Chile: Copper Workers Strike May Presage More Litigious Labor Relations

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By Tom Azzopardi

A three-week-old strike at the world's largest copper mine could be pointing the way for labor relations in Chile with the courtroom joining the picket line and the negotiating table as a key venue for resolving conflicts between workers and management.

In the latest round, the labor court in the northern city of Antofagasta ordered BHP Billiton-controlled Minera Escondida Limitada to pay its unionized employees withheld gratuities worth 1.545 million pesos ($2,379).

The 2,500 workers have been on strike since Feb. 9 after pay talks ended without agreement. The action has forced BHP Billiton to halt production at the 1 million ton a year mine, sending copper prices to their highest level in almost two years.

Union Claims Victory

In the Feb. 28 ruling, Judge Jordan Campillay held that “given that there is no discussion about the existence, size and accrual of the credit but only about the timing of the payment,” the company should make the payments agreed to under the workers' previous contract within 48 hours.

Escondida argued that it did not have to pay the gratuities because the contract was suspended from the moment the strike began, but the judge said that not doing so would represent a threat to the workers' freedom of association and to strike, which should be protected under the law as fundamental rights.

The company said it would comply with the ruling.

Although just a preliminary measure, the union has claimed a major victory against the company's legal strategy, “which has sought to resolve the strike by economically strangling the workers on strike.”

The payment could give the workers, who have said that they have already saved $1 million to fund the strike, the resolve to continue their protest for many more weeks.

Business as Usual

This is just the latest in a series of judicial actions since the strike began.

For Escondida's union, one of the country's most powerful and antagonistic, this is business as usual, a union spokesman told Bloomberg BNA March 1.

“Labor relations at this company are not good,” union treasurer Carlos Allendes said. “This is the way we have always understood each other.”

But lawyers fear that a new strongly pro-union labor law that comes into force a month from now could make these tactics much more widespread, in particular with regards to critical services.

Law No 20,940, signed by President Michelle Bachelet last August, radically rebalances labor relations in favor of unions by banning replacement labor, requiring bipartite agreements over critical services and letting unions decide who can share in negotiated benefits.

Currently, only unions with sufficient workers to halt production, like Escondida's miners, need to worry about critical services, but with the ban on replacement labor, this will become an issue for all unions.

“We are seeing a concrete case of what could happen with critical services at other companies under the labor reform,” Luis Parada, a labor lawyer at Bahamondez, Alvarez & Zegers, told Bloomberg BNA March 1. “This issue will go to court and hinder negotiations.”

‘Making Us More Demanding'

If both sides are more worried about suing than building the confidence to reach agreement, labor relations are likely to worsen.

At Escondida, management and union negotiators have spent more time in Antofagasta's courts than hotel conference rooms to settle the strike. That is partly due to another aspect of the incoming law.

Beginning April 1, collective negotiations must use the existing contract as their starting point, so both sides are keen to win as favorable a deal as possible because of its bearing on future talks.

The union has refused to meet for government-mediated talks until the company takes clauses ending some benefits and modifying workers' break times off the table.

“It is making us more demanding,” admitted Allendes.

For More Information

To contact the reporter on this story: Tom Azzopardi in Santiago at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For more information on Chilean HR law and regulation, see the Chile primer.

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