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Labour Dispute Resolution Systems in the Asia–Pacific Region

A nine-country comparison

Benedicto Ernesto R. Bitonio Jr.

International Labour Office, Bangkok 2008

Contents
1. Introduction 2. Labour Dispute Resolution Systems 3 Substantive laws International standards as guideposts What constitutes labour disputes Country definitions International perspective: Points of comparison 12 1

3 4 9 10

3. Labour Dispute Resolution Mechanisms and Procedures 17 Modes of labour dispute resolution: A hypothetical model 17 Application of the model: Country experiences 18 The model applied to the technical conceptualization of 19 labour disputes The model and institutional structures 20 4. Governance Issues 26 Calculating the costs of labour disputes Effects of substantive laws on mechanism design 27 Improving access, efficiency and effectiveness Voice and participation Rule of law Accountability 5. Convergence and Divergence 35 Historical movements Coping with change 6. Moving Forward Some practices to build on Reform paths and lessons learned Annex iii

26 29 31 32 33

35 37 40 40 40 43

Guide questionnaire for evaluating LDR systems Table: Status of ILO Conventions in the nine countries of the study 7 Figures Figure 1: Strikes and lockouts in selected countries 16 (excluding Viet Nam), 1995–2006 Figure 2: Hypothetical model: Modes of dispute resolution 18

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1. Introduction

A country’s labour dispute resolution (LDR) system encompasses the policies, laws, processes, procedures, mechanisms and agents involved in the prevention and settlement of conflicts and disputes arising from employment or non-employment. The LDR system is an important part of a country’s larger industrial relations system. It is also part of how the industrial relations system interacts with the political, economic and other systems. These systems complement each other to form a network of governance institutions that help attain social and economic development goals under the rule of law. LDR systems have both justice and development dimensions. National industrial relations experiences are unique, as national industrial relations systems are not homogenous. They constitute an amalgam of the internal and external influences of national political and legal frameworks and the operations of transnational corporations, international workers’ solidarity movements and international standards governing conditions and rights at work as embodied in the Conventions of the International Labour Organization (ILO) and other instruments. The same holds true for LDR systems. Comparisons, to be meaningful, must pay equal attention to convergence and diversity. How do countries resolve their labour disputes? What modes of dispute settlement are employed and how is the process of settlement or resolution organized? What are the specific LDR mechanisms in place? In what ways are LDR systems similar and in what ways do they differ? What might account for the similarities and differences? What lessons and insights can be drawn from a comparative analysis of LDR systems? This paper covers nine selected Asia–Pacific countries: Australia, China, India, Japan, Republic of Korea (Korea), Malaysia, Philippines, Thailand and Viet Nam. The selection is a representative sample of country groupings, based on the phases of development in the Global Competitiveness Index (GCI) 2007–2008. The three main phases are i) the factor-driven phase, ii) the efficiency-driven phase and iii) the innovation-driven phase. (Some countries are situated in between these three main phases.) At least one country in this analysis represents each phase.1 Apart from the GCI groupings, the countries were also selected for size, industrial relations history and their general political and
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On the basis of the GCI criteria, the countries included in the study are grouped as follows: for the factordriven phase – China, India, Philippines and Viet Nam; for the efficiency-driven phase – Malaysia; between factor- and efficiency-driven phases – Thailand; for the innovation-driven phase – Australia and Japan; and between efficiency- and innovation-driven phases, Korea.

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By way of limitation.and innovation-driven phases is the Republic of Korea. a relatively developed industrial relations system and an LDR mechanism currently undergoing reforms in the context of larger reforms in the justice system. particularly flexibility and LDR mechanisms. Within the innovation-driven phase is Australia. this paper makes a distinction between developed industrial relations systems (early developers) and developing industrial relations systems (later developers). legal and institutional environment. which has an open economy but a history of state guidance. for use as a tool for deeper in-country evaluation of LDR systems. It also identifies general lessons from national experiences and links between LDR systems and the larger political. an open economy and recent experience as well as ongoing experiments in labour market reforms. levels of sophistication of available data and systems of performance measurement are not the same. which is a medium-sized country with a market economy and a relatively new industrial relations system.2 For convenience. Later developers are those that started building their market-oriented industrial relations systems after the 1990s. the Philippines is a medium-sized country with a market economy and a relatively developed industrial relations (industrial relations) system. the modes of LDR and the strengths and limitations of different LDR systems. 2 Among the factor-driven countries. the objective of the study is to comparatively assess and evaluate various LDR systems. Between the efficiency. The questionnaire used for the study is appended to the paper. the paper relies more on qualitative rather than quantitative analysis. China is a big country with a transition economy and a relatively new industrial relations system. The sample of an efficiency-driven country is Malaysia. Another country in the innovation-driven phase is Japan. a history of a state-guided economy and a relatively developed industrial relations system that has seen little substantive changes in recent years. which is a medium-sized country with an open economy that has a history of state guidance and a relatively developed industrial relations system operating in a labour market that has experienced wide-ranging and continuing reforms. India is a big country (with a federal government). which is a medium-sized country (with a federal government). which is a big country but with a labour force smaller than the medium-sized countries. Early developers are those with industrial relations institutions and structures already in place before the 1990s.and efficiency-driven phases is Thailand. This analysis looks at how labour disputes are understood. Thus. economic.economic history. Viet Nam is a medium-sized country. 2 . with a transition economy and a relatively new industrial relations system. when the Cold War ended and the pace of globalization accelerated. Building on existing surveys of national labour laws. Between the factor. a history of democratic socialism moving towards a market-oriented economy. and a relatively developed industrial relations system.

the influence of labour law can be analysed from two dimensions – the scope of the substantive law itself and access to the mechanism intended to implement the substantive law. mechanisms and procedures in place to resolve these disputes. While recognizing the diverse conditions of labour among countries. iv) adoption of a weekly rest of at least 24 hours. In this regard.2. v) abolition of child labour and the 3 . the first ILC participants also agreed on methods and principles for regulating labour conditions that all industrial communities should endeavour to apply. ii) preventing or providing against unemployment. It also organizes the process of bargaining. including maternity protection and benefits. when the agenda included: i) application of the principle of the eight-hour work day or 48hour work week. ii) right of association for all lawful purposes by the employed as well as by the employers. and iv) employment of children. including the minimum age of employment. sets standards of bargaining behaviour and prescribes legal remedies and consequences in the event of failure of bargaining or undesirable bargaining behaviour. Substantive laws International standards as guideposts Substantive labour law determines the boundaries of the LDR system. the ILO began defining the scope of labour law in its first International Labour Conference (ILC). This section discusses how the nine countries of the study compare in terms of the scope of their labour laws. ii) conceptualization of what constitutes labour disputes and iii) the structures. iii) women's employment. imposes legal obligations and sets up structures for administration. enforcement and adjudication. This chapter considers the first two elements and Chapter 3 focuses on the third element. night work and protection against unhealthy work processes. Labour Dispute Resolution Systems An LDR system has three basic components: i) substantive laws. insofar as their special circumstances would permit. iii) payment to the employed of a wage adequate to maintain a reasonable standard of life (as understood in their time and country). night work and protection against unhealthy work processes. It defines legal rights. These included i) the principle that labour should not be regarded merely as a commodity or article of commerce. At its founding in 1919.

the organization of vocational and technical education and other measures. join with them in free discussion and democratic decision with a view to the promotion of the common welfare. and by continuous and concerted international effort in which the representatives of workers and employers. may include in its decisions and recommendations any provisions which it considers appropriate. protection of workers against sickness. protection of children and women. policies in regard to wages and earnings.” Improvement of these conditions therefore was an urgent concern of nations and the international community. (d) it is a responsibility of the ILO to examine and consider all international economic and financial policies and measures in the light of this fundamental objective.imposition of such limitations on the labour of young persons to allow the continuation of their education and assure their proper physical development. recognition of the principle of freedom of association. having considered all relevant economic and financial factors. provision of an adequate living wage. irrespective of race. The Declaration of Philadelphia spoke of world programmes to achieve full employment and to raise standards of living. the employment of workers in the occupations in which they can have the highest satisfaction. which expanded on the original preamble 3) express the fundamental assumption that “conditions of labour exist involving such injustice. recognition of the principle of equal remuneration for work of equal value. have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity. vii) a standard set by law in each country regarding the conditions and the equitable economic treatment of all workers lawfully resident therein. in particular. realize their full potential as workers and make their greatest contribution to the common well-being. vi) the principle that men and women should receive equal remuneration for work of equal value. It also reaffirmed the concept in the ILO Constitution that lasting peace can be established only if it is based on social justice and that (a) all human beings. (b) freedom of expression and of association are essential to sustained progress. (e) in discharging the tasks entrusted to it the ILO. (d) the war against want requires to be carried on with unrelenting vigour within each nation. of economic security and equal opportunity. Both the preamble to the ILO Constitution and the Declaration of Philadelphia (1944. viii) setting up an inspectorate to ensure the enforcement of the laws and regulations for the protection of the employed. the provision of facilities for training and transfer of labour. including migration for employment and settlement. should be judged in this light and accepted only in so far as they may be held to promote and not to hinder the achievement of this fundamental objective. (b) the attainment of the conditions in which this shall be possible must constitute the central aim of national and international policy. the effective recognition of the right of 3 The 1944 ILC reaffirmed the fundamental principles on which the ILO was based. prevention of unemployment. disease and injury arising out of employment. protection of the interests of workers when employed in countries other than their own. creed or sex. enjoying equal status with those of governments. 4 . hardship and privation to large numbers of people as to produce unrest so great that the peace and harmony of the world are imperilled. in particular those of an economic and financial character. Matters of priority included regulation of the hours of work. that (a) labour is not a commodity. regulation of labour supply. (c) poverty anywhere constitutes a danger to prosperity everywhere. hours and other conditions of work calculated to ensure a just share of the fruits of progress to all and a minimum living wage to all employed and in need of such protection. provision for old age and injury. (c) all national and international policies and measures.

its Part III includes the right to work.7 and maternity and child labour protection. the cooperation of management and labour in the continuous improvement of productive efficiency and the collaboration of workers and employers in the preparation and application of social and economic measures. the extension of social security measures to provide a basic income to all in need of such protection and comprehensive medical care. d) The right to strike. which affirms a) The right of everyone to form trade unions and join the trade union of their choice. to free choice of employment. if necessary. in particular women being guaranteed conditions of work not inferior to those enjoyed by men. c) Equal opportunity for everyone to be promoted in their employment to an appropriate higher level. in particular: a) Remuneration that provides all workers. which is the natural and fundamental group unit of society. which includes the right of everyone to the opportunity to gain a living by work that is freely chosen or accepted. by other means of social protection. provision for child welfare and maternity protection. including reasonable limitation of working hours and periodic holidays with pay.collective bargaining. 5 Article 7. the provision of adequate nutrition. housing and facilities for recreation and culture. The Declaration of Philadelphia was followed by the United Nations Declaration of Human Rights in 1948. with equal pay for equal work.6 the right to social security. Also echoing ILO principles and the UN Human Rights Declaration is the UN Covenant on Economic. and will take appropriate steps to safeguard this right. including the right to strike. subject to no considerations other than those of seniority and competence.8 4 Under Article 6. b) Safe and healthy working conditions. for the promotion and protection of economic and social interests. which recognizes that: a) The widest possible protection and assistance should be accorded to the family. subject only to the rules of the organization concerned. 6 Article 8. particularly for its establishment and 5 . adequate protection for the life and health of workers in all occupations. b) The right of trade unions to establish national federations or confederations and the right of the latter to form or join international trade union organizations. Article 24 covers working conditions in which everyone has the right to rest and leisure. ii) a decent living for themselves and their families in accordance with the provisions of the present Covenant. Article 23 specifies four rights recognized as inherent to every human being: i) the right to work. Social and Cultural Rights (CESR).4 the right to just and favourable conditions of work. and the assurance of equality of educational and vocational opportunity. 7 Article 9 8 Article 10. as well as remuneration for public holidays. which includes the right of everyone to the enjoyment of just and favourable conditions of work which ensure. iii) the right to just and favourable remuneration ensuring for oneself and one’s family an existence worthy of human dignity and supplemented. the right to equal pay for equal work. 5 the right of everyone to form trade unions of their own choice. and iv) the right to form and to join trade unions for the protection of one’s interests. to just and favourable conditions of work and to protection against unemployment. provided that it is exercised in conformity with the laws of the particular country. as a minimum: i) fair wages and equal remuneration for work of equal value without distinction of any kind. c) The right of trade unions to function freely subject to no limitations other than those prescribed by law and which are necessary in a democratic society in the interests of national security or public order or for the protection of the rights and freedoms of others. leisure and reasonable limitation of working hours and periodic holidays with pay. No restrictions may be placed on the exercise of this right other than those prescribed by law and which are necessary in a democratic society in the interests of national security or public order or for the protection of the rights and freedoms of others. d ) Rest. ii) without any discrimination.

the Conventions and Recommendations are deemed to represent the universal aspiration of all countries. two each on organizational rights (ILO Convention No. the ILO performs this role through its standards-setting functions by adopting Conventions and Recommendations. 111 on discrimination in employment and occupation). among the nine countries. the ILO’s strategic role is to act as the social conscience in the world of work. Some of the legal rights are considered basic human rights. Further. nondiscrimination (Convention No. States should also set age limits. 105 on forced labour). forced labour (Convention No. there emerged another special classification called Fundamental Principles and Rights at Work. 100 on equal remuneration and Convention No.As stated in its Constitution. 6 . below which the paid employment of child labour should be prohibited and punishable by law. Marriage must be entered into with the free consent of the intending spouses. During such period. 87 on freedom of association and protection of the right to organize and Convention No. b) Special protection should be accorded to mothers during a reasonable period before and after childbirth. c) Special measures of protection and assistance should be taken on behalf of all children and young persons. also known as core labour standards. 98 on the right to organize and collective bargaining). When the ILO instruments specified legal rights in the form of human. There are eight such core standards. it has to enact corresponding national legislation in order to make the Convention effective within its national jurisdiction. ILO member States can use the international framework as a guide in formulating their national labour laws and codes. a State has to ratify an ILO Convention before it can be subjected to the supervisory authority of the member States. As it is. while others fall into the category of social and economic rights. Their employment in work harmful to their morals or health or dangerous to life or likely to hamper their normal development should be punishable by law. Children and young persons should be protected from economic and social exploitation. social and economic rights. which specifies that the principles of international law become part of each nation’s laws. The doctrine of incorporation does not automatically make ILO instruments a “hard” law in the sense that failure to comply would give rise to a legal sanction. In more specific terms. Although it is acknowledged that member States have varying capacities in fully realizing them. working mothers should be accorded paid leave or leave with adequate social security benefits. 29 on prison labour and Convention No. 182 on elimination of the worst forms of child labour). ILO instruments have created notions of legal rights that collectively form the framework of an international labour code. Together with the UN Declaration of Human Rights and the CESR. The following table shows the ratification status of these Conventions. The nine countries discussed in this paper are all members of the ILO and generally adhere to the international doctrine of incorporation. while it is responsible for the care and education of dependent children. 138 on the minimum age for admission to employment and Convention No. and child labour (Convention No. including the year they were ratified. without any discrimination for reasons of parentage or other conditions.

only Australia. Twenty-six ratifications came in or after 1990. 105 – which it later denounced. All nine countries have ratified Convention No. there have been 48 ratifications. But absence of ratification does not negate this commitment. 98 after Australia ratified both in 1973. 9 Malaysia ratified the Convention in 1958 and denounced it in 1990. national labour laws and LDR systems Ratification of ILO Conventions and adherence to other related international instruments is a State’s expression of commitment to effectively put international standards in practice. 7 .Status of ILO Conventions in the nine countries of the study C 87 Yes (1973) No No Yes (1965) No No Yes (1953) No No C 98 Yes (1973) No No Yes (1953) No Yes (1961) Yes (1953) No No C 29 Yes (1960) No Yes (1954) Yes (1932) No Yes (1957) Yes (2005) Yes (1969) Yes (2007) C 105 Yes (1960) No Yes (2000) No No Den. National constitutions commonly speak of labour protection in alignment with the fundamental principles and rights at work embodied in the core conventions. Further. It is also notable that the wave of ratifications in China. the acceleration of globalization through trade and the Asian financial crisis that began in 1997 – all of which led to profound and wide-ranging political and economic restructuring in those four countries. including Malaysia’s ratification of Convention No. Korea. Thailand and Viet Nam happened after watershed events affected the global order – the collapse of communism. But only the Philippines has ratified all the eight Core Conventions. Japan and the Philippines have ratified the Conventions on freedom of association and collective bargaining.9 (1990) Yes (1960) Yes (1969) No C 100 Yes (1974) Yes (1990) Yes (1958) Yes (1967) Yes (1997) Yes (1997) Yes (1953) Yes (1999) Yes (1997) C 111 Yes (1973) Yes (2006) Yes (1960) No Yes (1998) No Yes (1960) No Yes (1997) C 138 No Yes (1999) No Yes (2000) Yes (1999) Yes (1997) Yes (1998) Yes (2004) Yes (2003) C 182 No Yes (2002) No Yes (2001) Yes (2001) Yes (2000) Yes (2000) Yes (2001) Yes (2000) Australia China India Japan Republic of Korea Malaysia Philippin es Thailand Viet Nam In all. This point is noteworthy because industrial relations systems have conventionally cast labour disputes mostly as demands for the effective exercise of the freedom of association and collective bargaining. Constitutions. 100. 87 or No. while Malaysia has ratified only the Convention on collective bargaining. There has been no ratification of Conventions No.

labour is considered a primary social and economic force whose welfare shall be promoted and protected (Article II. expansion and growth (Article XIX.c and 3). including prevention of unjustified discrimination against women (Article 32). and iv) an encompassing role for the State. the principle of non-discrimination is generally recognized. the Constitution mandates the legislature to make laws governing working conditions so as to guarantee human dignity (Article 32). freedom of association and prohibition against forced labour are incorporated in the Constitution of every country included in the study. Sec. 2. equality of opportunity and non-discrimination. especially workers. In Malaysia’s Constitution. For example. prohibition against exploitation particularly against human trafficking. forced labour and the employment of children in industries (Articles 33 and 34). work is a human right and obligation (Article 32). The workers' right to freedom of association.1.Specifically. The right of workers to productive gain-sharing is recognized in the same vein as the right of employers to profits. There is also special protection for working children and working women. iii) a recognition of the ethic of the greater good. especially in 8 . Article 10. public order or morality (Article 8. for example: In India. collective bargaining and collective action are also recognized (Article 33). As a norm. the federal Constitution mentions the fundamental rights of equality. In Korea. a living wage (Article 43) and workers’ participation in the management of industries (Article 43-a). ii) the need for continuing economic and social redistribution towards more equality and equity. provision of just and humane conditions of work (Article 42). as are specific provisions on the right to work. Sec. any provision or practice restricting office or employment connected with the affairs of any religion or an institution managed by a group professing any religion to persons professing that religion. labour protection is expressed or affirmed in a variety of ways. Under the Constitution’s Directive Principles (Part IV). These include: i) the creation of opportunity and promotion of welfare for every citizen. but the Parliament may impose such restrictions as it deems necessary or expedient in the interest of the security of the federation or any part thereof. 5.b). subject only to exceptions authorized in the Constitution (Article 8). a general provision on the promotion of social order and welfare is included. On the other hand.c recognizes the right of all citizens to form associations. which includes non-discrimination in employment and a special provision on public employment (Articles 15 and 16). 3). Indeed. is not considered discrimination (Article 8. These types of constitutional provisions indicate paramount challenges for the State in relation to workers. education and assistance (Article 41). In the Philippines. 18).

social insurance. Until the early 1990s.10 started adopting their own labour codes and laws. A critical consideration between the existence of a law and its effective implementation is the existence of a venue where rights may be asserted and enforced. Thailand has a relatively thin set of labour laws. nondiscrimination. There also were countries that had a balance of laws for protecting individual rights and organizational rights (Australia and Japan) and countries that were highly protective of individual workers’ rights but restricted organizational rights (such as Korea before democratization and the Philippines during its authoritarian period). Countries that used to have “thin” labour laws. Labour disputes are generally unresolved demands for compliance or enforcement of legal rights or for the redistribution of economic resources through bargaining. the term “labour dispute” is generally interchangeable with “industrial dispute” and “trade dispute”. The objective was to make labour markets more competitive. the early developers experienced pressures to make their own laws thinner. On the other hand. 10 Compared to China and Viet Nam. safety and health). a conflict is a situation in which the rights or interests of one or more persons or groups are in opposition or perceived to be in opposition to the rights or interests of some other persons or groups. protection for women (including maternity protection) and prohibitions against child labour. particularly China and Viet Nam. working conditions (including working hours and wages. which had either labour codes or a comprehensive set of labour laws that covered most – if not all – of what is envisioned in the ILO Constitution and in the Declaration of Philadelphia. such as more flexible and market oriented. In the 1990s and onward. along with the advantages and limitations inherent in each country. all of this changed. employment services. Thus. inspection. By the turn of the millennium. It is in this context. Disputes. For the countries under this study. countries (particularly the nine included in this study) attained more or less parity in terms of the subject matters covered by their labour laws. In the first classification were the early developers. are overt manifestations of conflict. vocational training. that national labour laws are designed. all nine countries have laws on trade unionism and collective bargaining. including labour disputes. What constitutes labour disputes Generally. 9 .coordinating desired outcomes for workers. it was convenient to classify countries as having “thick” or “thin” labour laws. Herein lies the value of an efficient and properly functioning LDR system. Where they vary is in the motivation behind the enactments as well as in their implementation.

This section first examines the country-specific definitions and nuances of labour disputes and then the similarities and differences in conceptualizing them. 10 .

or c) a dispute about the representation of the industrial interests of employees by an organization of employees. limitation or restriction on the performance of work by an employee or on the acceptance of or offering for work by an employee. In India. A type of dispute that has a specific definition in Australia is a “demarcation dispute”. according to the Workplace Relations Act (1996): a) the performance of work by an employee in a manner different from that in which it is customarily performed or the adoption of a practice in relation to work by an employee. The regulations also require that the enterprise and the workers and employees involved are the parties to a labour dispute. which is connected with the employment or non-employment or the terms of employment or with the conditions of labour. the result of which is a restriction or limitation on. according to the Industrial Disputes Act (1947). any dispute or difference between that worker and the employer connected with or arising out of such discharge. industrial dispute means any disagreement or difference between employers and employers. Industrial action can still apply even if an employee’s questionable conduct relates to only part of the required duties or to a course of conduct consisting of a series of industrial actions. This does not include action by employees that is authorized or agreed to by the employer or vice versa. according to the Regulations on the Settlement of Labour Disputes in Enterprises (1993). those regarding the execution of a labour contract. or between workers and workers. the performance of the work. dismissal. insurance. dismisses. which means any of the following. the definition of an industrial dispute can be inferred from the definition of “industrial action”. b) a ban. and those that other laws and regulations stipulate should be handled with reference to the regulations on labour disputes. c) a failure or refusal by employees to attend for work or a failure or refusal to perform any work at all by employees who attend for work. between employers and workers. training and labour protection. or b) a dispute arising between employers and employees or between members of different organizations as to the demarcation of functions of employees or classes of employees. of any person. and d) the lockout of employees from their employment by the employer. discharge or a lay-off of workers and employees and the resignation of workers and employees. welfare. labour disputes pertain to all those arising out of dismissal. retrenchment or termination is 11 . In China. retrenches or otherwise terminates the services of an individual worker.Country definitions In Australia. which includes: a) a dispute arising between two or more organizations or within an organization as to the rights. Where any employer discharges. those concerning implementation of relevant state policies on wages. or a delay in. status or functions of members in relation to the employment of those members.

dismissal or other treatment. in conjunction with the Trade Union Law. to settle them independently in good faith”. In Japan. including disputes between individual job applicants and employers with respect to matters concerning the recruitment and employment of workers and working conditions and other matters concerning labour relationships (Act on Promoting the Resolution of Individual Labour Disputes. the fair adjustment of labour relations and to prevent or settle labour disputes and thus contribute to industrial peace and economic development.treated as an industrial dispute. with the object of attaining their respective claims. arising between the parties concerned with labour relations. lockouts or other activities through which the parties to labour relations intend to achieve their claims. Parties concerned are responsible for special efforts to mutually promote proper and fair labour relations. and. collective bargaining and collective action as allowed by the Constitution and to contribute to industrial peace and to the development of the national economy by preventing and resolving industrial disputes through the fair adjustment of labour relations. defined as those between individual workers and employers. concerning the determination of terms and conditions of employment. An act of dispute means a strike. an industrial dispute is any controversy or difference arising from disagreement between the trade union and employer or employers' association. In this case. such as wages. The purpose of the law is to maintain and improve the working conditions and to improve the economic and social status of workers by securing their right of association. according to the Trade Union and Labour Relations Adjustment Act (1997). a slowdown. welfare. sabotage. 12 . But more recent developments in the laws have focused on individual disputes. "industrial action" means actions or counter-actions that obstruct the normal operation of a business. The purpose of the law is to promote. to fix by "collective agreement matters concerning the establishment and operation of regularized organs in order to promote the constant adjustment of labour relations. "disagreement" is referred to as situations in which no agreement is likely to be reached by the parties even though they continue to attempt to make an agreement. in the event labour disputes have occurred. In Korea. working hours. according to the Labour Relations Adjustment Law (1946 and amended in 1988). On the other hand. Reference to “labour relations” in the context of the law projects a narrow notion of labour disputes to matters between employers and unions. resulting in either acts of dispute or the threat of them. 2001). referred to as "parties to labour relations". such as strikes. a labour dispute means a disagreement over claims regarding labour relations. notwithstanding that no other worker or any union of workers is a party to the dispute. a lockout or any other act that hampers the normal course of work of an enterprise by the parties concerned.

1985 (No.In Malaysia. a worker refers to any person who has been dismissed. changing or arranging the terms and conditions of employment. or it can be a grievance expressed by workers and employers. In Viet Nam. For purposes of any proceedings in relation to a trade dispute. 11 A strike is a temporary work stoppage by one or more groups of workers with the intent to enforce or resist demands or express grievances or the support of other workers in their demands or grievances. “other action due to labour disputes” refers to action taken by one or more group of workers or by one or more employers with the intent to enforce or resist demands or express grievances. 1985 (No. regardless of whether the disputing parties stand in the proximate relation of employer and employee. including an apprentice. a labour dispute is about rights and benefits relating to employment. a labour dispute is a disagreement over a particular issue or group of issues in which there is conflict between workers and employers. according to the Labour Code. International perspective: Points of comparison Technically. fixing and maintaining. see also Labour Statistics Convention. In addition. strike 11 or lockout12 are the two actions directly resulting from a labour dispute. Under this definition. with both there can be workers or employers supporting other workers and employers in their demands or grievances (Resolution of the 15th International Conference of Labour Statisticians. according to the Vietnamese Labour Code (1994 but amended in 2002 and taking effect in 2003). under a contract of employment to work for hire or reward. 160) and Labour Statistics Recommendation. 1993. and the issues that arise during a training or apprenticeship period. In the Philippines. a trade dispute means any dispute between an employer and workers that is connected with the employment or non-employment or the terms of employment or the conditions of work of any such worker. discharged or retrenched in connection with or as a consequence of that dispute or whose dismissal or discharge led to that dispute. a labour dispute is any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating. 13 . 170)). the performance of the labour contract and the collective agreement. It also refers to the support of workers or employers in their demands or grievances in which there is no cessation of work. A worker is then defined as any person. according to the Industrial Relations Act (1967). It includes an individual labour dispute between an employee and an employer and a collective labour dispute between a labour collective and an employer. wages. 12 A lockout is a total or partial temporary closure of one or more places of employment or the hindering of the normal work activities of employees with the intent to enforce or resist demands or express grievances or to support other employees in their demands for grievances. incomes and other labour conditions.

“collective” necessarily involves a group of workers. a labour dispute occurs when the employer-employee relationship still actually exists. it is merely classified as other action arising from a labour dispute. Parties to a labour dispute The labour law in all nine countries share the conceptualization of a labour dispute as one that involves a worker or a group of workers against an employer or a group of employers. an issue that arises during the training or apprenticeship period is considered a labour dispute. lockouts and matters of representation or recognition. initiates a claim to question the validity of his/her dismissal. 14 .This technical conceptualization of a labour dispute has three components: i) the parties to the dispute. This also probably explains why the only meta data consistently compiled for international comparison are strikes and lockouts and their cumulative effects in terms of lost workdays. In the first Labour Statistics Conference. the definition of labour disputes focused on their collective nature in a unionized context. as narrowly defined. Parties to a labour dispute may be individual or collective. and iii) the effects of the dispute. such as when a worker complains of poor working conditions. It can also occur proximate to an actual employer-employee relationship. in dispute with an employer or with a group of employers. having been dismissed from employment and therefore no longer actually working. including strikes. ii) the subject matter of the dispute. Thus. where the term is descriptive of group-level matters concerning the exercise of the freedom of association and the right to self-organization or collective bargaining. This group-level orientation of parties to labour disputes seems to have been given more prominence in the international discourse than individual labour disputes. whether members of a union or not. the early developers built their industrial relations and LDR systems around collective disputes. Action by a worker or employer in resisting or enforcing demands or expressing grievances is not per se classified as a labour dispute. such as when a worker. an issue arising from recruitment is classified as an individual labour dispute in Japan. The disputing parties must stand in the actual or proximate relationship of an employer and employee. A relatively narrow meaning is indicated in Korea and Japan (where the phrase “parties involved in labour relations” appears in the law) and in the Philippines as well. the term “collective” in reference to labour disputes has its own distinct nuances. Interestingly. And in Viet Nam. In practice. for example. But some countries also recognize a proximate relationship before employment. In its barest sense. All countries in the study recognize a proximate employment relationship after the actual fact of employment.

constitute a class whose interests are distinct from. either individually or in groups. The policy prominence given to representation. inferred from the notion of collective agreements. Employers. is not classified as a collective dispute but as an individual dispute involving several claimants. which follows a pluralist union-exclusive bargaining representation model. which follows a pluralist union-nonexclusive bargaining representation model. In the Philippines. It is a core issue. China and Viet Nam. Thailand and Viet Nam appear to be built exclusively on it. however. In Thailand. It is also not apparent in Viet Nam. India’s labour law includes matters “between workmen and workmen”. following what its labour laws term as “democratic centralism”. There is. It is also an issue in India. matters among union members and grievances among individual workers would also be classified as labour disputes. It is increasingly an issue in Korea where demand for the recognition of multiple unions is central to ongoing public policy debates. for example. which are agreements covering a group of workers but are not always the result of collective bargaining undertaken with the participation of a union. the Philippine law includes matters of representation and recognition. recognition or demarcation disputes. even if filed simultaneously by them. Australia includes demarcation disputes in its conceptualization of labour disputes. a labour dispute involves the employer and workers where the employer stands in a relationship of control and subordination over the worker or employee or a group of workers or employees. for instance. a labour dispute is essentially configured vertically. those of workers and their unions. 15 . Intra-union matters. This structuring is a necessary derivative of the class and power relations under industrialism. But the structuring of labour disputes in China. 87 and No. where representation of labour collectives appears not to include the idea of democratic contestation. this would be treated as a collective dispute regardless of union membership. inter-union matters such as representation. recognition or demarcation issues may also be a function of the union and collective bargaining structure. it must have a recognized legal standing as a legitimate union. represented by managers. Malaysia. All nine countries of the study share this vertical dimension.What this also implies is that for a group of workers to be a party to a labour dispute. a horizontal dimension to a labour dispute as well. But the horizontal dimension is not apparent in China where unionism is vertically integrated. Thus. Disputes may arise among workers. in the Philippines. such as unpaid wages. In Thailand. In terms of structuring the relationship of the parties. although some national laws actually refer to it. and often in opposition to. This dimension has not been given international prominence in terms of statistical data. complaints against an employer from a group of workers who do not belong to a registered union. 98. “collective” is used in a loose sense. as contemplated in ILO Conventions No.

complement the area of bargaining. the process involved in the resolution of rights disputes is either enforcement or adjudication. leaving all other matters to collective bargaining at the enterprise level (such as Australia). some national labour laws are open-ended and do not specify the subject matter of collective bargaining (such as in the Philippines). It does not mention trade union or collective bargaining issues. such as reasonableness. Because the issue in dispute is compliance with state regulations. and consistency with public policy. which has a centralized bargaining system. In turn. In “interest disputes”. Application and implementation of company policy and existing collective contracts can give rise to rights disputes. agreements are subject only to general limitations. defined by statute with guidelines from organizations of unions and employers. like Japan and Korea. Still others specify allowable awards in case a labour dispute occurs. In this context. changing or arranging terms and conditions of employment would be an interest dispute. interest disputes have a group-level or collective orientation. Others specify what must be negotiated (such as China). The subject matter of rights disputes is naturally determined by the scope and extent of rights recognized by substantive laws and contracts. the subject matter of an award may be extended under certain circumstances to groups of workers not originally covered by the award. The Philippines’ definition is explicitly broader: Any controversy arising from terms and conditions of employment is a rights dispute. Those with coordinated bargaining systems. fixing and maintaining. the primary LDR approaches 16 . whether it involves individuals or groups. such as in rights arbitration. The distinction between rights and interest disputes is material in two important respects: First. In Australia. On interest disputes. compliance with existing laws and regulations. This is done through a process analogous or similar to the exercise of judicial power. in rights disputes like those arising from law or from minimum labour standards. The subject matter of labour disputes in Malaysia is of the first type: A labour dispute relates to the terms of the applicable law or contract or the conditions of work of the worker. the State is theoretically also a party to the dispute. Second. the State has as much stake in the case as the individual worker. as does non-compliance with standards. the primary LDR mechanism is the inspectorate system. The academic literature typically refers to the first type as “rights disputes” and to the second type as “interest disputes”. Theoretically.Subject matter of a labour dispute Labour disputes are unresolved demands for compliance or enforcement of existing legal rights or demands for redistribution of economic resources through bargaining. Controversies arising from negotiating.

But in this case. methods of calculation and conditions of payment). 1995–2006 13 Paragraph 24. and trade union issues. sympathy or solidarity (such as strong support for a group of workers on the part of other workers although they have no direct interest in the particular labour dispute). The process involved is analogous to law-making because it leads to the creation of legal rights through new terms or conditions of employment. redundancies and lay-offs). job evaluations. Over a 15-year period. harassment. problems concerning working conditions (such as reduction or changes in hours of work. conciliation.are negotiation. movement of staff. employment problems (such as personnel policies. the organization of work. closure of establishment. There are also secondary effects. the subject matter of labour disputes also includes other problems relating to the workplace (such as discrimination. and protest. reclassification of staff. and health and safety in the workplace). the subject matter of disputes may also be classified into disputes arising from collective bargaining and those not arising from collective bargaining. Effects of a labour dispute The primary effects of a labour dispute are cessation of work (as in strikes or lockouts) or disruption without cessation of work. The same issues also can be addressed in a non-collective bargaining context. mediation and interest arbitration. 13 The first category would include problems concerning wages. For statistical purposes. But the distinction between rights and interests disputes is not always straightforward. such as when a labour dispute action prevents workers from working or disrupts their work or affects other groups of self-employed workers who are prevented from working or whose work is disrupted (Resolution of the 15th International Conference of Statisticians). such as the expression of grievance with respect to a government policy or decision affecting conditions of work. bonuses and other compensation (such as increases. duress and unfair labour practices). Only eight countries had meta data available on this issue and it only covered the number of strikes and lockouts. the statistics show the following: Figure 1: Strikes and lockouts in selected countries (excluding Viet Nam). Resolution of the 15th Conference of Labour Statisticians 17 .

000 800 600 400 200 0 1995 1996 1997 1998 1999 2000 Year Australia China India Japan Korea Malaysia Philippines Thailand 2001 2002 2003 2004 2005 18 .1.200 N o. of st ri k e s/ lo c k o ut s 1.400 1.

impartial and independent third party who can help facilitate a resolution through conciliation or mediation. arbitration and court adjudication. the use of power either by the parties (such as a strike or lockout) or by state authorities is then the mode of resolution. cooperative or consensual approaches are to be preferred and should first be exhausted before employing legal or non-cooperative approaches.  If preventive measures fail.3. leading to a consensus. The third principle envisions the entry of a neutral.  If parties cannot resolve the problem. If this is not successful. the role of the parties and of neutral third parties. should resolve the dispute with binding effect. but it should involve the parties as much as possible. the same third party or another third party. In other words. 19 . the parties themselves should resolve the problem. From this proceeds a discussion of the various modes of LDR. and the conditions under which state or third-party intervention may be invoked. A hypothetical model of LDR is presented as a framework for analysis. The first principle envisions a situation in which there is no dispute. If the dispute is not resolved in spite of these sequential principles. conciliation and mediation. neutral third-party intervention may be invoked. the sequential principles advocated by the ILO are:  Prevention is better than resolution. primarily through negotiation and consensus. Figure 2 presents a hypothetical model of LDR that combines the common modes and the sequential principles of LDR. In resolving or settling labour disputes. using legal rules. Modes of dispute resolution: A hypothetical model The modes of LDR that are practised in all nine countries are dialogue and negotiation (with grievance handling in some countries). The second places on the parties the primary responsibility of resolving disputes as and when they arise. Design of Labour Dispute Resolution Mechanisms This chapter presents comparisons of how the LDR mechanisms in the nine countries are designed or structured.

This is the policy preference in all nine countries of the study. including conciliation. The Philippine Constitution states a preference for voluntary and consensual modes of settling labour disputes. Japan articulates its policy by striving to promote the fair adjustment of labour relations and prevent or settle labour disputes and thereby contribute to the maintenance of industrial peace and economic development.Figure 2: Hypothetical model: Modes of dispute resolution Courts Final resolution Arbitration Conciliation/ mediation Resolution DISPUTE Dialogue/ negotiation Settlement Settlement Application of the model: Country experiences The objective of the hypothetical model is to put closure on a labour dispute at the earliest stage or lowest level possible through cooperative means. to fix by collective agreement matters concerning the establishment and operation of regularized organs in order to promote the constant adjustment of labour relations and. including voluntary arbitration. This preference is true whether the industrial relations system of the country developed early or at a relatively later stage. at least as expressed or implied from their labour laws. The Labour Code says that the State is to promote and emphasize the primacy of free collective bargaining and negotiations. As a corollary to this. 20 . the primary or joint responsibility for settling disputes rests on the parties. mediation and voluntary arbitration. to settle them independently in good faith (Labour Relations Adjustment Law). in the event labour disputes have occurred. Among the early developers. Parties concerned with labour relations can make special efforts mutually to promote proper and fair labour relations.

it is interesting to see the extent to which the sequence in the hypothetical model is actually followed. With respect to parties. China specifies in its Labour Code that the settlement of labour disputes must observe the following principles: 1) emphasis is given to mediation and prompt handling. 3) openness. dialogue. the model is applicable across countries on issues arising from collective agreements. The model applied to the technical conceptualization of labour disputes Beyond this shared policy preference for early negotiated settlement. 98. 87 and No. or a separate procedure for individual disputes may be prescribed (for example. National experiences vary on how the model is made operational. 2) reconciliation and arbitration on the basis of respect for the rights and interests of both parties. conciliation or mediation does not always happen. This is regardless of whether or not a country follows the standards on freedom of association and protection and promotion of the right to organize and to bargain collectively under Conventions No. However. With respect to subject matter. conciliation and mediation in statutes and regulations. a common approach is to recognize the necessity for negotiation. and 3) the parties involved are equal before applicable laws. the subject matter of the dispute and the effects of the dispute. The model also generally does not apply to horizontal disputes. Japan). based on the parties to the dispute. respect for the common interests of society and observance of the law. objectivity. the model is applicable across countries on group-level or collective disputes. negotiation. Among the later developers. expeditiousness and conformity with the law. with conciliation or mediation internalized into the arbitration procedure (such as the Philippines). timeliness. Recalling the technical conceptualization of a labour dispute presented previously.mediation and conciliation. its 21 . labour disputes are settled on the following principles: 1) direct negotiation and arrangement between two disputing parties at the place where the dispute arises. and 4) participation of the representatives of the trade union and the labour user in the process of settling the dispute. or a claimant may go straight to arbitration. In Viet Nam’s Labour Code. In relation to strikes and lockouts. Resort to these modes is a precondition to arbitration. For individual disputes. distinctions can again be drawn. 2) labour disputes shall be dealt with in accordance with the law on a fact-finding basis. An individual claimant may have a statutory right to invoke mediation prior to arbitration (such as Malaysia). as modes of settling labour or industrial disputes.

22 . disputes in emergency cases or disputes involving the national or public interest. which performs arbitration functions) or an independent agency (for example. an LDR mechanism may be an integral part of the national authority in charge of labour (for example. stated differently. which performs mediation functions). The views expressed in this paper are not intended to suggest a formula for resolving these issues. This classification is analogous to “essential services”. a fundamental objective of an LDR system is to promote industrial peace or. including submission of the dispute to compulsory arbitration. the Australian Industrial Relations Council). early state intervention is an exception to the policy preference for settlement by the parties. But each system has several LDR mechanisms that are organized as separate organizational units and with various degrees of de14 The compatibility of national labour laws restricting the right to strike or lock out in national or public interest or emergency cases has been a long-standing issue in the ILO’s Committee on Freedom of Association and Committee of Experts. As a state institution. Determining which type of dispute belongs to this class can be made by statute or by an authority identified by statute (such as the minister of labour). 15 The model and institutional structures LDR mechanisms are institutionalized through law. the Philippine National Labour Relations Commission. This means creating a specific state institution with the mandate and resources to promote industrial peace and resolve disputes. With respect to the effects of labour disputes. State intervention also results in restrictions on industrial actions.14 Likewise. Malaysia’s Department of Industrial Relations. inspection rather than dispute resolution is the main mode of ensuring compliance. recognize a special classification of labour disputes. and later developers like China and Viet Nam. 15 Australia and the Korea have ongoing policy debates on changing the role and mandate of arbitration. Malaysia and the Philippines. Japan. such as the right to strike or lock out. Conciliation and mediation structures In each of the nine countries there is essentially a single LDR system. as defined by the ILO. an autonomous agency attached or aligned to the ministry in charge of labour (for example. This special class is variously referred to as disputes in public welfare undertakings. That is why early developers like India.application to enforcement of labour standards or rights disputes is not automatic. In the nine countries in the study. Thus. Therefore. mandatory and expedited procedures for conciliation and mediation may be imposed. All the countries included in the study provide for an administrative mechanism for LDR. the nine countries explicitly or implicitly assume the importance of industrial peace in their overall development. the model can be used only to complement enforcement procedures. minimize the disruptive effects of labour disputes on public welfare. Under this special classification.

Like a mediator. trade unions and employers as well as a number of authoritative lawyers. only then will a neutral third party intervene to settle the dispute. the conciliators are not drawn from the enterprise. in the absence of timely objection. The latter is a provincial mechanism composed of full-time and part-time members who are representatives of the labour office. becomes automatically enforceable upon notification of the parties. it is mandatory for enterprises with ten or more workers to establish a labour conciliation council composed of an equal number of representatives of workers and of the employer. administrators and social workers. There are also two kinds of disputes that may be directly submitted to the People’s Court without going through the procedure of conciliation: i) disputes concerning dismissal or the unilateral termination of a labour contract and ii) disputes concerning workers’ material liability to compensation for damages. Japan and Viet Nam present contrasting examples: In Viet Nam. the parties are bound to implement the agreement. The labour conciliation council in Viet Nam is different from the labour arbitration council.concentration or decentralization. according to its Labour Code. each party has the right to request the People’s Court at the district level to settle the dispute. Once these are accepted. but nor are they public servants. according to its Labour Relations Adjustment Law. Its authority may be invoked when one of the parties to a dispute refuses to negotiate or both parties have negotiated but have failed to reach agreement and one or both of them lodge a request for labour dispute settlement. With respect to conciliation and mediation. the workers or the employer have the right to request the People’s Court to settle the dispute. If there is no agreement. In Japan. It is mandated to settle collective labour disputes. the chairman of the Labour 23 . The arbitration council can make proposals that. If conciliation fails. whether or not they involve rights or interests or labour disputes that were not settled by the labour conciliation council and one or both of the parties have requested the labour arbitration council to settle the dispute. when accepted by the parties. This neutral third party is the labour conciliator of the local labour office and is a public servant. Upon request of one or both of the parties to the dispute or upon his/her own initiative. constitute a binding agreement. If there is an objection. The council is competent to settle individual and collective labour disputes. If there is no labour conciliation council in the enterprise. This court is empowered to make the final adjudication on collective labour disputes. the council must issue an award that. This council is decentralized down to the enterprise level. the council or the conciliator can make proposals to the parties. The Labour Relations Commission maintains a list of conciliators who are private persons with knowledge and experience and who are capable of rendering assistance for the settlement of labour disputes.

in a dispute concerning a public welfare undertaking.Relations Commission nominates one or more conciliators. In the event a conciliator has no prospect of achieving a settlement. the consultant provides information to both the worker and employer on the means of resolving the dispute. conciliation and mediation are distinct modes of LDR in Japan. While not a full-time public servant. ascertain their respective points of view and assist in arriving at a settlement.  when. The conciliators act as intermediaries between the parties. it is then handed to the head of the regional labour office for advice and instruction. which took effect in 2001. a request for mediation has been made by either party to the Labour Relations Commission. The law institutionalizes a consultation unit as the entry point for individual labour disputes. according to the Labour Relations Adjustment Law:  when a request for mediation has been made to the Labour Relations Commission by both parties to the dispute. Mediation is applied in any of the following cases. as regards mariners covered by the Mariners Law. by the Minister of Transport) or by the prefect governor to the Labour Relations Commission. A person knowledgeable in labour problems can also provide his/her offices to resolve the dispute. in a dispute concerning a public welfare undertaking or in a dispute of a large scope or involving work of a special nature and therefore seriously affecting the public welfare. Although coordinated by the same agency (the Labour Relations Commission). a conciliator may receive compensation for expenses necessary for the performance of his/her duties. a request for mediation has been made by the Minister of Labour (or. in a dispute concerning a public welfare undertaking.  when either one or both the parties has requested the Labour Relations Commission for mediation in accordance with the provisions of a collective agreement.  when. the Labour Relations Commission on its own initiative has decided ex officio that it is necessary to carry out mediation.  when. as fixed by Cabinet Order. he/she withdraws and reports the salient facts of the case to the Labour Relations Commission. Mediation specifically applies to collective disputes arising from the Trade Union Law. Through this unit. 24 . Mediation of a labour dispute by the Labour Relations Commission is carried out by a tripartite mediation committee consisting of an equal number of members representing the employers. the workers and the public interest. If the dispute cannot be resolved through consultation. A new development in Japan is the Law Promoting the Resolution of Individual Labour Disputes.

And they share at least four characteristics: i) The arbitration mechanism is provided by the State and is institutionalized through legislation. The arbitration mechanisms of Australia and the Philippines illustrate this point: The Australian Constitution restricts the federal Government’s role in industrial relations to “conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of one state”. sexual harassment or other work conditions. advice and outside offices. The 16 Japan Institute for Labour Policy and Training. it cannot exercise judicial power and thus cannot resolve rights disputes (Fenwick. retirement. resolves a labour dispute. creating labour tribunals within the judicial system to resolve individual disputes that cannot be resolved through consultation. The following section discusses federal arbitration performed through the AIRC. Arbitration mechanisms exist in all nine countries in the study. the arbitrator may attempt to conciliate or mediate the dispute. iv) The award or resolution of the arbitrator is generally final and binding on the parties. Accordingly. iii) In the course of the arbitration proceeding. except for individual termination disputes. 28. The AIRC arbitrates labour disputes at the federal level only. The AIRC’s core functions encompass setting wages in federal awards. By constitutional limitation. who is either a government functionary or a private person chosen by the parties. authority and design. which are also under the jurisdiction of the AIRC. settling industrial disputes and registering trade unions. the federal system features two independent bodies: the Australian Industrial Relations Commission (AIRC) and the Office of Employment Advocate (OEA). national arbitration mechanisms vary greatly in scope. Jurisdiction over individual disputes is vested in the courts. As established by the Workplace Relations Act (WRA) of 1996. The OEA investigates breaches of the WRA’s freedom of association provisions and files individual employment agreements. disputes within states are resolved at the state level under applicable state laws. 25 . Jurisdiction of the AIRC is limited to collective disputes. ii) Submission of a case to arbitration suspends the right of either party to take industrial action. 2002). called Australian Workplace Agreements (AWAs). Nevertheless. the AIRC’s jurisdiction applies only to interest disputes. registering new awards and enterprise agreements. “Resolving individual labour and management disputes.Disputes that are brought before consultation units involve mostly termination issues or those relating to the modification of employment contracts. In May 2004 a Labour Tribunal Law was also enacted.” Labour situation in Japan and detailed analysis 2005/2006. As well. Australia’s LDR system is divided into federal and state levels.16 Arbitration structures Arbitration is a mode of dispute settlement in which an impartial third person. p.

days to be substituted for. stand-down provisions. arbitration is performed through three distinct mechanisms: the National Labour Relations Commission (NLRC).AIRC’s primary authority is to issue awards or certify collective agreements. The WRA provided that awards would consist of only 20 "allowable matters". Before the WRA. Thus. The WRA limits the AIRC’s authority to what is termed “allowable award matters” as follows: ordinary time hours of work and the time within which they are performed. The dispute-settling process included in an award may only be used to resolve disputes about matters arising under the award and between persons bound by the award. in some cases. loadings for working overtime or for shift work. By the terms of the WRA. casual. responsibilities or skills that are not taken into account in rates of pay for employees or disabilities associated with the performance of particular tasks or work in particular conditions or locations. each award includes a term for a disputeresolution process as the model set out in the WRA. awards generally cover certain classes of workers within a given industry. notice periods and variations to working hours. Because the Australian bargaining structure is centralized. rest breaks. the Office of the Secretary of Labour and voluntary arbitrators who are 26 . penalty rates. which may be considered in enterprise agreements. of days declared by or under a law of a state or territory as public holidays. To date. or a procedure for substituting. regular part-time and shift work. incentive-based payments and bonuses. or “stripping”. leave for the purpose of seeking other employment after giving notice of termination by an employer to an employee. conditions for outworkers but only to the extent necessary to ensure that their overall conditions of employment are fair and reasonable in comparison with the conditions of employment specified in a relevant award or awards for employees who perform the same kind of work at an employer’s business or commercial premises. annual leave loadings. observance. Conditions removed by "award stripping" are now negotiated separately through the enterprise bargaining process in the form of certified agreements or AWAs. redundancy pay. an award also includes dispute-settlement procedures. monetary allowances for expenses incurred in the course of employment. dispute-settling procedures. with pay. type of employment. Awards are orders that are the arbitrated outcome of a dispute between an employer and one or more unions. such as full-time. 100 matters. ceremonial leave. A term providing for any other dispute-settling process or procedure is not about an allowable award matter. days referred to. awards by the AIRC had evolved over time to include. about 85 per cent of awards have been stripped. The WRA reformed the Australian industrial relations system through what has become known as the concept of award simplification. In the Philippines.

the NLRC is a compulsory arbitration mechanism for all intents and purposes. hours of work and other terms and conditions of employment if accompanied by a claim for reinstatement. in his opinion. In such cases. cases involving wages. In practice. use of the grievance mechanism at the enterprise level and thereafter conciliation and mediation through the NCMB are preconditions to the jurisdiction of the voluntary arbitrator. The orders of the Med-Arbiter can be appealed to the Secretary of Labour (Labour Code). moral. Labour Code).or inter-union issues are also treated as arbitration cases that are resolved by the MedArbiter. The primary arbitration mechanism is the NLRC. rates of pay. a public servant in the Department of Labour and Employment who is deployed in the regional offices but under the technical supervision of the Secretary of Labour. cases arising from the commission of prohibited acts by labour organizations and employers.private citizens accredited by the National Conciliation and Mediation Board (NCMB). It has exclusive and original jurisdiction over unfair labour practices. Because its jurisdiction is exclusive and that agreement of the parties is not a precondition for invoking it. a labour dispute exists that is causing or is likely to cause a strike or lockout in an industry indispensable to the national interest” (Article 263[g]. The Secretary of Labour exercises extraordinary compulsory arbitration powers “[w]hen. The NLRC and the NCMB are agencies attached to the Department of Labour and Employment. voluntary arbitration is distinctive because the arbitrator is a private person who is accredited to perform a public task. and all other claims arising from employer-employee relationships. termination disputes. certifies the dispute to the NLRC for compulsory arbitration. orders and awards of these three mechanisms are final and binding. With 27 . exemplary and other forms of damages arising from employee-employer relations. claims for actual. they can only be brought before the courts on questions of fact and law. representation. Compared with compulsory arbitration. recognition and intra. including the legality of strikes and lockouts. The decisions. instead of assuming jurisdiction. Its jurisdiction is expansive in that it includes individual and collective disputes as well as rights and interests disputes. In addition. voluntary arbitration in the Philippines is applicable more to collective disputes arising from interpretation of collective bargaining agreements. The general jurisdiction of voluntary arbitrators pertains to cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation of company personnel policies and any other labour dispute that the parties may agree to submit before the voluntary arbitrator (Article 262. Labour Code). The same power may be exercised by the NLRC over the same type of dispute if the Secretary of Labour.

Australia’s federal mechanism is based on the WRA of 1996 and the Philippines’ is based on a labour relations law enacted in 1989. could not be more divergent. Australia obviously envisioned a dispersed arbitration and LDR mechanism with more reliance on enterprise bargaining and individual workplace agreements than on government methods. agreement of the parties to submit the case to voluntary arbitration is a jurisdictional precondition. Their current arbitration models are actually secondgeneration models that were introduced as part of larger reforms in their industrial relations systems. it has been vested with powers that are normally associated with regular courts. the power to issue injunctions and the power to execute its own decisions. the Philippines has increased the role of the bureaucracy in LDR. In sum. Australia has retained the role of the courts with respect to individual disputes. however. The path followed by these countries. Australia and the Philippines are early developers of labour dispute mechanisms. 28 .respect to Article 262 cases. This includes the power to award actual. conforming to its Constitution. With the stripping of allowable award matters under the WRA. moral and exemplary damages. On the other hand. while the primary arbitration agency in the Philippines – the NLRC – remains an administrative tribunal.

about half the average monthly pay of a Chinese worker (Wu. In effect. But whether or not there is a fee in entering an LDR mechanism. In the Philippines. including costs from the secondary effects of industrial actions and perceptions on the lowering of competitiveness.4. rule of law. litigation costs.  costs of lost opportunities. Governance Issues LDR mechanisms are institutions of governance. voice and participation. A practical way to estimate the costs of disputes is to combine the following:  costs to government. 2006). A common public policy concern. the tendency is for them to go instead to a compulsory arbitrator. especially workers. a dispute always has costs. This chapter discusses why governance matters and shows how governance principles such as access. including loss of productive work days.  costs to society and the public welfare. who is a public servant and whose services are free. in China. High costs of disputes restrict the access of parties. filing and lawyers’ fees and incidental expenses. submitting a case to arbitration requires the claimant to pay a fee of more than US$50. this deprives them of the protection provided by the substantive laws. For instance. and efficiency and responsiveness are embedded in national LDR systems. is the rising costs of labour disputes. accountability. whoever bears it. Across the nine countries. time spent pursuing the case at the expense of more productive work and re-alignment of resources to respond to the costs of pursuing the case. Calculating the costs of labour disputes Disputes must be resolved in the most efficient. to LDR mechanisms. in the form of maintaining public institutions. including lost-time pay. voluntary arbitration is promoted as a preferential mode of dispute settlement. therefore. the parties have to pay a fee to the voluntary arbitrator. In addition to how they are designed. an important question is how their design internalizes governance indicators. reforms of LDR mechanisms have been motivated to a large extent by the common realization that labour 29 . including paying the salaries of public servants. However. Thus.  costs to parties. least expensive and most effective way possible.

have repeatedly made this objective public. All nine countries in this study have embraced this as a matter of advocacy. such as dialogue. are there so few disputes going to arbitration in Malaysia and Thailand but so many going to the same mechanism in the Philippines? The design of LDR mechanisms and how the substantive law feeds into its internal workings is an important factor in the occurrence and resolution of labour disputes. The ILO has actively promoted the more consensual and cooperative modes of dispute resolution. China and Japan. conciliation and mediation. negotiation. labour codes and laws created the infrastructure for rights-based industrial relations systems. With respect to collective agreements. for instance. clear and unambiguous contract language and intrinsic fairness of contract provisions can prevent or at least minimize the occurrence of disputes. The structuring of substantive law may encourage the parties to assume greater responsibility in preventing or resolving disputes or. founded on the principle of labour protection. for all their contrasting experiences. a priori participation of parties in defining the scope and content of the employment relationship through individual or collective employment contracts. In various ways. in varying degrees. how are national experiences different? What makes some countries more prone to labour disputes while others appear to have very few problems? Why. workplace agreements are negotiated by individual workers and are subject to the approval of a competent authority to ensure fairness. But institutional reforms to implement this advocacy have been slow to take root. Effects of substantive laws on mechanism design Starting from the 1990s. on the other hand. the fact that these are entered into through union representatives assures workers of equitable and fair treatment and minimizes future disagreements. The following provides a discussion of three facets of this argument: 1) The substantive laws in all nine countries allow.disputes are not only getting more expensive but can also be a drag on a country’s competitiveness. In Viet Nam. every employer is required to adopt an individual or collective contract that conforms to existing standards. and to a certain extent in Thailand. substantive laws structure the behaviour of the parties to an employment relationship in order for them to act in a desired manner. Quality participation in the preparation of the employment contract. encourage them to choose third-party intervention. the 30 . in lieu of more legalistic modes. Across the nine countries. In Australia. As long as the provisions of the contract are complied with in good faith. the content and substance of national constitutions and labour laws have converged along fundamental or core international labour standards. Given this convergence.

can encourage the settlement of disputes through the preferred modes of negotiation. 3) Substantive laws embody policy choices. Nevertheless. there is a learning curve. claimants prefer to file cases to resolve termination disputes. statutory requirements for a strike or lockout. Notice to the administrative authority or consultation prior to termination are generally seen as rigidities. if properly complied with. unlimited back wages and. 2007). 2) Some countries require compliance with certain conditions before parties can take actions that have the potential of causing disputes. the expropriation effect and the rigidity effect of labour regulations. including the observance of cooling-off periods. their potential to prevent disputes. compensation for damages. on labour disputes (Ahsan and Pages. such as Japan and the Philippines. among others.likelihood of differences ripening into labour disputes and entering formal LDR mechanisms can be reduced. This is true for countries that have “learned” to use the process. the employer has the burden to prove that the termination was legal. there is a requirement to consult with workers prior to specific types of termination. a government may have decided to invest a large role for the State and the bureaucracy in resolving labour disputes. in some cases. Given the consequences of a finding of illegal dismissal as prescribed by the law. cannot be overemphasized. conciliation and mediation. Accordingly. resulting in huge case inflows and backlogs in the arbitration mechanism. Related to this analysis is a seminal study on the effects of labour regulations. delays in the disposal of cases can actually benefit the worker because it increases the pay-off if he/she wins and doesn’t cause any harm if he/she loses. The law also provides that an illegally dismissed worker shall be reinstated in his/her job immediately upon order of the arbiter. with full. This seems to be the case in the Philippines where individual termination disputes can be immediately submitted to compulsory arbitration. Additionally in India. 31 . At some point. or to escalate disputes in cases of non-compliance. For newer industrial relations systems like China and Viet Nam. there is a requirement to notify the administrative authority prior to termination of employment. The expropriation effect is related to problems that occur when labour laws make it easier for workers to appropriate part of the returns of employers’ investments. The study points to the price effect. In collective cases. In Viet Nam and India. Many workers and unions still do not know the legal requirements for strike action and the consequences of not observing them. Ease of entry into the arbitration mechanism for the worker and compulsion to participate in it for the employer create a strong incentive for the dismissed worker to file a termination case rather than settle matters at the enterprise level. Under the substantive laws. Most strikes in these two countries are undertaken without regard to the legal requirements.

On the contrary. It may lead to a quicker resolution of the dispute and can act as a filter in limiting the number of cases entering more formal and legalistic modes of resolution. A fair amount of administrative de-concentration or decentralization is taking place. This is one of the main policy dilemmas in countries that still follow compulsory arbitration. efficiency and effectiveness A centralized LDR system is one that is open. Improving access. single. Further. the parties will agree on the fairest and most efficient solution to the dispute. win-win approach and the like. The procedure in Australia’s AIRC that empowers just one of its 32 . Different forms of delegation are also being recognized in statutes. has been the norm. To temper this outcome. using cooperative and consensual modes of dispute resolution at the earliest stages when cooperation is still possible. independent of how the law allocates rewards and consequences. applying first the consensual modes of dispute settlement is obviously less costly. captured in such rubrics as alternative dispute resolution. without forcing redistribution or putting either at a disadvantage. cannot be expected to be the most efficient structure in solving labour problems. There also is continuing efforts within the nine countries to decentralize the LDR function. with responsibility being spread out to regional and provincial levels that have jurisdiction over the locus of the dispute. Bureaucracies. Multiple access.The question lies in how the substantive law and the LDR mechanism combine to allocate rewards and consequences. Is the law designed to force redistribution of resources from the employer to the worker in the event there is no agreement? If forced redistribution through a thirdparty LDR mechanism is an option. non-exclusionary and publicly provided and where all labour disputes can be brought for resolution. such as arbitration and court adjudication. Some employers will also not oppose such a mechanism if it accommodates rent-seeking. is now apparent across the nine countries. The common objective across the nine countries has been to nudge parties towards more shared responsibility in resolving their own disputes. In this regard. based on different modes of dispute resolution and invoked in accordance with the sequential principles of dispute settlement. the experience across the study’s nine countries shows distinct classifications of disputes that are processed through separate specialized channels. The hypothetical model presented previously does not argue for a centralized LDR system. especially monolithic ones. The theory is that if transaction costs of negotiating or bargaining are low. mutual-gains approach. higher consciousness on consensual modes of dispute settlement. workers will go to the mechanism regardless of the State’s expressed policy preferences. substantive laws and LDR mechanisms should be designed to make it easy for both parties to negotiate or bargain.

In Malaysia. The setting up of conciliation and mediation committees at the enterprise level in China. a worker has free entry or access to mediation and conciliation services provided by the Director of Industrial Disputes. In Malaysia.members to act on certain matters without the participation of other members is one form. If the dispute is not resolved. In the Philippines. with representatives of workers and employers as members. an employer who appeals against a judgement of the arbiter is required to post a cash or surety bond of an amount equivalent to the award. But it does not specify the standards under which the Minister of 33 . the parties must pay for the services of the voluntary arbitrator they have chosen. As previously mentioned. In most countries. Procedural conditions required to enter an LDR mechanism also affect access. If the dispute is not resolved at the level of the minister. Authority given to private practitioners in Japan to assist in the resolution of individual disputes is another. various approaches are employed: In China. it is the State that prescribes the rates and pays for the fees of private persons or consultants engaged to assist in the resolution of labour disputes. a pay-per-entry approach in an LDR mechanism is a problematic one because it can aggravate the inherent economic disadvantage of the worker vis-à-vis the employer. parties to a collective bargaining agreement are required to go through the enterprise-level grievance procedure before they can invoke third-party intervention. In voluntary arbitration. In Japan. some arbitration mechanisms require payment of fees. Yet. Where courts function as LDR mechanisms. under the Ministry of Human Resources. Arbitration fees include an acceptance fee and a fee for dealing with the case. is yet another. the law clearly specifies the procedure before a worker can go to the labour courts. filing and docket fees are normally prescribed. Fees may act as filtering devices to discourage parties from invoking third-party intervention immediately. In the Philippines. access to most mechanisms has generally remained free. jointly with the departments in charge of finance administration and commodity prices administration. although the State also provides a subsidy. the State charges nominal administrative fees for compulsory arbitration disputes upon the filing of a case. A concern is that procedural conditions may actually work as outright or subtle barriers to access particular LDR mechanisms. In situations where fees are paid. the latter may refer it to the labour courts. under the State Council. the party that applies for arbitration pays the arbitration fees according to the relevant rules set by the State. While LDR mechanisms are being decentralized and localized. Further. legitimate status is required before a union can have legal standing in a labour dispute. The rates and procedures for charging arbitration fees are determined by the department in charge of labour administration. the director may refer the matter to the minister.

500 ringgit. thereby disqualifying them from using the LDR mechanism.500 ringgit from the coverage of the labour laws pertaining to workers. The effect is to exclude those earning more than 1. Further. which is lower than the national median wage. whether the discretion is exercised or not. Under the Industrial Disputes Act. may assume jurisdiction over a dispute that in his/her discretion involves national interest. In the Philippines and India. 34 . the Labour Secretary and Minister in Charge of Labour. The law simply leaves the minister with the discretion and does not provide for any remedy. The effect of intervention is to remove the dispute from the regular LDR mechanisms. respectively.Human Resources may refer the dispute to the courts. Malaysia also restricts workers’ choices in securing legal or union representation to assist them in pursuing their claims. the definition of a worker is limited to those whose monthly income does not exceed 1. it has what may be described as a “level of income test” in entering LDR mechanisms.

where conciliators and mediators are external third parties and public servants. by all of them. the nomination of a conciliator or mediator is made by the chairman of the local or central labour relations commission. employers and the public). all nine countries have adopted policy preference for having the parties settle their own disputes. In Japan. assignment to particular cases is done randomly. The possibility exists for the choice to be made by the dominant party. there is the requirement that workers’.Voice and participation At the enterprise level. Because the labour relations commission is tripartite (with representation from workers. the worker. But what about the individual level? In the Australian Workplace Agreements (AWAs). such as in the cases of China and Viet Nam. To ensure that the worker is not disadvantaged. individually or with the assistance of a union. but the procedure for designation is not clear. The AWA covers terms and conditions of employment and may also incorporate a dispute settlement procedure in case a dispute arises. parties do not have the statutory right to choose their conciliators or mediators. Nomination implies a right of the parties to veto (but no information on this matter was available during the research period). for which nominations must come from the members of the appropriate labour relations commission. an AWA must be approved by the Office of the Employment Advocate upon showing that the contract passes the “no disadvantage” or “fairness” test. Generally. although in practice. Can parties choose the persons to whom their dispute is submitted for settlement or resolution? In conciliation and mediation at the enterprise level. Dialogue and negotiation as the preferred first-line mode of settlement is endorsed. thus. the parties are represented by their designated representatives. In the Philippines. employers’ and the public interests must be equally represented in the committees. 35 . expressly or by implication. In this respect. Voice and participation through dialogue and negotiation is a central facet of collective bargaining across all industrial relations systems. Nominations for conciliators must be done from an accredited list of conciliators. it can be made by the employer in the exercise of his/her mandated duty to set up a conciliation council in enterprises with ten or more employees. Another aspect of voice and participation is choice. nomination based on mutual choice is not prohibited. Mediation is done through committees. the AWA may embody the most direct and institutionalized form of voice and participation for individual workers among all industrial relations and LDR systems included in this study. directly participates in negotiating his/her own employment contract.

however. National constitutions very clearly recognize this point. the AIRC is mandated to perform its functions with due regard. In Japan and Korea. labour disputes should not only be resolved fairly for the parties but also for the larger goal of promoting industrial peace and economic development. In China and Viet Nam. conciliation. Thus. In the Philippines. Nevertheless. disputing parties may not have a direct participation in choosing who the conciliator or mediator will be. This appears to be a shared perspective actualized in different ways in the laws and procedures of all nine countries in the study. LDR functionaries are expected to settle or resolve disputes with due regard to the laws. low inflation. In Australia. there is proxy participation through interest representation because the nominations always come from members of a tripartite body. However. The Philippines regards labour contracts not as ordinary contracts but as contracts vested with public interest. mediation or arbitration. Having said this.What emerges is that in Japan. is included. As a rule. labour disputes are to be prevented or resolved. All nine countries assume that labour disputes constitute a special type of dispute whose resolution requires a specialized mechanism or procedure. negotiation. Rule of law Whether the mode of dispute settlement is dialogue. the public interest or the State’s interest or to promote productivity and full employment. In disputes arising from collective bargaining agreements. parties to a compulsory arbitration case do not have a right to choose. with the higher interest of the State always in mind. it is clear that the resolution of labour disputes bears a social function and responsibility. labour dispute resolution is not only an exercise in law – it is also an exercise in equity. creation of jobs and high levels of employment (WRA. 36 . The parties also have a choice in defining the issues to be submitted as constituting the labour dispute. voluntary arbitration assumes that the arbitrator is chosen directly by the parties. as amended). among others. minimum labour standards form the baseline in any settlement or resolution. to the desirability of high levels of productivity. Whether it is to uphold the ethic of the greater good. In arbitration. and more particularly in mediation. the agreements themselves usually contain a dispute settlement procedure in which a potential neutral third-party. the overall welfare effect becomes a necessary criterion in evaluating LDR systems. the right of the parties to choose the arbitrator is not generally expressed in statutes. or at least the procedure for choosing the third-party if a dispute arises.

In Japan. appointees to the AIRC must have the same qualifications as judges. Accountability Across the nine countries. In Australia. provided the rules of engagement are clear. and their appointment and tenure is made under and protected by administrative or civil service laws. does not necessarily negate its independence so long as the higher authority does not have veto power or does not exercise control and direct supervision over the mechanism. The independence of functionaries is also strengthened if they possess specialized or expert qualifications. This makes them subject to civil service rules or. it is the power to resolve the issues under the best lights. Korea and Viet Nam. Japan. independence means the authority to control or direct the proceedings free from political or extraneous influences. the appointment of the public sector members of the central labour relations commission must be done with the consent of the Diet. In arbitration. The most common are the following:  LDR functionaries are public servants or at least they are acting as public servants when they are performing their functions. In conciliation and mediation. In the Philippines’ NLRC. in accordance with law and equity. would also affirm the independence of the mechanism. the Malaysian King appoints judges in industrial courts.  LDR functionaries are appointed by a high-level official. Members of the central labour relations commission in Japan and Korea are appointed by the prime minister.  LDR functionaries must possess a minimum set of qualifications. several measures are employed to ensure that LDR functionaries are accountable. based on a list prepared by the labour minister. to the rules of the judiciary. In China. labour arbiters and commissioners must be lawyers with 10–15 years of membership in the bar. in the case of labour courts. Attachment of the LDR mechanism to a higher authority. Independence refers to the functionaries of the LDR mechanism but also includes the mechanism itself. in Australia. In the Philippines. the AIRC president.A characteristic of LDR mechanisms that aids in promoting respect for the rule of law is independence. Conciliators and mediators who are full-time public servants are appointed by a high-level labour ministry official. vice president. are men or women of unquestionable probity and integrity. 37 . The exercise of oversight functions by the legislature or judicial power by the courts over the LDR mechanism. usually by the minister or secretary of labour. they must be persons with demonstrated knowledge or expertise in labour relations. deputy vice president and commissioners are appointed by the country’s governor-general. NLRC labour arbiters and commissioners are appointed by the country’s president. such as the ministry of labour.

Accountability is enforced through the implied power of the nominating sector to recall.  LDR functionaries must follow prescribed procedures. Commissioners of the AIRC in Australia and commissioners and labour arbiters of the NLRC in the Philippines hold office until they retire. including a country’s Supreme Court.  LDR functionaries who represent workers and employers in LDR mechanisms with a tripartite composition must be nominated by their respective sectors as a condition for their appointment. subject to good behaviour. This is true in Japan. Korea and the Philippines. They are bound. subject to renewal. Administratively. LDR functionaries are ranked highly in the bureaucratic hierarchy.  LDR functionaries have well-defined tenure. the chairman of the NLRC has the same rank as the presiding justice of the court of appeals. A different approach is employed in Japan and Korea where workers and employer members of the regional and central labour relations commission have a term of two years. 38 . while labour arbiters have the same rank as regional trial court judges. In the Philippines. to resolve labour disputes within given periods of time. With respect to arbitrators and judges of labour courts. they are subject to oversight by the minister or secretary of labour. among others. their decisions may be reviewed by higher courts.  LDR functionaries are subject to oversight.

This threat potential increased the gravity and scope of conflicts and disputes. Standards gave individual workers both protection and power by prescribing legally enforceable rights. days and hours of work. and social protection were adopted. With freedom of association. particularly for conciliation. the economic weapon of strike that workers as a collective group possessed became far more threatening to the general welfare than any individual grievance. various labour standards were developed to provide guiding principles on what constitutes humane conditions of work. to bargain collectively. which were usually part of the judicial system. It became necessary that the relations between unionized workers and employers – in technical terms. This led to the recognition of the need to protect workers by ensuring just and humane conditions of work. they formed separate but complementary LDR mechanisms. Following the ILO Constitution. labour relations – be governed by a set of laws. To the extent that inspectorates and labour courts gave workers the venue to assert these rights. the disputes were referred for adjudication to the labour courts. minimum wages. employers and the public at large. The second thread is the rise of unionism and collective bargaining from the early part of the twentieth century to the 1970s. 39 . Where these rights were not observed and non-compliance or denial ripened into disputes. To ensure compliance and enforcement. embodied in the right to organize. specialized LDR mechanisms. Standards relating to minimum age of employment. national authorities set up labour inspectorates. leave. holidays. Convergence and Divergence Historical movements Three historical “threads” run through the evolution and development of LDR systems. overtime. Industrial unrest and social tensions over workers’ exploitation and poor working conditions in industrial countries brought about the first one. both at the international and national levels. The power of unions is the power of collective action. regulations and institutions that protected workers. Thus. the Declaration of Philadelphia and the norms set by ILO Conventions and Recommendations. It is ranged against the inherent economic advantages of employers and their power to lock out labour. were set up to prevent and resolve union-management disputes. workplace safety and health. mediation and arbitration. to strike and undertake other forms of industrial action.5. the right to organize and the right to collective bargaining regarded as fundamental human rights.

a decline that continues to the present. In these two threads of development. ii) Externally. together with the labour forces of the old Soviet bloc. For these countries. Malaysia and the Philippines. the effects of globalization on industrial relations are quite different. which means that collective disputes involving unionized workers was given more policy prominence. This has led to the decline of unionism in the market economies. In the market economies. the boundaries between LDR mechanisms were labour relations-centric. Korea. It brought about the collapse of communist regimes and their transition to democratic political institutions and market economies. profit margins have whittled down. particularly freedom of association and the right to collective bargaining. which brought about political and economic liberalization. They initially shaped the LDR systems of the early developers – in particular Australia. eroding the ability of the unions to bargain for better benefits and even secure the employment of their members. it is notable that as transition economies. Workers from market economies compete with workers from transition economies. Consequently. in the production of goods and services created an infinitely elastic global labour pool. One is that the participation of the labour forces of China and Viet Nam. Specialized institutions dealing with these issues.their LDR systems by placing emphasis on enterprise-based conciliation and 40 . Although arbitration and court adjudication existed in China even before the transition. the foreign trading and investment partners of countries in transition also raised similar demands for adoption of labour standards in order to level the playing field and avoid what has been described as a competitive “race to the bottom”. China and Viet Nam started building . The first and second threads are at the core of industrialism and industrial relations. the capacity of the labour inspectorate systems of both countries was limited. became the fulcrum of industrial relations policy. Japan. Specifically. the LDR system is generally a mix of three mechanisms – i) the inspectorate. While labour standards were put in place. it strengthened the citizens’ demands for basic labour rights and institutions that had been recognized and used by democratic and market economies. ii) arbitration usually preceded by conciliation and iii) mediation (conceptually for collective disputes) and the courts that are either specialized or part of the regular judicial system (usually exercising direct jurisdiction over individual disputes and review powers over arbitration awards or decisions).and continue to build . particularly union registries and arbitration. more emphasis was given to the resolution of issues through collective bargaining.The third thread is globalization. strikes and lockouts. India. Its effect on the industrial relations systems of these regimes can be viewed from two angles: i) Internally. The third thread has been dominant in shaping the LDR systems of China and Viet Nam.

41 .mediation. This is in contrast to the early developers. whose preference was for third-party intervention outside the enterprise.

On the whole. The history of industrial relations is an alternating cycle of equilibrium and disequilibrium. With the convergence of the three historical threads and the entry of globalization. How have industrial relations and LDR systems responded? The nature of changes taking place among the nine countries recalls an early distinction raised by Dunlop (1958) between conflicts played out within systems and conflicts over the shape of such systems. Only systemic changes can resolve such conflicts in a holistic manner. a new cycle of disequilibrium has been set in motion. 98. When these institutions started functioning. The changes that have taken place in the Philippines belong to the first type. The role of the State in LDR. The later developers started building their own institutions in accordance with their own values and also with due consideration to the legacy of industrialist institutions and values. 87 and No. adding to mechanisms that were already in place. comprised the disequilibrium phase at the turn of the twentieth century. arbitration and minimum standards setting. The principal actors in industrial relations did not eschew conflicts. The early developers went on to review their systems.Coping with change At the start of the millennium. the equilibrium was restored. LDR mechanisms in a country simply capture the society’s preferences on how the disputes should be resolved. as technically conceptualized. collective bargaining. these three threads converged. Nevertheless. Changes in the legal provisions concerning the rights to self-organization and collective bargaining brought the laws more faithfully in line with the principles of ILO Conventions No. A recent change is a law increasing the number of divisions (or committees) in the NLRC to address the tremendous backlog of cases in the arbitration system. Technology and globalization have resulted in a rearrangement of employment relationships and work processes. Labour reforms that started in 1986 were inspired by the restoration of democracy. are conflicts played out within national industrial relations systems. these reforms were simply incremental. most scholars agree that the reforms started in 1986 helped bring down the incidence of strikes and lockouts in the Philippines. Labour disputes. with some eventually introducing changes. but the institutions within the system were adequate to prevent or resolve conflicts with minimum damage to the economy and society. But industrial conflicts brought about by globalization and the need for higher competitiveness challenge the shape of the system itself. such as trade unions. strikes and lockouts. Reforms in LDR mechanisms focused on enhancing conciliation and mediation and expanding the scope of arbitration. which in themselves are creations of industrialism. through the bureaucracy and the 42 . The institutions and practices born in the first and second historical threads.

The recent changes in Japan also belong to the first type. or with the assistance of agents. The reasons for the reforms were both practical and economic – among others. Also belonging to the second type are Australia and Korea. an effect that is completely the opposite of the policy preference towards shared responsibility of the parties in settling their conflicts. The legislation strengthened individual workers’ rights to enter into employment contracts on their own. Representation of workers in LDR mechanisms at the enterprise and local levels is a positive approach that can work best if the representatives are independently chosen by the workers. these reforms also signified a shift from administrative paternalism to the rule of law and self-responsibility. Among the second type of reforms are those in China and Viet Nam. expanded and solidified even further. Being relatively recent. mediation and citizen’s participation in LDR processes through administrative decentralization and delegation. Winter 2006. The reforms were part of Japan’s 1995 Economic Plan and were brought about by the recognized lack of expeditious special procedures within the court system dealing with individual disputes. and diversification and individualization of workers in the labour market. “Judicial reform and the reform of the labour dispute resolution system. pp. 3. The direction of reforms was to extend LDR mechanisms to individual disputes through the labour tribunals and strengthen conciliation. the effects of these reforms cannot be determined precisely at present.courts. as well as from pre-entry regulation to rule-based governance of the market. and political will appear to be the key drivers of reforms in Australia. 43 . Elements of participation and decentralization are apparent in the development of tripartite enterprise-based conciliation and area-based mediation. Vol. the decrease in collective disputes but persistence of delays and increasing complexity of cases. the need to upgrade competitiveness. What continues to be done in China and Viet Nam is a firstgeneration experiment – the first attempt at developing an industrial relations system and LDR mechanisms under a market economy. In 1996.” in Japan Labour Review. 1. In spite of this. As noted earlier. the core of the LDR system is conciliation and mediation. Globalization pressures. Centralized unionism that is vertically integrated to form part of the political apparatus is still the norm in both countries. Australia broke away from a long tradition by supplanting its major labour laws with the Workplace Relations Act. The main catalyst for the reforms was the collapse of communism and the consequent economic liberalization of those two countries. shifted 17 Kazuo Sugeno. 4-12. a paternalistic – if not pervasive – role of the State in LDR is undeniable. No. the LDR reforms were wide-ranging but they neither changed the substantive laws nor did they expand substantive rights.17 On the whole. Being a part of the larger effort towards judicial reforms.

lifted restrictions on freedom of association. From an administrative governance standpoint. the changes started with democratization in the late 1980s. compulsory arbitration was the lynchpin of the LDR system. 44 . abolished compulsory arbitration and set up tripartite bodies to build consensus on needed policy reforms and to directly participate or assist in the settlement of labour disputes. After the reforms.protection from collective to individual contracts and dispersed LDR functions among several agencies (such as the AIRC. the wage commission. the approach is not only de-concentration of LDR functions but also devolution of governance to the workplace through more individual contracting and enterprise-level bargaining. This was followed by an exogenous shock – the financial crisis that started in 1997. the Government recognized temporary work (Law on Dispatched Workers). the workplace authority director and the employment advocate office). thus making the labour market more flexible. the Korean Government had restrictive labour standards and highly protective job security laws – laws that curtailed freedom of association and collective bargaining. Before the revisions. The crisis forced economic restructuring and a revision of laws to make the labour market more flexible. In Korea. The democratic space sparked off big strikes.

 continuing professionalizing and skills building of LDR functionaries. But context-dependent factors ultimately determine the choices or combination of choices that States take with respect to the structure.  easy and inexpensive access. private sector or citizens’ participation in LDR is also being encouraged in others.  participation of workers’ and employers’ organizations in the formulation of social and economic policies.6. such as freedom of association. arbitration and court adjudication remain important functions both in rights and interest disputes. less bureaucracy and less legalism are advocated in most. In the nine countries. workers’ participation and the role of the State in LDR. are prominent issues. Further. thereby reducing the potential for disputes. Economic and political choices influence the contours of LDR mechanisms. both substantively and procedurally.  more conciliation and mediation as the first line of third-party intervention prior to arbitration. there are notable efforts to promote the following:  shared responsibility of the parties in LDR. Within this policy instrument. Fundamental labour rights. is reflected in the design of their LDR systems. Reform paths and lessons learned The forces of globalization continue to put pressures on LDR systems. it can be generally said that ways of preventing conflicts and disputes are as important as ways of resolving them. whether these choices are deterministic or causative to LDR outcomes has not been established. Moving Forward Some practices to build on Based on the experiences of the nine countries in the study. challenging their effectiveness with new situations of disequilibrium and 45 .  integration of tripartism into the LDR mechanism in some countries. operation and capacity of the LDR mechanism. state provision is still the main policy instrument in designing LDR mechanisms. Nevertheless. How different States balance market principles and workers’ protection. achieved through decentralization and localization of LDR mechanisms and services. collective bargaining.

ii) The early developers that are in the factor-driven stage and where the pace. the experiences of the nine countries yield key lessons: i) For the early developers. iii) The current shape of LDR systems at the time of shocks as well as their previous institutional experiences. In making choices. some of which were 46 . In these two countries. The main players in the industrial relations system are constrained from engaging political leaders in building a consensus for fear of scaling back labour protection as well as substantive rights already recognized in the statute books. They also tend to validate three assumptions: i) Political and economic developments are external “shocks” to industrial relations systems.conflicts. The combined experiences of the nine countries tend to show that changes in LDR systems are second-round effects of economic and political changes. those who have moderate income levels and whose dominant trade union is affiliated with the ruling political party or otherwise have a relatively weak trade union movement. leading to conflicts that LDR systems are expected to resolve. ii) These shocks generate new insecurities and demands from national constituents. are the leaders in reform efforts. In Australia and Korea the reform process approximates “creative destruction”. determine their responsiveness. which are in the third phase of development under the GCI. These countries have more integrated labour markets (bigger formal sectors). combined with larger economic and political factors. with their labour forces characterized by a large informal sector. have higher income levels and bigger industrial bases. They also have segmented labour markets. iv) In the transition economies of China and Viet Nam. extending to LDR structures and to substantive labour laws. the countries that are higher in the Global Competitiveness Index (GCI) scale have shown greater political will and capacity to innovate. relatively higher unemployment rates and are in the lower income brackets. scope and intensity of LDR reforms are more gradual. While the fast growth of foreign investment inflows may have paved the way for migration of international concepts and ideas. LDR reforms did not actually start with a blank slate. have lower growth rates. institutional inertia also plays a major role. are more conservative in terms of reforms. This is the situation in the Philippines and India. adaptive capacity and ability to contribute to the attainment of development and social justice goals. This may partly explain why little LDR reform is taking place in Malaysia and Thailand. which is between the second and the third phases. Thus. the policy choices have ranged from preservation to enhancement and replacement of existing systems. and Korea. For the nine countries. iii) The early developers with relatively high growth and investment rates. Australia and Japan. are more active in international trade. higher growth and investment rates.

but decline in their incidence has not stopped countries from pursuing further reforms. Countries can learn from each other. and the migration of some practices may at times be desirable. 47 . Convergence of influences and basic universal principles is indeed a general theme. Further. little is said of new developments relating to the horizontal dimensions of LDR mechanisms. the two countries did not start building their post-communist LDR mechanisms along the initial path used by the early developers. In this connection. continuing reforms are characterized by a re-mixing of preferences in terms of modes of LDR. especially in countries with more sophisticated work environments. They chose to start with enterprise-level conciliation and local-level mediation. conciliation and mediation as preferred modes. In conclusion. management and resolution. they may have different starting points. The fundamental objective of LDR mechanisms is to help countries adjust and adapt to fluid environmental circumstances in a manner that is fair and equitable for all. The parties to a labour dispute are still primarily the worker and the employer in a vertical relationship. there is a growing recognition that individual disputes need to be given equal attention. Yet. But with unique national experiences rooted in a country’s culture. advantages and constraints. v) Increases in strikes and lockouts are always part of the justification for LDR reforms. the most instructive way to evaluate LDR mechanisms might be to see them as ongoing experiments in conflict prevention. politics and values. The link between this choice with the culture and the previous political system is an idea that could be explored further. Reforms generally point in the direction of negotiation. there will be diversity more than ever.eventually translated into substantive laws.

4) Describe the extent of political involvement of unions in terms of a) representation in policy-making bodies. as the case may be. e) incidence and extent. used to analyse the LDR systems in each of the study’s nine countries. b) respective shares of public and private sector employment. if any. grouped under thematic headings. b) existence of a political arm or labour party. d) number and coverage of collective agreements. federation. of the union movement and of employers’ organizations. if data is available. Political and economic systems 1) Based on its constitution. d) union/collective bargaining agreement density by sector. if available. including the legislature. 3) Describe the country’s state of unionism and collective bargaining over the past five years in terms of a) unity or plurality. c) total union membership. tripartism or other forms of democratic participation? If so. industry or enterprise-based). 2) Describe the country’s labour market over the past five years with respect to a) respective shares of the formal and informal sectors among those employed. in what way? 3) What type of economy does the country have? Are there enterprises that are state-owned? General labour market indicators 1) Describe the country’s labour force.Annex Guide questionnaire for evaluating LDR systems The following lists the various questions. and c) sector distribution of employment (such as industry. and c) veto power and powers of codetermination for unions in relation to government policies and programmes. unemployment and underemployment rates over the past five years. b) union structure (national. e) levels of bargaining. what is the country’s form of government? Does the country follow a unitarian or federal model? What is the extent of centralization or decentralization of political and governance institutions? 2) Does the political system incorporate elements of corporatism. employment. of industrial action and collective disputes. Rule of law tradition 1) What is the country’s legal system (civil law or common law)? 2) Does the country have a judiciary independent from the executive and political branches of government? What power. services and agriculture). does the judiciary have on executive and political actions? 3) Which of the core ILO conventions has the country adopted? To what extent have these been embodied in the national legislation? 48 . labour force participation.

including payment of wages. c) protection of the right to organize and to bargain. rights or interest)? 2) What is/are the LDR mechanism/s in the country? Is it a specialized administrative agency. or are there separate laws for each sector? Do the labour laws classify types or classes of employment (such as regular. before a strike or lockout can be staged? Do the laws require a decision to stage a strike or lockout to be arrived at through a democratic process? Do the laws require employers to secure clearance from or give notice to administrative authority before they can terminate the services of an employee? Do the laws require payment of severance pay in the event of employment termination? 5) 6) 7) 8) 9) Structure of LDR mechanisms 1) How is a labour dispute defined in the country? What are the most common types of labour disputes? Do the laws provide for a classification of disputes (such as individual or collective. before the LDR mechanism can be invoked? Is access dependent upon the classification of a dispute? Is access subject to the payment of fees? If so.Substantive laws 1) 2) 3) 4) What are the major labour laws in the country? Does the country have a labour code. or is there a separate mechanism for each sector? 4) What are the conditions. or right to damages? Do the laws provide for procedures that enable the parties to work out terms and conditions of employment through negotiation. or is it an independent agency? How is the LDR mechanism funded? To which higher authority is the LDR mechanism accountable? Is there a supervisory or advisory body that oversees or monitors the mechanism? 3) What is the jurisdiction or scope of authority of the LDR mechanism? What labour disputes can be brought before it? Is it accessible to both public and private sector workers. right to reinstatement and back wages. conciliation and mediation part of the LDR mechanism? 7) Is arbitration included in the LDR mechanism? If arbitration exists. including notice to administrative authority. indefinite. what labour disputes may be submitted to arbitration? What. is there a procedure for determining majority status? If not. the ministry of labour) or part of the regular courts. how does bargaining take place? Do the laws prescribe conditions. and d) protection against unjust dismissal. if any. are these nominal fees or pro-rated to the claim? 5) Is there a labour inspectorate in the country? What is the relationship between the inspectorate and the LDR mechanism? 6) Are grievance procedure. including protection against unfair labour practices. including grounds for dismissal. or do labour laws exist but are not codified? Do the labour laws cover both the public and private sector. whether individual or collective? Do the laws require registration or notice to an administrative authority before a union can claim legal existence? Do the laws require that a union must have majority status before it can engage in collective bargaining? If so. if any. fixed period) and if so. what are these? How do these classifications affect substantive rights? Do the labour laws provide for protection in terms of a) general labour standards and working conditions. part of a ministry (for instance. b) measures against workplace discrimination. are the preconditions for arbitration? Are parties given the choice to select the arbitrator? 49 .

b) prescribing ancillary remedies (such as injunctions ordering return to status quo or prohibiting certain acts). instrument or procedure in dealing with it? 9) Which party has the burden of proving their cause in a labour dispute? 10) What rules of procedure are followed in the use of the LDR mechanism (such as summary procedures. c) back wages. how can the settlement be enforced? 4) In the event a party (worker or employer) is dissatisfied with the decision of the arbitrator or the court. c) using modes of discovery and rules of evidence. d) reinstatement. d) recognized “wise professionals” or experts. and e) allowing or facilitating efforts of the parties to explore negotiated solutions. training or accreditation standards before a person may be qualified to perform LDR functions? Who appoints such persons? How are they compensated? 12) Describe the LDR mechanism in terms of its composition. compensation or damages). 2) Describe the substantive terms of settlement that are possible under the LDR mechanism (restitution. Does the LDR mechanism work through individuals or through committees? 13) Do the labour laws express a policy that tripartism and shared responsibility are requirements in the setting up and operation of an LDR mechanism? Powers of the LDR mechanism and remedies available 1) Describe the powers and prerogatives of the LDR mechanism in terms of a) determining the issues in dispute (for example.8) Do the labour laws include a definition of disputes involving “essential services” or any comparable concept? If so. c) private persons who represent labour and employers’ organizations. In the event of illegal termination. b) severance or separation pay. would such dispute fall under the LDR mechanism. conciliation. meaning whether the persons who perform LDR functions are a) public servants. does the LDR mechanism have discretion to determine the issues in dispute or is it limited to the issues submitted by the parties?). does the worker have a right to a) compensation by way of damages (what kind of damages). what is the consequence if the periods are not observed? 2) Is there a system to enable public monitoring of the performance of the LDR mechanism (such as posting of status and ageing of cases)? 50 . d) allowing the parties to adopt their own procedures in lieu of standard procedures. is the settlement binding or non-binding? Do parties have a choice on whether settlement shall be binding or non-binding? If non-binding. or e) any combination of the above? 3) If the dispute is settled through the LDR mechanism (whether by grievance procedure. mediation or arbitration). or is there a special device. b) public servants who are nominated by labour and employer organizations. e) ordinary citizens. specialized procedures or procedures similar to litigation)? Do workers’ and employers’ representatives participate in formulating these rules? Are these publicly disseminated? Are proceedings in the LDR mechanism open to the public? 11) Who can participate in the resolution of labour disputes? Do the labour laws prescribe minimum qualifications. limited or full. does the person or group have a right to appeal? Up to what level is this right available (appeals court or supreme court)? Performance of LDR mechanisms 1) Do the laws prescribe periods within which the LDR mechanism should resolve disputes? If so. as the case may be. what is the next step? If binding. either immediate or upon finality of judgement.

3) Describe the performance of the LDR mechanism in terms of a) volume of cases. 4) What are the main strengths of the LDR mechanism? 5) What are the main problems encountered by the LDR mechanism? What efforts have been exerted by the country to respond or correct these problems? 6) How has the LDR mechanism responded to the renewed advocacy for alternative dispute resolution? Can the LDR mechanism be considered a special alternative dispute mechanism for labour disputes? 51 . b) speed of disposition. orders or awards. c) acceptability or enforceability of settlements.