It has been months now that the Ministry of Labor and Social Affairs of Armenia is preparing changes to the country’s labor code. The changes were supposed to be submitted by the end of January and yet, there has been no development since then. What exactly do these new changes entail? And what will it mean for workers?
In search of answers, we recently spoke with a labor law expert, who is a legal adviser at Transparency International’s anti-corruption center in Armenia, Heriknaz Tigranyan, who provided some context on the issue.
Sofia Manukyan: What is your assessment of the new labor code draft?
Heriknaz Tigranyan: The new draft of the labor code is a regress when compared to the current code and it gives way to possible violations and abuse by the employer, while some points contain discriminatory aspects. It is therefore a concerning development.
S.M.:Why it was decided to make any change in the labor code?
H.T.: The prime minister tasked officials with easing the administrative burden on businesses, particularly small enterprises, but it is questionable whether this new draft will fulfil that function. The initial draft referred only to employment relations in small enterprises (employing up to 10 people and having a certain amount of income circulation), but a later draft included regulations for all employers. And so whatever was being criticized specifically in relation to small enterprises will now be implemented for all employers regardless of size.
S.M.: What is the biggest concern of the new draft?
H.T.: The main concern is that those who drafted this code hope for the employee and employer to negotiate regarding the working conditions and find suitable options for both sides. They do away with clear regulations that exist in the law when it comes to, for example, overtime work. The authors of this draft also hope to increase the role of trade unions by bringing them to the negotiation table to speak for employees’ rights.
In theory, it’s a good approach, to include negotiation to achieve implementation of mutual interests. But in practice and in Armenian realities, it is very questionable if trade unions will, for example, be able to negotiate with the employer when it comes to negotiating overtime work. This is one of the new provisions in the law, which states that if the employer and employee agree, the employee has to be involved into overtime work. In the current law, employers can involve the employee in overtime work only if there are grounds mentioned in the law. If there are no such grounds, there can be no overtime.
Furthermore, there is annual limit for overtime work, which is 180 hours. The new regulation says that if there is a mutual agreement, then this annual limit is dismissed. And this now relates to all sectors, whether public or private.
S.M.: Can we be sure that there would be an agreement achieved between the employer and employee?
H.T.: Of course there will always be the doubt if there is employee’s agreement. The employer can always state that it has the agreement. Moreover, payment for overtime is also left to negotiations between employers and employees. In practice, it is hardly possible that the employee demand more payment than that offered by the employer for overtime. Current law provides 50% additional payment for overtime work (counted based on hourly rate), while the International Labor Organization (ILO) says that in many countries this is a common amount (or even more amount is paid) and suggests Armenia to follow this experience.
S.M.: What are the other changes?
H.T.: Another change is related to removing pre-determined durations of prolonged and additional annual holidays so that, too, will have to be negotiated between the employer and employee. Currently there are categories of jobs where employees enjoy not 20 or 24 working days annual holidays, but have prolonged holidays, and there are those who have the right to additional holidays. The list of categories (doctors, miners, nuclear power plant workers, some workers of the airport, etc) benefitting from additional holidays is fixed in the government’s decision (1384Ն). But the change suggests to remove the list so that the employer and employee will decide themselves if there should be additional or prolonged holidays and how many days if so. This regulation refers only to the private sector, since for public institutions government will determine the amount of annual prolonged and additional holidays. This is clearly discriminatory as there is distinction between public and private workers based on the predictability of working conditions in case of a public worker.
Another change threatens to remove the list of particularly difficult and particularly dangerous jobs. Currently, there is a provision (1698Ն) that delineates jobs which, according to law, are harmful and dangerous to an employee’s health and therefore, respective compensations are envisaged. If the work is harmful, there is a minimum of 30% compensation paid in addition to the salary (counted based on hourly rate), while if it is a dangerous work, the compensation is 50%. The change removes not only the list of such jobs but also the minimal 30% and 50% compensation and again it is left to negotiations. The justification for this is that the employer must remove any risk factor at the workplace and then provide the employee with the right to additional holidays, similar to the demands of the revised European Social Charter. But this Charter mentions that states can define better conditions by law, so then, why remove the 30% or 50% compensation?
S.M.: And what is the justification for such deterioration?
H.T.: What the drafters assert is that, probably, employers have invested large amounts of money and ensured the safety of their workspaces, and so why they should continue paying compensations? But how is the employer going to assess the safety of its workplace if there are no clear regulations or the body controlling this aspect is not fulfilling its function in full scale?
At least with current law the employers are guided by the lists defined by the state. If the list is removed, the employer can decide itself if the work is harmful or dangerous for the health and, therefore, decide whether or not to pay compensation. Who will prove this point? It is assumed that Health Inspection Body should do that, but does it have the necessary tools (measuring devices, etc)? This is questionable.
Another problem with the new regulation is about night shift payment. Currently there is 30% additional income (counted based on hourly rate) for the night shift. But the new regulation removes it and leaves it up to negotiation between the employer and employee. Not to undermine the power of negotiation, but when there is no state control and trade unions are weak, it is questionable to assume the employer will act in the interests of the employee.
The authors of the draft say that these changes will empower trade unions to start taking a more active role in negotiations. But trade unions—not just de facto, but de jure—have no leverages to affect employers. Employers have the “advantage” in Armenia, as they create employment, thus trade unions can hardly negotiate as equals. In such circumstances, it would make sense to first strengthen and give legal grounds to trade unions and then invite it to the negotiation table. The employee is left alone.
He or she will be given a sum of money for the night shift and will have to agree whatever the amount. Since Armenia’s labor market doesn’t make it easy to find another job, the employee must either accept conditions or the contract can be broken. The new regulations bring risks of labor exploitations.
S.M.: So all these steps are being taken to make life easier for employers?
H.T.: For easing the administrative burden of the employer the new regulation suggest for small enterprises not to adopt internal legal acts, which is considered as a burden for them, instead, the conditions will be included in individual contracts with the employees, and this contract form is provided by the government. I think no administrative burden is eased this way. Instead, the opposite happens. Yes, the government will establish some exemplary contract forms, but each employer has to adapt it accordingly to its organization and job type and if this is done for each of the employee, then the administrative burden grows.
S.M.: So in what stage is the draft now?
H.T.: Currently the draft code is with the Ministry of Labor and Social Affairs and we are unaware of what state it is in. The deadline to send it to the government was end of January 2018. Parallel to this, the Ministry of Justice invited a British expert to study the gaps in our labor code and consult with the corresponding groups. It is unclear as to why two ministries do this work separately, not in cooperation.
S.M.: Why British, not some European expert?
H.T.: The British Embassy is supporting the Ministry. Quite possibly, the expert will look from the perspectives of free market or stronger trade unions they have, however, the Armenian reality is different. The employer takes the employee as its property. It never says “Thank you for helping me promote my business.” It says “Be thankful that I provided you with a job.” In such circumstances the employee will have to perform any function, including getting involved in political vote buying (Editor’s Note: As was in case of SAS group, whose employees were told to bring the votes of their relatives during parliamentary elections of April 2017). We stress on this—don’t look at this document only from the legal perspective, look at it also from Armenia’s socio-political stance.
S.M.: Did you send your conclusions to any state body?
H.T.: Yes, we sent a document of suggestions on behalf of myself and our organization to the Ministry of Labor and Social Affairs, but they were all rejected. They told us not to underestimate employees and they cited, as an example, employees in the IT industry. But an IT specialist has wide range of opportunities. If he or she doesn’t find a work suitable, it’s possible to go to Silicon Valley to work. But what should a common employee do? The most important gap is the absence of a controlling body. Trade unions are weak in practice. Employers are thus free to do anything they want with the employee.
S.M.: Are there any positive changes in the code?
H.T.: Some of the positive sides of the new draft are a number of edits that have since been made, since the wrong usage of even one word is problematic. It is also good that an anti-discriminatory article has been included. Yet in our suggestions that have been rejected, we were rallying for a more specific article banning the employer to be guided by any conditions (such as appearance, age, sex etc.) other than skills, education, experience when accepting to work or assessing the working process. Someone from the Union of Manufacturers the other day was surprised to find out that “good looking” is a discriminatory criterion.