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Freedom of Association

As elaborated in Human Rights Watch’s April 2002 report, Tainted Harvest: Child Labor and Obstacles to Organizing on Ecuador’s Banana Plantations, despite general provisions in Ecuadorian law safeguarding workers’ right to freedom of association, critical weaknesses and loopholes in the laws render the protections virtually meaningless.  As a result, Ecuadorian law governing workers’ right to freedom of association falls far short of United Nations (U.N.) and International Labor Organization (ILO) standards and fails to deter employers from retaliating against workers who exercise their right to organize. 

Ecuadorian employers who engage in anti-union discrimination face only the threat of minimal fines and thus few, if any, significant repercussions for violating the law.⁶  Workers dismissed for union activity have no right to reinstatement,⁷despite the findings of the ILO Committee of Experts on the Application of Conventions and Recommendations (ILO Committee of Experts) that “[t]he best solution [to anti-union dismissal] is generally the reinstatement of the worker in his post with payment of unpaid wages and maintenance of acquired rights.”⁸  Ecuadorian law continues to require a minimum of thirty workers to form a union,⁹ yet the ILO Committee of Experts has twice recommended that Ecuador reduce that number “so as not to hinder the establishment of [unions].”¹⁰  Under Ecuadorian law, anti-union hiring discrimination is not explicitly prohibited, though the ILO Committee on Freedom of Association has clearly stated that anti-union hiring discrimination violates workers’ right to organize.¹¹  Employer interference in the establishment or functioning of workers’ organizations is not explicitly banned in Ecuador, though ILO Convention 98 concerning the Right to Organize and Collective Bargaining states that “workers' and employers' organisations shall enjoy adequate protection against any acts of interference by each other or each other's agents or members in their establishment, functioning or administration.”¹²  

In practice, employers take advantage of these shortcomings in the law to violate workers’ human rights by retaliating against workers for engaging in union activity, erecting often insurmountable obstacles to the formation of workers’ organizations, and generally creating a climate of fear that deters workers from exercising their right to freedom of association.  

For example, in late July and early August 2004, fifty-two workers on the Vizcaya banana plantation in Guayas province reportedly held founding assemblies to form a trade union.  They allegedly presented their petition for union registration and their collective contract proposal to the Labor Ministry, in accordance with Labor Code procedures.  As required by law, the Ministry of Labor notified their employer.  Rather than entering into negotiations as the Labor Code requires, however, the employer reportedly fired all fifty-two workers and banned them from entering the workplace.   

Although the workers reportedly reached an agreement with their employer on September 2 for their reinstatement, under Ecuadorian law, they have no right to their jobs back.  Instead, if their dismissals were ultimately deemed illegal, they would have been owed severance pay, plus one year’s salary for having been illegally fired immediately after presenting their collective contract proposal.¹³  In such cases, however, workers may never see that additional one year’s pay.  As discussed in Human Rights Watch’s September 2003 ATPA petition, employers often offer far less than the amount legally due.¹⁴  Financially unable to wait without pay while a legal challenge against their employer is resolved, workers in these circumstances often settle, taking whatever compensation their employer offers even if far below the amount legally due.   

Furthermore, although Ecuadorian law does not explicitly prohibit the formation of industry-wide or sector-wide unions, the Ministry of Labor has interpreted the law as containing such a prohibition.  For example, in November 2002, the Labor Ministry denied registration to the Regional Union of Flower Workers on the ground that the Labor Code only permits unions “of workers from a specific employer.”¹⁵  In October 2003, when flower workers again attempted to register an industry-wide union, under a new administration with a new labor minister, they were again notified that the law only allows registration for unions whose workers have “a dependent relationship with one specific employer” and that the Association of Flower Workers, instead, was “an organization composed of workers that work for different employers, violating the legal provisions related to the matter.”¹⁶  The ILO Committee on Freedom of Association, however, explicitly has established that “[l]egislation should not constitute an obstacle to collective bargaining at the industry level.”¹⁷  

Employers also impede workers’ freedom of association by taking advantage of legal loopholes that allow the unlimited use of subcontracted labor to perform employers’ normal, everyday activities.  Because they are employed by a third-party contractor rather than the corporate or individual business owner, subcontracted workers have no guaranteed legal right to organize and collectively bargain with the companies benefiting from their labor.  Therefore, though the companies may determine the workers’ employment terms and conditions, the workers, in most cases, are able to organize and negotiate collectively only with their subcontractors.  In addition, rather than forming one union and bargaining collectively with one employer, subcontracted workers wishing to organize their workplace, in most cases, must form multiple unions (one for each subcontractor) and negotiate multiple times, creating an additional obstacle to exercising their right to freedom of association. 

The use of third-party contractors to sidestep labor rights protections generally takes one of three forms: third-party operators, employment agencies, and individual subcontractors.  While third-party operators can be legitimate, independent and autonomous companies performing specific jobs and services, they can also, instead, be shell companies for a primary employer. Managed by employees of the larger main employer, these shell companies can further impede workers’ right to organize by rotating workers among the companies, thereby constantly changing the actors involved in any organizing drive or negotiating effort.  Employment agencies and individual subcontractors, for their part, while legitimately used to hire workers temporarily or for tasks not directly related to a company’s main activities, are also often hired to provide workers for a company’s normal, day-to-day operations.  In such cases, subcontracted workers’ “temporary” contracts are often renewed indefinitely.  As “permanent temporary” workers, they are not entitled to the benefits due workers seen as permanent in the eyes of the law.  Because they are not permanent, they have no legal expectation that their jobs will extend beyond the few days or weeks for which they are officially hired.  Therefore, their employers are not bound by the Labor Code prohibition of anti-union firing—if temporary workers are told not to return to work, they have not technically been fired, simply not rehired.  And the Labor Code does not explicitly ban anti-union discrimination in hiring.  In addition, in some cases, multiple individual subcontractors are also used to hire teams of fewer than thirty workers, creating work teams lacking the minimum number needed to unionize.  

In October 2002, prior to receiving ATPDEA beneficiary country designation, Ecuador committed to the United States to review its existing labor laws in order to assess their compliance with international standards, particularly in the area of freedom of association.  Ecuador pledged to apply ILO recommendations and to consider putting forward revised legislation to improve protection for the right to organize, possibly after requesting and receiving ILO technical assistance. 

In the almost two years since it made this commitment, the Ecuadorian government has sent no reform proposals to Ecuador’s congress to address the serious shortcomings in the country’s laws on freedom of association.  Although several meetings have been held between the government and the ILO, they have resulted in little, if any, progress in this area.  And although the government promised early this year to issue an executive decree on third-party contractors, over six months later, the decree has yet to be issued.  Furthermore, as discussed below, even if issued, the decree, as drafted, will not effectively prevent the use of third-party contractors to violate workers’ human rights, particularly the right to freedom of association.

ILO Intervention and Creation of the National Labor Council

Recent ILO intervention in Ecuador has reportedly focused primarily on fostering tripartite dialogue on labor related issues and facilitating the establishment of an official tripartite body to institutionalize such dialogue—the National Labor Council.  Human Rights Watch recognizes that tripartite dialogue is an important first step towards improving respect for workers’ human rights and, in particular, applauds the creation of the National Labor Council in June 2004.  The council’s primary goal is to “coordinate, negotiate, and propose labor policies on areas of common interest.”¹⁸  Human Rights Watch encourages the council to fulfill this goal as well as its more specifically enumerated objectives: a) “to foster permanent labor dialogue and promote tripartite participation with the objective of harmonizing labor relations”; b) “to foster equity in the area of labor relations, as well as respect for freedom of association”; c) “to analyze labor norms to make them more compatible with the economic, political, and social reality of the country and stimulate the adoption of a regime in accordance with fundamental labor rights”; and d) “to create conditions conducive to the creation of better quality jobs.”¹⁹  Increased tripartite dialogue and the creation and operation of the National Labor Council alone, however, will not ensure effective protection of workers’ human rights. Instead, meaningful labor law reform and effective government enforcement of those reforms—which can be encouraged but not accomplished by the council—are needed.

Inadequate Draft Executive Decree on Third-Party Contractors

In October 2002, Ecuador promised to create a high-level commission to investigate reported anti-union activities on the Los Alamos banana plantations and pledged to implement the final recommendations in the commission’s report.  One of the recommendations called for regulations to prevent the use of third-party contractors to violate workers’ human rights, “principally freedom of association and collective bargaining.”²⁰  Although Ecuador has drafted an executive decree to address this problem, it has not yet been issued.  Human Rights Watch urges that the decree be issued without delay and that it be fully and vigorously implemented and publicly promoted, yet we also believe that the decree, as drafted, contains serious shortcomings.

The decree allows for and regulates, largely through registration requirements and operating restrictions, the use of three kinds of third-party contractors: 1) subcontractors providing workers to perform temporary services; 2) subcontractors providing workers to perform “complimentary” services, defined as those not directly related to the main activities of a primary company, like security, cleaning, and maintenance; and 3) employment agencies or other third-party contractors providing workers, indefinitely, to perform the main, everyday activities of the primary company.²¹  

The decree requires third-party contractors to sign contracts with the main company hiring them, setting out the jobs to be performed and the subcontracted workers’ terms of employment.²²  Under the decree, these subcontracted workers must receive the same salaries and benefits and enjoy the same employment conditions as employees at their same level working directly for the main company.²³  In addition, in an attempt to curb employer use of shell companies, the decree also establishes that a third-party contractor cannot share business partners, associates, managers, legal representatives, or administrators with the main employer.²⁴  

Decree violation is punishable by a fine—up to U.S.$200 per subcontracted worker if imposed by high-level Labor Ministry officials and up to U.S.$50 per subcontracted worker if imposed by labor courts or labor inspectors.²⁵  If third-party contractors violate the decree, their subcontracted workers shall be legally considered direct employees of the main company, enjoying the increased workers’ rights protections that status entails.²⁶  

Nonetheless, even if issued and adequately enforced, this decree, as drafted, will fall short of preventing third-party contractors from being used to circumvent labor law protections, in particular those governing the right to freedom of association.  First, an executive decree does not and cannot effectively close the aforementioned legal loopholes that facilitate such abuses.  For example, the decree does not grant the right to reinstatement for workers fired for union activity, prohibit anti-union discrimination in hiring, lower the minimum number of workers required for union formation, or ban the use of consecutive short-term contracts to create a “permanent temporary” workforce.  To close these and other such loopholes, a legislative amendment is required, since an executive decree is only a regulation, interpreting and fleshing out but not reforming existing law.  Second, the decree itself contains a key loophole that could seriously undermine its potential contribution towards curtailing the use of third-party contractors to violate workers’ human rights. 

Draft Executive Decree Loophole

As discussed, employment agencies and individual subcontractors are frequently hired to provide workers, indefinitely, to perform a company’s everyday activities.  Often in teams of just under the minimum number required for union formation, these subcontracted “permanent temporary” workers enjoy fewer legal protections than permanent workers.  An executive decree that established limits on this practice could have gone a long way towards reducing the use of third-party contractors to impede workers’ right to organize.  For example, hiring of third-party contractors could have been restricted to those providing workers to perform temporary or complementary services or specific jobs and projects.  A cap on the percentage of subcontracted workers in any workplace is another option that Human Rights Watch has previously recommended.  This decree does neither.  Instead, it allows employers to continue to contract out, indefinitely, normal company activities and, thus, continue to circumvent Labor Code protections, particularly those governing workers’ right to organize, by doing so.²⁷