On August 22, 2014, Ecopetrol S.A. the Colombian state oil and gas company reached a labor agreement with two of the principal labor unions in the oil and gas industry:  the “Unión Sindical Obrera de la Industria del Petroleo (USO)” and “Adeco”. As a result of the agreement reached between the parties, a new Collective Bargaining Agreement was executed and will be in force during the next four years. Agreement with other two minor labor unions, also from Ecopetrol, was not reached.

The Collective Bargaining Agreement was reached within the time frame provided by the law for the direct negotiation between the unions and the employers. However, given the circumstances of the parties involved (Ecopetrol is one of the main oil and gas companies in Colombia and the USO the principal labor union in the industry) the agreement was considered a success, especially if consideration is given to the hostilities that took place during the negotiation and the difficulties that arose during the process. In fact, on Wednesday August 20, 2014, most of the local media was anticipating that the agreement was not going to be reached, and that the risk of a strike in the oil and gas industry was imminent.

The principal changes introduced in the Collective Bargaining Agreement are a salary increase of 1.12 percent over the consumer index price for each one of the years in which the Collective Bargaining Agreement will be in force, a considerable increase in the aid for living and education both for the employees and their families, and financial aid for the employees, among other extralegal benefits of the oil and gas industry.

In addition to the labor and employment matters, the parties made a very interesting agreement regarding the inclusion of Colombia as a beneficiary of the Collective Bargaining Agreement. Ecopetrol agreed to provide financial aid for the union leaders to travel to Cuba and participate in the peace negotiation process that is taking place between the Government and the terrorist group FARC-EP.

Moreover, the execution of the Collective Bargaining Agreement between Ecopetrol and the mentioned labor unions has direct implications in all the oil and gas industry. In Colombia all contractors and companies dedicated to the oil and gas industry must have the same salary and compensation scheme for their employees and the base for such schemes are the agreements reached between the main oil and gas companies such as Ecopetrol and their labor unions.