Fiji Airline Pilots Association v Air Pacific Ltd [2005] FJAT 13; Award 14 of 2005 (9 March 2005)

THE REPUBLIC OF THE FIJI ISLANDS

NO. 14 OF 2005

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

FIJI AIRLINE PILOTS ASSOCIATION

AND

AIR PACIFIC LIMITED

FAPA: Mr P Rae
Air Pacific: Mr N Barnes

RULING

This is a dispute between the Fiji Airline Pilots Association (the "Association") and Air Pacific Limited (the "Company") concerning the termination of employment of Vikash Ram (the "Grievor").

At the request of the Tribunal the parties appeared on 29 October 2004 to resolve certain discovery issues. During the course of discussions on that day Counsel for the Company indicated that there was a preliminary issue which should be determined before the dispute proceeded to a final hearing.

The Company submitted that as a result of the Supreme Court of Fiji decision in Air Pacific Limited –v- Fiji Avaition Workers Association and the Permanent Arbitrator (Civil Appeal No.6 of 2003 delivered on 17 September 2004) the Tribunal was restricted to a consideration of the Collective Agreement which was to be interpreted in accordance with common law principles developed by the Courts of Fiji. The Company claimed that if this submission was correct then there would not be any requirement to conduct a two day hearing.

The Company further submitted that if a hearing was required at all, then it would be more concerned with the procedure adopted by the Company in terminating the employment.

As a result of this submission, the Tribunal directed the parties to file submissions on this preliminary issue and the Dispute was relisted for mention on 26 January 2005.

The Company filed its submission on 29 November 2004. The Union filed answering submissions on 17 January 2005.

On 26 January the Tribunal directed the Company to file any necessary reply submission by 4 February 2005. The Dispute was to be relisted on a date to be fixed. The Company filed its reply submission on 7 February 2005.

This Dispute had been referred to the Permanent Arbitrator on 11 May 2004 with the following terms of reference:

"........ for settlement over the termination of Vikash Ram (Flight Officer) with effect from 7th February 2000 for Air Pacific Limited, which the Union feels that the termination was harsh and unfair".

Put simply, the terms of reference requires the Tribunal to determine whether the termination of employment of Vikash Ram was harsh and unfair.

As the Company pointed out in its submission, the Tribunal is a creature of statute and the limits of its jurisdiction are determined by the same statute, the Trade Disputes Act Cap 97 (the Act).

Section 23 of the Act states:

"A Tribunal shall make its award .... on any matter referred to it under the provisions of this Act without delay and in any case within twenty eight days from the date of reference thereto".

The issues specified in the Reference are the matters requiring determination by the Tribunal. The Tribunal’s function is not completed until it has complied fully with the terms of reference.

One aspect of the Company’s submission is that the Tribunal should not consider whether the termination of employment was harsh or unfair. The Company is in effect urging the Tribunal to disregard the terms of reference and limit itself to a consideration of the relevant provisions of the Collective Agreement. It should be noted that the terms of reference does not expressly refer to a Collective Agreement.

This Tribunal has consistently taken the view that it does not have the jurisdiction to examine or enquire into the validity or the substance of the terms of reference. There is nothing in either the Trade Disputes Act or the terms of reference itself which would enable the Tribunal to scrutinize and rule on the terms of reference.

If the Company wanted to challenge the terms of reference on the basis that it required the Tribunal to consider issues which were contrary to the law of employment in Fiji, then the appropriate course of action was to apply for judicial review in the High Court. It is the Tribunal’s opinion that unless and until the High Court decides otherwise, the terms of reference are valid and regular. The Reference sets the limit of the Tribunal’s jurisdiction. These views are consistent with previous observations made by the Tribunal. (See Award No.24 of 1998 and Award No.24 of 2001). In Fiji Islands Revenue and Customs Authority – v – The Permanent Arbitrator and Fiji Public Service Association (JR No.11 of 2001 delivered on 10 September 2001) Justice Shameem at page 8 observed:

"The jurisdiction of the Permanent Arbitrator is therefore limited to the trade dispute referred to him for decision. His jurisdiction is limited to his terms of reference".

As the Tribunal is required to determine whether the termination of employment was harsh and unfair, the issue then becomes on what bases or principles are such matters determined. To a certain extent this will depend upon whether the termination was by way of summary dismissal or by notice or payment in lieu of notice. The Tribunal considers that what may amount to a harsh or unfair termination by way of summary dismissal may not be harsh or unfair where the termination was by way of notice or payment in lieu of notice under the terms of a Collective Agreement or in accordance with the provisions of the Employment Act Cap.92.

In this Dispute the Grievor’s employment was terminated by way of notice or payment in lieu of notice. Although this is not apparent from the contents of the termination letter dated 7 February 2000, the Company clarified the matter in a letter dated 5 April 2000 addressed to the Union’s Vice President. The third paragraph of that letter states:

"In respect of grievance (d), we would ask you to set out why the Association believes the disciplinary procedure should be applied in this situation when Mr Ram was terminated on notice in terms of clause 6.6.2 of the relevant Collective Agreement"

The relevant part of clause 6.6.2 states:

"The services of a Pilot shall be terminable by either the Company or the Pilot:

......

Thereafter:

(i) by three (3) month’s notice in writing; or

(ii) by the payment to the Pilot of three (3) months salary or part thereof in lieu of notice in writing;

(iii) ......

The Tribunal accepts that clause 6.6.2 is consistent with the relevant provisions in the Employment Act which deal with the requirements for terminating an oral contract (as defined) by way of notice or payment in lieu of notice.

The remainder of this Ruling will proceed on the basis that this is a dispute where the Grievor’s employment was terminated by notice or by payment in lieu of notice.

Another aspect of the Company’s submission is that the Tribunal is limited to assessing the issues of harshness and fairness by reference to the terms of the Collective Agreement. The Company claims that as a result of the Supreme Court decision in the Air Pacific Limited decision (supra) the Tribunal cannot consider questions of harshness and fairness outside of the context of the Collective Agreement.

The Tribunal notes that the terms of reference in the earlier Air Pacific Limited dispute required the Tribunal to consider the question of fairness in the context of a specific clause in the Collective Agreement dealing with redundancy procedures.

The Supreme Court stated the position clearly at page 7 when it observed:

"We agree with the Court of Appeal that the expression "substantive justification" (which is almost a term of art in the New Zealand Legislation) should be avoided. It does not have a distinct existence in the law in Fiji. Rather that law, to put it generally, is to be found in the relevant Collective Agreement, in the common law and in section 33 of the Constitution; section 43(2) of the Constitution may also be relevant."

Although the Supreme Court has clearly and finally banished the concept of "substantive justification" from employment law in Fiji, this does not necessarily mean that considerations of harshness and fairness have also been discarded as relevant considerations.

Although there is no reference to harshness or fairness in clause 6.6.2 of the Collective Agreement, the Tribunal proposes to briefly consider whether such considerations form part of the common law in Fiji or are relevant considerations by virtue of section 33 of the Constitution.

Section 33 (3) of the Constitution states:

"Every person has the right to fair labour practices, including humane treatment and proper working conditions".

It is the Tribunal’s opinion that the right to fair labour practices includes but is not limited to the practices, rights and obligations set out in the Industrial Relations Code of Practice (June 1973) approved by the Labour Advisory Board. The relevant ILO Conventions would also come under the umbrella of fair labour practices, especially those 22 ratified Conventions currently in force in Fiji.

In addition, the Tribunal considers that the observations of the first Permanent Arbitrator of Fiji, Professor F J L Young, in "Notes for Guidance" which appeared at the conclusion of Award No.12 of 1985 at pages 92-93 of the bound volume of the 1985 Awards are of assistance in determining fair labour practices in the context of termination of employment by notice or payment in lieu of notice.

In the last paragraph of his "Notes", Professor Young concluded:

"Persons concerned for the improvement of industrial relations generally argue that dismissals should be dealt with in terms of "the fairness" of the employer’s action. This permits considerations of non-legal matters which are often crucial to the morale and performance of the work group as a whole. It must be emphasised that it is not essential to have unfair dismissal legislation on the statute books to permit an arbitrator to consider the fairness of a termination. It can be done by making provision in collective agreements for the arbitration of claims of unfair dismissal. Equally, as sometimes happens in Fiji, the arbitrator’s terms of reference may direct him specifically to consider whether the dismissal was unfair".

The Tribunal considers that section 33 of the Constitution provides a sufficient basis for considering the questions of fairness and harshness in broader terms than the limited or restricted approach which has been submitted by the Company.

In relation to the position at common law, the Tribunal has considered the recent Fiji Court of Appeal decision in The Permanent Secretary for Labour and Industrial Relations and The Disputes Committee – v- Air Pacific Limited and Fiji Aviation Workers Association (Civil Appeal No.23 of 2003 delivered on 16 May 2003). This was a dispute where the Grievor’s employment was terminated by the Company upon the payment of two weeks salary in lieu of notice of termination.

In that Appeal the Court was required to consider, amongst other things, the decision of a Disputes Committee that the termination of employment was harsh. It would appear that Counsel for the Company submitted that the test to be applied was reasonable conduct by a reasonable employer.

The Court of Appeal held that the decision of the Disputes Committee was invalid because of its failure to provide reasons for its decision "combined with the use of a term on the face of the decision which at least suggests a wrong approach was adopted.....". As a result, the Court concluded that "harshness" was not a test to be applied by a Disputes Committee considering a dispute involving termination of employment by notice or payment in lieu of notice.

However the Court appears to have left open the question of a Disputes Committee considering whether such a termination was reasonable or fair. The Tribunal concludes that in so far as the Court of Appeal decision reflects the common law of Fiji there is no prohibition on a Disputes Committee established under the Trade Disputes Act from considering whether the termination of the Grievor’s employment by notice was fair or reasonable. The Tribunal considers that the same conclusion applies equally to its consideration of its terms of reference involving a dispute concerning termination of employment by notice.

In paragraph 27 of its submission the Company claims that an allegation that it acted in bad faith cannot be supported in law. However, this submission does not appear to be supported by comments made by the Supreme Court in the Air Pacific Limited decision (supra). The Court noted at page 8:

"There is no independent obligation on Air Pacific to justify the redundancies and related decisions, although Air Pacific accepts that its decisions must be taken in good faith".

The Tribunal considers that this requirement to act in good faith is a term implied by law into certain contracts such as a contract of employment. The Tribunal also considers that the implied requirement to act in good faith extends to acting not only honestly, but also fairly and reasonably.

The Company has placed some reliance on section 25 of the Trade Disputes Act in support of its submissions.

Section 25 states:

"Where any trade dispute referred to an Arbitration Tribunal involves questions as to wages, or as to hours of work or otherwise as to the terms and conditions of or affecting employment which are regulated by or under any written law other than this Act, the Tribunal shall not make any award which is inconsistent with the provisions of that written law or which is less favourable to the employees than any award or order lawfully made in pursuance thereof".

This dispute is concerned with termination of employment by notice or payment in lieu of notice. To the extent that termination by notice is regulated, sections 24 and 25 of the Employment Act Cap 92 are relevant. Those provisions deal with the period of notice required to be given and the circumstances under which payment may be made in lieu of notice. Neither of those issues form part of this Dispute. As a result the Tribunal will not be required to make a decision which may or may not be inconsistent with the provision of that written law or which may or may not be less favourable than any award or order dealing with those matters.

It should be noted that in section 2(1) of the Interpretation Act Cap 7 (as amended by Decree No.35 of 1989 and Act No.6 of 1998) "written law" is defined as meaning "all Acts (including this Act) and all subsidiary legislation".

The Tribunal notes that there is no Act or subsidiary legislation in Fiji which otherwise regulates issues relating to termination of employment by notice. As a result the Tribunal has concluded that section 25 has no application to this preliminary issue. The Tribunal considers that there is no statutory prohibition to the Tribunal considering whether the termination by notice was fair.

The question raised by this preliminary issue is whether the Arbitration Tribunal, which is established under the Trade Disputes Act and which derives its jurisdiction under that Act, has imposed upon it a limitation implied by the Act itself to settle its terms of reference only in accordance with the general principles of the law of contract and specifically the law pertaining to employment contracts. For the reasons stated above the Tribunal has concluded that the answer to that question is that there is no such limitation implied by the Trades Disputes Act.

Finally, the Tribunal is of the opinion that in order to achieve sound and harmonious industrial relations no such limitation should be implied. It is not difficult to think of instances where an employee’s employment may be arbitrarily terminated by notice. Whilst such termination may be in accordance with the express requirements of the contract of employment, there is no reason to conclude that a union member should not have access to this Tribunal to seek appropriate relief in accordance with the terms of reference. In some of these cases the Grievor may be able to mount a claim under Fiji’s Human Rights legislation. However, that by itself is not sufficient reason to conclude that the Tribunal is prevented from considering the question of fairness. There is no such limitation implied by the Act. The only limit to its jurisdiction is the terms of reference and section 25 of the Act which has no application to this dispute.

The Dispute will be listed for mention on 30 March 2005.

DATED at Suva this 9 day of March 2005

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL