Fiji Banks and Finance Sector Employees Union v Westpac Banking Corporation [2004] FJAT 40; Award 34 of 2004 (9 September 2004)

THE REPUBLIC OF THE FIJI ISLANDS

NO. 34 OF 2004

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

FIJI BANKS AND FINANCE SECTOR EMPLOYEES UNION

AND

WESTPAC BANKING CORPORATION

FBFSEU: Mr Pramod Rae
Westpac: Mr G Leung with Ms S Sorby

DECISION

This is a dispute between the Fiji Banks and Finance Sector Employees Union (the "Union") and Westpac Banking Corporation (the "Employer") over the constructive termination of Ms Salaseini Nakeke (the "Grievor").

A trade dispute was reported by the Union on 14 February 2003. The report was accepted by the Permanent Secretary on 27 February 2003. The Dispute was referred to a Disputes Committee. As a consensus decision could not be reached, the Minister authorized the Permanent Secretary to refer the trade dispute to an Arbitration Tribunal for settlement pursuant to section 5A(5)(a) of the Trade Disputes Act Cap.97.

The Dispute was referred to the Permanent Arbitrator on 28 May 2003 with the following terms of reference:

"..... for settlement over the constructive termination of Ms Salaseini Nakeke with effect from 24/11/02 which action the union claims as unjust, unreasonable and unfair and therefore seeks her reinstatement without loss of pay or benefits".

The Dispute was listed for a preliminary hearing on 24 June 2003. On that day the parties were directed to file preliminary submissions by 30 October 2003 and the Dispute was fixed for hearing on 30 November 2003. The hearing date was changed to 27 November 2003. That date was subsequently vacated and when mentioned on 20 January 2004 the Dispute was relisted for hearing on 7 and 8 June 2004.

The hearing commenced on 7 June and resumed on 8 June when it was adjourned part heard to 18 June 2004. At the hearing the Employer called four witnesses and the Grievor gave evidence on behalf of the Union. At the conclusion of the evidence the parties requested and were granted leave to file final submissions. The last submission was filed on 29 July 2004.

At the commencement of the hearing, the legal representative for the Employer informed the Tribunal that the Bank acknowledged that the Grievor had been constructively dismissed. This was subsequently confirmed in paragraphs 1.1 as amended and 1.4 of the Employer’s final submission.

Constructive dismissal is the term which is commonly applied to a resignation by the employee in circumstances such that he or she is entitled to terminate the contract without notice because of the employer’s conduct. (The Law of Termination of Employment 6th Edition Robert Upex at page 135).

In Auckland Shop Employees Union – v - Woolworths (NZ) Ltd [1985] 2 NZLR 372 the New Zealand Court of Appeal identified at least three separate situations where a constructive dismissal can occur. First, where a worker is given a choice of resignation or dismissal. Secondly, where the employer has followed a course of conduct with the deliberate and dominant purpose of coercing an employee to resign. Thirdly, where a breach of duty by the employer leads a worker to resign. The Tribunal has adopted this statement as correctly stating the position in law.

The material placed before the Tribunal in this Dispute raises at least two separate claims of constructive dismissal. The first is when the Grievor was given a choice to resign during the Separation Interview on 22 November 2002. The second is set out in the Grievor’s resignation letter dated 24 November 2002. In the second paragraph of that letter the Grievor states:

"Since March of this year I have undergone victimization and unfair treatment which has been extremely frustrating and has brought me to resign".

The Grievor then set out a number of matters which she claimed amounted to a course of conduct designed to coerce her to resign. The Union submitted that the Employer’s actions "had created an untenable situation for Sala and was looking for a way to get rid of her". In addition, the Union submitted that the Employer’s actions also amounted to a breach of the Employer’s duty to act with trust and confidence towards the Grievor forcing her to resign.

As noted above, the Employer indicated that it acknowledged that this dispute was concerned with a constructive dismissal. The concession was made at the commencement of the hearing. The final written submissions filed by the Employer would appear to indicate that the acknowledgement of constructive dismissal applied only to the first claim involving the choice to resign. This acknowledgement relieved the Union of the burden of showing that a constructive dismissal had taken place in relation to the first claim and left the burden of showing justification with the Employer.

In relation to the second claim involving conduct designed to force resignation, the Union bears the burden of showing that the Employer’s conduct caused the resignation but the burden of showing justification again remains with the employer.

It is proposed to consider first whether the acknowledged constructive dismissal which arose during the course of the separation interview whereby the Grievor was given the choice to resign was justified and fair.

The facts concerning this constructive dismissal claim were not in issue. The evidence showed that the Grievor did not disclose her Mastercard as a liability on her two loan application forms dated 21 February 2001 and 28 October 2002. Further, the Grievor used $500 from the loan proceeds of her second loan contrary to the purpose for which the loan was applied. The Grievor also incurred outside debt contrary to the condition of approval of the first loan. Finally the Grievor failed to disclose in her meeting with Mr Smith on 27 March 2001 that she had an existing Mastercard .

The Employer claimed that these actions breached the Bank’s Code of Conduct which requires employees to act with honesty and integrity. The Employer also claimed that these actions breached clause 2.2 of the Personnel Manual which prohibits staff from using loan funds for purposes other than the purpose applied for, failing which will result in disciplinary action, including dismissal. The same clause requires staff to provide accurate and truthful information on all documentation provided. Any false or misleading information will be treated as a serious breach of the Bank’s policy and may render the Officer liable for disciplinary procedures, including dismissal and police involvement.

The Employer claimed that these breaches gave rise to a right to dismiss under clause 12 (c) of the staff agreement and to summarily dismiss under clause 4B (ii) (a) of the Collective Agreement.

Having formed the view, as a result of a thorough investigation, that the Grievor’s employment was no longer tenable, the grievor was given the option of resigning. The Employer said that this was done to give the Grievor the opportunity to find other employment more easily.

The Union submitted that it was unreasonable and an over-reaction for the Bank to dismiss on the grounds of non-disclosure of the card as the Bank ought to have known of its existence. A thorough check would have revealed the existence of the card which would have resulted in the loan applications being declined.

Whatever laxity (if any) which is attributable to the Employer or Mr Smith does not disguise the fact that the Grievor had knowingly failed to disclose the existence of the card when required to do so on page five of each of the loan applications.

The Union submission placed some reliance on the Grievor ‘s own beliefs. The Tribunal has some reservations concerning the reliability of the Grievor’s evidence. During the course of her evidence the Grievor appeared to be evasive and contradictory. On some matters her evidence was inconsistent with the Union’s submissions.

The Union also submitted that the Employer did not produce evidence that loan proceeds were used to pay for the Mastercard. However, on at least two occasions during the investigation the Grievor made admissions to the effect that she used $500 from the second loan to pay off her Mastercard. At no stage during the investigations did the Grievor attempt to explain that the $500 was simply the amount saved from the second loan as a result of careful spending of the loan proceeds. This explanation was provided during the course of the hearing before the Tribunal and is as a result treated with some skepticism.

The Union raised further issues in its final submissions which are more concerned with the Employer’s actions. The Tribunal accepts that to some extent the Employer’s non-compliance with its own procedures was for the purpose of assisting the Grievor on the understanding that her loan applications were made in good faith and had been completed in accordance with the Personnel Manual.

The Tribunal considers that the Grievor’s conduct in relation to non-disclosure and the unauthorized use of funds from the second loan to be the more serious of the actions which the Employer claims justified dismissal.

At this stage it is convenient to note that in accepting the Grievor’s resignation, the Employer in its letter dated 26 November 2002 advised the Grievor that she would be paid 20 days pay in lieu of notice in addition to all other amounts owing to her. This payment complies with the Employer’s obligation under clause 4B(i) of the Collective Agreement. The constructive termination was by way of discharge rather than by way of summary dismissal.

This Tribunal has nevertheless accepted the position that even through a termination of employment by discharge with notice or payment in lieu of notice has been lawfully effected (ie. In accordance with legislative and contractual provisions) it may still be unjust or unfair. Indeed the terms of reference require the Tribunal to determine whether the constructive dismissal was unjust, unreasonable or unfair. The Tribunal’s practice in such cases is to consider two issues. First, whether there was sufficient justification and secondly, in reaching the decision to terminate whether procedural fairness was observed by the Employer.

In this Dispute the first issue is whether in reaching the decision to give the Grievor the choice to resign the Employer has reasonably concluded that there was sufficient justification to terminate her employment by discharge.

The Tribunal considers that the misconduct which an Employer may be required to show in a situation where employment has been terminated by discharge (ie. with notice or payment in lieu of notice under the terms of an agreement) will not need to be as serious as that which may be required by way of justification in a situation where employment has been terminated by summary dismissal.

In Award No.17 of 1999 Fiji Bank Employees Union – v – Westpac Banking Corporation, the Tribunal at page 20 noted that:

" ...... the honesty of an employee at or outside the workplace is a characteristic which a Bank, as an employer, has a substantial and abiding interest!. All employers, and particularly banks, have a substantial and legitimate interest in the general honesty of their employees. Put conversely, dishonesty is incompatible with the operations of a bank and indeed most, if not all operations since it undermines the trust and confidence that must repose in any employment relationship".

These sentiments are the basis of the Code of Conduct and the requirements of the Personnel Manual.

The Tribunal finds on the evidence that the Grievor was not honest with her employer. The dishonesty extended to the obtaining of approval for two loans as a result of the non-disclosure of the existence of a credit card in the Grievor’s name, the disclosure of which was expressly required by the loan application form. There has been a breach of confidence and good faith towards the Employer as a result of the repetition of the non-disclosure in the second loan application form and the use of $500 from the second loan funds for a purpose which was not disclosed at the time the application was made and the loan approved. The Grievor’s conduct has fallen short of the high standard of integrity, honesty and trust which the Employer’s management rightly expects from its employees.

As a result the Tribunal considers that the constructive dismissal of the Grievor was justified and reasonable. In that sense it was fair. Taking into account the nature of the banking industry, it was not harsh.

In determining whether the Grievor has been afforded procedural fairness the Tribunal considers any contractual requirements relating to procedure and those procedural requirements implied by common law.

Clause 13(b) of the Agreement, so far as is relevant, provides:

(i) when an Employee is being interviewed in connection with an alleged irregularity which may lead to disciplinary action against the Employee he shall be informed by the Manager or his nominee of:

1. the purpose of the interview

2. the fact that disciplinary action may result.

(ii) If following such interview the Employer proposes to take disciplinary action, the employee shall be informed of the proposed disciplinary action. Such advice may be given in writing and a copy given to the Union if requested by the employee".

In additional, in a letter dated 8 June 1999 and addressed to the Union’s then National Secretary, the Employer proposed an additional requirement as part of the disciplinary procedure. The relevant portion of the letter states:

"The bank as part of its disciplinary process outlines to all employees being questioned or suspected of misconduct both verbally and in writing (both as part of an interview process and in the bank’s letter of allegation) that an employee is entitled to be represented by a third party. We are prepared to ensure that if the employee is a member of the Union they will be advised that they are entitled to have a Union representative available".

This material was filed by the Union with the Tribunal as an attachment to a letter dated 2 August 2004. The Union considered it necessary to take this action
because of an assertion in the Employer’s Reply submissions in paragraph 6.2 which states:

"... In any event, no provision of the Collective Agreement requires that an employee who is being interviewed in connection with an irregularity which may lead to disciplinary action should be given an opportunity to have a Union representative or any person for that matter, present in an interview".

As a result of enquiries from the Tribunal Secretary, the Employer’s legal representative replied to the Union’s material by way of a letter dated 2 September 2004. In that letter the Employer acknowledged that "the practice has been that even in the absence of such a provision in the Collective Agreement employees are given an opportunity to have a union representative present at such an interview".

The relevant interview for the purposes of clause 13 (b) (i) and the Employer’s commitment to inform the Grievor of her entitlement "to have a union representative available" is that which took place on 21 November 2002 between the Manager Legal and Management Services (Mr S Samuels) and the Grievor in the presence of Ms B Wakeham as observer.

From a reading of the notes of the interview, it is apparent that the Grievor was adequately informed as to the purpose of the interview. However she was not advised that disciplinary action may follow. The words used by Mr Samuels in question two "determining an appropriate outcome in this matter" do not comply with the obligation to advise that disciplinary action may follow.

It is also clear from the transcript that the Grievor was not informed of her entitlement "to have a union representative available" at the interview.

It is the Tribunal’s opinion that the Employer has not complied with clause 13(b) of the Agreement nor has it complied with its commitment as set out in its letter dated 8 June 1999.

The Tribunal is satisfied that the separation interview represented compliance with clause 13 (b) (ii) of the Agreement.

However, this separation interview took place on 22 November 2002, the day after the interview with Mr Samuels. It was at the separation interview that the Grievor was given the choice to resign and hence when the admitted constructive dismissal arose.

The Grievor was not given an opportunity to present either herself or through Union representation any mitigating material in relation to whether or not her employment should be terminated. She was at once presented with the option of resigning. It is the Tribunal’s opinion that it is an element of procedural fairness that the Grievor should be given the formal opportunity to present mitigating material before the decision is made to terminate employment.

It is the conclusion of the Tribunal that the Grievor was not afforded procedural fairness in relation to her first claim for constructive dismissal which was in that sense unfair.

The second claim for constructive dismissal involves essentially an allegation of victimization. The matters which the Grievor claims forced her to resign are set out in her resignation letter dated 24 November 2002.

In its closing submissions the Union claimed that the Employer’s actions not only amounted to a course of conduct designed to coerce the Grievor to resign but also amounted to a breach of the Employer’s duty to act with trust and confidence towards the Grievor thereby forcing to resign.

The Tribunal does not intend to examine in detail the events to which reference was made in the evidence and in the submissions. It is sufficient to note that these matters were raised by the Grievor in her memorandum dated 18 March 2002. This Memorandum was addressed to the Chief Manager Westpac Fiji. These matters were further discussed when she spoke with the Chief Manager on 26 March 2002 and his file note dated the same date confirms the outcome of those discussions. The Grievor was provided with a copy of the file note. It would appear from the contents of the file note that the Grievor’s concerns were being addressed to her satisfaction. There was no response to the file note from either the Grievor or the Union.

The matters which were of concern to the Grievor in March 2002 were not raised again by the Grievor until her letter of resignation dated 24 November 2002.

In Award No.3 of 1995, Fiji Bank Employees Association v National Bank of Fiji, the Tribunal noted that:

"In order to establish victimization, the Union has to show mala fides on the part of the Bank".

The transfer from Nabua may have seemed abrupt and even improper. It could have been seen as a demotion even if the Grievor retained her seniority and salary. The Grievor had been removed from a management position at Nabua to a position with virtually no management responsibilities.

However, the apparent satisfactory outcome which resulted from the Grievor’s approach to the Chief Manager and his responses do not support the allegation that the Employer had acted with mala fides or in bad faith.

In this category of constructive dismissal the employee must establish on balance that her resignation was the result of the repudiatory conduct of the Employer. Although the resignation need not be immediate, if the Grievor does not elect to terminate the contract by resignation within a reasonable time, she is taken to have affirmed the contract. There was no communication from the Grievor after 26 March 2002 which would have alerted the Employer that the arrangements outlined in the file note of 26 March 2002 were not acceptable to her.

It should also be noted that clause 14 of the Collective Agreement provides for a grievance procedure for matters arising out of employment affecting either an individual employee or a group of employees. When there is a grievance procedure, provision for which is expressly made in a Collective Agreement, the Tribunal considers that an employee who is subject to that agreement should grieve according to the procedure before an entitlement can arise to elect to terminate by resignation as a result of the conduct of the employer.

There was no evidence before the Tribunal that the Grievor had pursued the grievance procedure which was set out in clause 14.

Under the circumstances the Tribunal concludes that the second claim of constructive dismissal has not been established.

The question of an appropriate remedy arises in relation to the first claim for constructive dismissal. The Tribunal considers that the correct position is that if procedural fairness is not established the dismissal should be regarded as unfair, but if justification is shown on the facts, this may in certain circumstances be reflected in the remedy. In determining the appropriate remedy, the Tribunal is entitled to undertake a broad inquiry taking into account matters that might not have formed proper reasons for the dismissal but which, nevertheless, are directly relevant to a renewed employment relationship. In broad terms, the test to be applied in deciding whether re-instatement is the appropriate remedy, should be whether objectively assessed, the employee can be said to have the "trust and confidence" of his or her employer and "could be a harmonious and effective member of her employer’s team.

These are the principles which this Tribunal has adopted in determining the question of remedy (see Award No.7 of 2000 Suva City Council Staff Association – v – Suva City Council)

After careful consideration of all the evidence the Tribunal has concluded that re-instatement would not be appropriate in this case. This is because the Tribunal considers that the Grievor’s conduct has made it impossible for the Employer to maintain trust and confidence in her and for her to be a harmonious and effective member of the Employer’s team. In the circumstances the Tribunal believes it would be fair and reasonable for the Employer to pay the Grievor three months salary as compensation for the breach of its procedural obligations.

AWARD

The Grievor’s constructive dismissal which arose as a result of the choice to resign given to the Grievor in the course of the separation interview was justified and reasonable, and in that sense fair.

The Grievor’s claim that there was a constructive dismissal as a result of the matters set out in her resignation letter is rejected.

In relation to her first claim for constructive dismissal, the Grievor was not afforded procedural fairness and in that sense it was unfair.

Re-instatement is not an appropriate remedy. The Grievor is to be paid three months salary as compensation for the Employer’s breach of its procedural obligations.

DATED at Suva this 9^th day of September 2004

Mr W D Calanchini
ARBITRATION TRIBUNAL