may not be interpreted so narrowly as to prohibit the retention of the practice concerning weekly and monthly paid employees, which means that these employees would receive their holiday wages in the same order as their normal wages and upon the usual payment dates (see proposition 1963:68 page 60). The Labour Court came to the conclusion that the Law concerning Holidays could not be interpreted as requiring that holiday wages be paid prior to the end of the holiday period. Under the Swedish legislation, the appropriate remedy for the employee is damages. Sweden does not have any legislation that directly covers the issues of an

6 6 employee's duties towards the employer, but according to the 34 of the Law on Employment Protection, in the event an employee is terminated from employment without just cause, the termination will be declared void. The issue then becomes whether the employee s action in refusing to perform employment duties as directed by the employer can be viewed as just cause. A case in which an employee was fired for refusing to take a lower wage was viewed by the Labour Court as termination without just cause (AD 122/1994). Swedish labour law is protective legislation, and as such, is nondispositive. A contractual analysis is possible under Swedish law, but as the Law concerning Holidays specifically addresses the issue of holiday pay and remedies, the protective legislation pre-empts the laws governing contracts. 2. Italian Labour Law According to Italian labour law, the right of employees to a holiday leave is constitutionally guaranteed (Italian Constitution, Art. 36) in order to recharge the physical and psychological capacities of the employee. However, it is the right of the employer to organize the time frame in which the employee can exercise this right, balancing on one side the needs of the firm and, on the other side, insuring that it is not unjustly oppressive against the worker and takes into consideration his legitimate needs (art Italian Civil Code as confirmed by the Labour Section of the Cassation Court, 24 October 2000, n ). The power of the employers is discretional and, in addition to the above mentioned limits, it is limited by other obligatory rules, like the one that the employer has the duty to communicate in advance to the worker the period in which the employee will be on holiday or the fact that the employee has the right to be on holiday for a determined period of days during the working year and not after. It is not possible for a worker to renounce the constitutional right of having holiday (Italian Constitution, art. 36). A contractual argument could perhaps be made, in that having a contract which includes the payment of holiday wages prior to the taking of the holiday leave, inadimplenti non est adimplendum (if one party does not fulfil the contract, the other has no duty to do so). The problem with such an analysis is the constitutional right to a holiday which cannot be forfeited by the employee. 3. English Labour Law

7 7 According to Regulation 13(1), Entitlement to Annual Leave of the Working Time Regulations 1998/1833, a worker is entitled in each leave year to a period of leave in any leave year beginning after 1999, four weeks. According to 1 of the Employment Rights Act 1996 Chapter 18, Part I Employment Particulars, Right to Statements of Employment Particulars, where an employee begins employment with an employer, the employer shall give to the employee a written statement of particulars of employment, including particulars as to entitlement to holidays, including holiday pay (the particulars given being sufficient to enable the employee s entitlement, including any entitlement to accrued holiday pay on the termination of employment to be precisely calculated). As the only protective legislation regarding holidays concerns the length of the leave and the fact that the terms of the holiday pay are specifically stated in the employment contract, the actual time of payment of the holiday pay is not regulated by the legislation, but instead by the employment contract. Once the holiday pay is due, it is considered as wages and non-payment of such is treated as non-payment of wages. The employee in the event of nonpayment of wages can file a complaint with the Labour Board, which then orders the employer to pay under threat of certain penalties. Refusing to follow the order of the employer is not the remedy available under the legislative scheme. 4. United States Labour Law There is no federal legislation governing holiday pay in the United States. Neither is the granting of a vacation subject to state regulation in many states. However, once the terms of the employment agreement include a holiday, and the holiday wages are not paid, they become wages within in the meaning of many state statutes, see for example Robertson v. Opequon Motors, Inc., 519 S.E.2d 843 (W.Va. 1999) and Minn.Stat In the event of non-payment of wages, the employee in most jurisdictions is entitled to the wages as well as a penalty after non-payment for a certain period (for example ten days after the demand). In the event of a longer period of non-payment, for example under the Minnesota Statute of 31 days, non-payment of wages is then considered a criminal offense of the level of a gross misdemeanour. Thus the remedies available to the employee are damages and/or criminal indictment. The relationship between an employee and employer as to following the orders of the employer is typically as found in the California Labour Code 2856: An employee shall substantially comply with all the directions of his employer concerning the service on which he is engaged, except where such obedience is impossible or unlawful, or would impose new and

8 8 unreasonable burdens upon the employee. Here the non-payment of holiday wages would need to be for a rather long period to be viewed as an unreasonable burden upon the employee. As stated above, this is not the remedy available under the legislation of the majority of states. III. Opinion 1. The Right to Payment of Holiday Wages prior to the taken of a Holiday It is clear that according to article 96 of the Code of Labour Laws of the Russian Federation that the employee is entitled to a payment of the holiday wages prior to the taking of the holiday. This right is support by ILO C132 (which Russia has not ratified) but also can be seen as supported by Articles 3, 4 and 9 of ILO C52 (which Russia has ratified), which states that the employee shall receive the remuneration determined by the national laws, that any agreement to relinquish the right to an annual holiday with pay would be void, and that the convention would not affect any law or agreement between employers and workers which ensures more favourable conditions than those provided by the convention. The law of the other jurisdictions investigated also supports this right as legislated. 2. Remedies (A) Exhaustion of Remedies An issue that is not clear from the facts of this case is whether the employee exhausted the remedies available under the Russian Code. Article 122 gives the worker the right to request a postponement of the holiday leave in the event of an untimely payment. However, it is not clear from the Article whether the employer must grant the request or whether it simply gives the worker the right to make such a request. A second issue that is not clear is whether the employee in the present case made such a request before refusing to take the vacation as scheduled and ordered by his employer. It is also not clear whether the employee was represented by a labour union, and whether there were remedies available to the employee with respect to any collective bargaining agreement between the labour union and the employer. Last, the ramifications of the employer s action in refusing to allow the

9 9 employee to work are not clear. Did the employee suffer damages, direct or indirect, as a result of the non-payment of the holiday wages and/or the refusal to be allowed to work during the scheduled vacation? Did the employer take any further actions in response to the employee s refusal to take vacation, for example by refusing a later vacation or by terminating employment? Last, were the holiday wages eventually paid? (b) Available Remedies It is not clear from the facts presented in the case as to the remedies available under the Russian legislation. Neither do the conventions address the issue of remedies, but leave it to the parties to implement through appropriate national legislation. Within the other jurisdictions reviewed, the holiday pay becomes wages in the normal course of business. In the event of non-payment, the common remedy is damages and/or monetary penalties. In certain states within the United States, the non-payment of wages can become a criminal matter. The protective legislation concerning employees pre-empts any contractual argument, and in fact leads to a greater protection than those available under contract law. (c) Refusing to follow the order to take vacation In the event there is no specific protective legislation concerning the failure to pay holiday wages, or wages in general, within Russian legislation, then a contractual argument can be made. This is made here under the general principles of contract as the Russian laws governing contracts have not been presented here. If the performance of the employee, to take vacation, was dependent upon the performance of the employer, to pay holiday wages prior to the taking of vacation, then the employee could be excused from his performance. Here the argument could be made that the employee could not take the vacation without the payment of the monies; therefore the performance of his duty was dependent upon the performance of the employer. This appears to be the strongest argument that can be made in the case under the facts as presented here. NATIONAL EXPERT OPINION The problem raised in the present case is quite a burning issue for the practice of application of the Russian labour legislation. Essentially the problem is as follows. In accordance with the established regulations and

10 10 based on the workers suggestions the undertaking prepares a timetable of holiday leaves for each year, the document determining the starting and ending date for the holiday of each particular worker. Within the time limits provided by the holiday timetable the employer is obliged to grant an annual holiday leave to the worker and the worker is obliged to take a holiday. The holiday period should be paid for by the employer before the leave starts. However quite often employers (due to economic problems or dishonest conduct) does not comply with his obligation to timely pay for the leave period and referring to the holiday leave timetable makes the worker take a leave. At this the employer gets into a debt to the worker, and this debt may be claimed in legal form. The above stated does not cancel the right of the worker and the employer to agree to postpone the time of starting and finishing the holiday to a later date within the corresponding working year. The issue of the worker s right to refuse to take a holiday due to the failure to pay for it is not directly dealt with in the Russian legislation. Nevertheless concluding the situation analysis of the problem under consideration it should be noted that in pace with the economic stabilization the number of cases of untimely payment of vacations has been dramatically reduced. Coming now to the legal analysis of the case it should be stated that the legal evaluation given below will be based on the national legislation of the Russian Federation regulating the issues of the human right to rest and leisure in conformity with the international principles. Article 37 of the Constitution of the Russian Federation guarantees the right to rest and leisure to everybody. One of the elements of the right to rest and leisure is the annual holiday leave with pay granted to every person working under an employment contract. The procedure of granting and paying for the annual holiday leave with pay is elaborated in the Labour Laws Code of the Russian Federation. In particular, in accordance with Article 96 of the Labour Laws Code of the Russian Federation the wages for the whole period of the vacation should be paid not later than one day before the vacation starts. The meaning of this regulation is absolutely clear: the payment for the holiday before it starts allows the worker to dispose of his leisure in the most fruitful way, to really recover his strength and capabilities of active work. Otherwise (in case the leave is not paid for before it starts) the granting of an annual vacation loses its target (to grant to the worker freeof-work time of substantial length for recovering the energy spent in the process of production).

11 11 Accordingly, if the vacation period is not paid for before it starts the worker will suffer damages of both property (the worker then will act as the employer s lender and may receive after a certain period of time an amount of money of smaller purchasing capacity) and non-property nature (experiencing moral sufferings from the impossibility to use the time of vacation in accordance with his plans, to provide proper rest for his family members etc.). Hence, one may draw the conclusion that the non-payment of the vacation period before it starts is a breach of the constitutional human right to rest and leisure with respect to the guarantees of granting an annual holiday leave with pay. Having established the non-constitutional nature of the non-payment of the leave period before it starts under the Russian legislation let us now turn to the legal remedies for defending this right. Firstly, it should be noted that when not paying for the period of vacation before it starts the employer violates the imperative regulation of the Labour Laws Code of the Russian Federation. A breach of the labour legislation is an administrative offence liability for which is provided by Article 41 of the Administrative Offences Code. For any violation of the labour legislation (including the non-payment of the vacation period before its start) the company leader employer may be penalized with a fine of up to 10,000 roubles. However the imposition of administrative liability on the employer s representative does not always result in the restoration of the violated right of the worker. The worker s right to get his vacation period paid for before its start may also be defended in legal form. The worker has the right to refer to the bodies examining labour disputes with a demand to pay for his holiday period. There is no doubt that the body examining a labour dispute will pass an award that will make the employer pay for the holiday period. However even such an award passed by court will not serve as a guarantee of the worker s right to be granted a holiday leave with pay. Evidently the court s ruling will be passed and fulfilled after the vacation that was granted according to the timetable and used by the worker actually without pay. Thus the existing administrative and court procedures for the protection of the worker s rights to get an annual holiday leave with pay do not provide (and are unable to) for the timely protection of the worker s right to get paid for the holiday period before it starts. However such evaluation may

12 12 be applied not only to the Russian practice but to the practice of other legal systems too because of the existence of general principles of the functioning of administrative bodies objectively incapable of defending the violated right just the next calendar day after its breach. Under the circumstances the only person capable of taking active steps in order to defend the right in question is the worker himself. It is customary in the legal theory to call corresponding actions aiming at defending one s own right by himself as self-defence of the right. In the Russian law the actions aimed at self-defending one s right are based on the Constitution of the Russian Federation (Paragraph 2, Article 45) according to which each person has the right to defend his rights and freedoms using all means not prohibited by law. Currently the Russian labour law directly provides for the following cases of workers actions aiming at self-defending their right: - refusal to do work in case of any dander arising for the worker s life and health due to a violation of the labour safety requirements until such a danger is eliminated; - refusal to fulfil the employer s order to return to the work-place before the vacation end; - worker s refusal to take up a job where he was transferred with a breach of the law; - independent use of days of rest if the timing for their use did not depend on the employer s discretion (for example, blood donors are entitled to a day of rest immediately after every day of collection of blood and its components). Court practice also explicitly recognizes the worker s right to refuse to perform his labour duties in case the employer violates his duties to pay for the employee s work. It is clear that a situation when the worker refuses to take a vacation due to the employer s failure to pay for it should be considered as the worker s self-defence of his constitutional right to have an annual holiday leave with pay. In the absence of a federal law that would prohibit to the worker to refuse to take a vacation in case of non-payment for it the worker s corresponding actions should be considered lawful. It also appears evident that this right should supplemented with the employer s duty to grant to the worker a possibility to keep working until the vacation period is paid for (the actual start of the vacation). At this point there inevitably arises the question of determining the new

13 13 time frame for starting vacation. It is necessary to take into account the fact that if the worker should take a vacation at his will this may not be considered acceptable and lawful. Consequently, the worker who refused to take a vacation should agree with worker on the new time for starting his vacation. As a result of the negotiations changes will be introduced into the vacations timetable. It goes without saying that for entering into negotiations the worker may be represented by a trade union. Thus it can be stated that our conclusions based on the Russian legislation coincide with the conclusions drawn by the international expert while analyzing the situation in question from the point of view of international law and different legal systems. National Trade Union Contact Federation of Trade Unions of St.Petersburg and Leningrad region, FNPR Russia Saint Petersburg Truda Square 4, office 89 Russia Valery Safonov Legal Responsible Tel: Tel: Fax: safonov@lfp.spb.ru bllp@mail.ru INTERNATIONAL EXPERT Laura Carlsson NATIONAL EXPERT Victoria V. Korobchenko

14 14 Sponsored by 1 1 Swedish International Development Cooperation Agency