According to the Article 61° of the  Refunded Text of Law on Collective Labor Relations approved by Supreme Decree N° 010-2003-TR , (hereinafter, the Law)  in the event the parties do not reach any agreement during the negotiation or in the conciliation, there are three alternatives: (i) the workers have the possibility to go on strike; (ii) mandatory arbitration or (iii) potestative arbitration

By sentence dated on August 17, 2009 and Resolution of June 10, 2010, rendered in the File No. 03561-2009-PA/TC, the Constitutional Court interpreted that the arbitration regulated on the article 61º of the Law, during development of collective bargaining has mandatory character. Thus, if the employer and the union can not reach an agreement on the list of demands, either party may compel the other to an arbitrator settle the discrepancy (unless the workers decide to go on strike), in order to prevent the labor dispute can not be resolved.

In the same line, the Constitutional Court declared that in cases where there is no prior negotiation between the parties and they do not reach an agreement on the level of negotiation, the bargaining level must be determined by the mandatory arbitration.

This interpretation was followed by the Ministry of Labor and Employment Promotion in the Supreme Decree No. 014-2011-TR, which incorporated the article 61-A in the Regulation of the Law on Collective Labor Relations, approved by Supreme Decree N° 011-92-TR.

Indeed, the new Article 61-A of the Regulation established a mandatory arbitration in two assumptions:

  • When in the first negotiation the parties do not agree on the level or content.
  • When in the negotiation are noted bad faith acts, as the following: (i) Refusal of the employer to provide information, (ii) Failure to comply with conditions agreed (meeting dates , etc.), (iii) Refusal to receive representatives and / or advisors, (iv) Any practice that hinders the negotiation, etc.

Therefore, by this Regulation, the Ministry of Labor and Employment Promotion accepted the interpretation of the Constitutional Court that the labor arbitration in collective bargaining has mandatory character, but limited its application for two specific cases, provided that in all other cases would continue to apply voluntary arbitration.

Notwithstanding, recently a Labor Arbitration Court, according to the initial interpretation given by the Constitutional Court and ignoring the provisions of this Regulation, has incorrectly determined that the union does not have to prove "bad faith" on the company, as a prerequisite to begin the process of optional arbitration because, according to its interpretation, the articles 61° and 63° of the Law, and the Peruvian Constitution establishes that the labor arbitration in collective bargaining would be mandatory in all cases and not just those in which the employer had engaged in acts of bad faith.