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Editorial

Conciliation Commission: a Relic of the Past or an Effective Tool to Resolve Labor Disputes?

August 2016 - Employment. Legal Developments by AEQUITAS.

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Conciliation Commission: a Relic of the Past or an Effective Tool to Resolve Labor Disputes?

Alexandr Chumachenko, Associate, AEQUITAS Law Firm LLP

On 1 January 2016, Kazakhstan enacted its new Labor Code, which, among other things, altered the procedure for the review and settlement of individual labor disputes.  Now, before going to court, the employer and the employee must have their individual labor dispute reviewed by a special body – conciliation commission.

What is a "conciliation commission" and is it any good in practice?  The first 6 months' experience of putting to practice the new Labor Code regulations has revealed as follows.

Short Historical Background

The institute of conciliation commission is not new to Kazakhstan.  The Code of Labor Laws of the Kazakh SSR (in effect until 1 January 2000) featured a labor dispute commission whose tasks included review of labor disputes (except for those subject to review directly by courts, pursuant to legislation) arising at enterprises, in institutions and organizations between workers and employees, on the one hand, and administration, on the other hand.  It should be mentioned that at that time, such body was mandatory for enterprises, institutions and organizations, the interests of employees being represented by trade unions.

Pursuant to the Labor Law which came to substitute the Code of Labor Laws of the Kazakh SSR, labor disputes were to be reviewed either by agreement of the parties (by the conciliation commission), or in court.  Thus, the activities of conciliation commission turned into an alternative and non-mandatory option to review labor disputes.

The 2007 Labor Code kept the order of things: labor disputes could be alternatively settled either by the conciliation commission, or in court, at the employee's or employer's choice.  In practice, this ended up in a situation where this institute was actually out of use in Kazakhstan, because in case of a disputable issue employees preferred to go directly to court.

Meantime, the Kazakh labor legislation is apparently going back to its roots, since over the past several years the work of trade union bodies and organizations has strengthened and the institute of conciliation commission has again become mandatory for labor dispute settlement.

General Provisions on Conciliation Commission

A conciliation commission is a permanent body whose objective is to settle individual labor disputes between employees and employers.  The conciliation commission is set up at an organization, its branches and representative offices on a parity basis, comprising an equal number of employer's and employees' representatives.

As a general rule, all individual labor disputes (i. e., disputes between a particular employee and the employer) arising after the enactment of the new Labor Code, i. e., starting 1 January 2016, are subject to settlement by conciliation commission.  Exceptions are labor disputes: (1) with heads of executive bodies of legal entities, which are to be reviewed only in court; (2) with household workers, which are to be settled by agreement of the parties or in court; (3) in which employers are small business entities, as these are allowed not to set up conciliation commissions.  If at the time a labor dispute arises the commission has not yet been formed, the period of limitations for such dispute is suspended until the organization sets up its conciliation commission.

The procedure for the setting up and work of the conciliation commission is established by written agreement between the employer and employee representatives or by collective agreement.

The conciliation commission must review disputes within 15 business days of application registration and issue copies of its decision to the disputing parties within three days of the decision adoption date.

Problematic Issues in the Work of Conciliation Commission

In the first instance, it is necessary to point out that the conciliation commission's decision has not been and, pursuant to the new Labor Code, is not a final point in a labor dispute, as the parties may go to court after their dispute has been reviewed by the conciliation commission.  The new Labor Code sets forth two grounds for such submission to court: (1) the labor dispute has not been settled by the conciliation commission, or (2) the conciliation commission's decision is not being performed by a party (parties) to the labor dispute (please note that in case the claimant fails to corroborate the said grounds for going to court, the statement of claim will be rejected by the court's relevant ruling).  Thus, review of dispute by conciliation commission in cases where a party (or both parties) is not satisfied by the conciliation commission's decision and thereafter goes to court in fact just prolongs the conflict.

One should also pay attention to the following aspects of the conciliation commission institute:

Employer's extra costs. Although the new Labor Code does not expressly require employers to bear the costs to set up the conciliation commission and organize its work, as well as to annually train its members in labor legislation basics, in fact, these costs do fall on their shoulders (this is how the law-application practice is at the moment).

Objectivity of conciliation commission's decisions.  According to the Labor Code, conciliation commission is formed to comprise both the representatives of the employees and the employer, the employer's interests being represented by individuals and legal entities accordingly authorized by the foundation documents or a power of attorney. In practice this means that appointed as employer's representatives are other employees of the employer.  Hence, the labor dispute between the employer and the employee is actually reviewed by other employees of that employer.  This situation is fraught with a risk that the dispute may be settled not in favor of the employer (even if the employer's position in the labor dispute was originally legally correct), especially if the dispute indirectly affects other employees or members of the conciliation commission.  At the same time, being employer's employees, the members of the conciliation commission may be exposed to pressure on the part of the employer, thus induced to decide in favor of the employer, despite the actual circumstances of the case.  A third option is also possible – since the representatives of the employees and the employer are reviewing the dispute being guided by the interests of the party they are representing, the labor dispute settlement may give rise to an unresolvable conflict inside the conciliation commission itself.

Competence of the conciliation commission. The conciliation commission's work is essentially to perform the function of an arbitrator in a labor dispute. Obviously, the person acting as an arbitrator should possess not only special knowledge in the subject matter of the dispute, but also special skills to negotiate. Meanwhile, as mentioned above, the conciliation commission is formed to include the employees of the organization who, with a great degree of probability, do not possess all the requisite skills and knowledge. Although the Labor Code expressly mandates annual trainings in labor legislation basics for the conciliation commission members, competent settlement of labor disputes looks problematic for most organizations, at least at the initial stages of conciliation commission establishment.

Confidentiality and exchange of experience. The possibility to resolve conflicts with employees without making them public (disclosing the information the parties would prefer to keep confidential) is certainly an advantage of dispute settlement by conciliation commission (of course, in case the dispute has been settled and the parties are satisfied with the conciliation commission's decision).  However, this hinders the free study of other companies' experience and, accordingly, the own development of organizations on the basis of such experience.

Insufficient legislative regulation. In the Labor Code the legislator does not detail the conciliation commission establishment and work procedure, generally leaving the issue to the discretion of the employer and employees and setting out only some 'point' regulations in this respect.  Accordingly, in order for a conciliation commission to start working at an organization it is necessary to draft and have approved a document, which would govern all the necessary issues.  Meanwhile, practice shows that there are too many issues that need to be clearly addressed.  Here are just some of them.

(1) What is the list of issues the conciliation commission may review?  In particular, should the conciliation commission review a person's contesting a refusal to hire him/her?

(2) In which composition should the conciliation commission hold its meeting, if one (or more) of its members becomes a person concerned in relation to the dispute under review?  Would it be required to appoint, prior to holding the meeting on such labor dispute, new members of the conciliation commission, if the presence of such persons concerned breaks the parity of the parties?

(3) What should be the language of the meeting?  Must the employer provide for an interpreter to be present at the meeting in case the parties disagree on the language of the meeting?

(4) During what time (working or off-work, as applied to both the conciliation commission members and the employee whose dispute is under review) should the meeting be held?  Should the employer release the employees participating in the conciliation commission meeting from work for the corresponding period of time or make any payments in connection with the participation in the meeting during off-work hours?

(5) Where should the meeting take place?  Can it be held online, i.e. without the physical presence of the employee or another participant in the meeting?

(6) How the expert, travel and conciliation commission support costs should be distributed between the parties?  Should these be reimbursable by the employee, if all such costs have initially been incurred by the employer and the decision was not in favor of the employee?

(7) In which case should the labor dispute be deemed unsettled by the conciliation commission so that the parties could go to court?

Summary

The fact that the legislator changed the status of the conciliation commission from a non-mandatory and alternative (to the judicial) labor dispute settlement method to a mandatory pre-trial stage stems, in all appearances, from the desire to somehow unburden the courts, which are usually flooded with labor disputes.  It is still unclear whether or not it was a success.  Such conclusion will be possible only with the lapse of time, when the law-application practice is formed and becomes more established.  However, now it is already clear that all organizations (except small business entities) should bother to set up conciliation commissions and streamline the issues relevant to their activities that might (1) hinder dispute submission to court, (2) give rise to new disputes, or (3) prevent successful settlement of disputes inside the organization.

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