Tropik Wood Staff Union v Tropik Wood Industries Ltd [2005] FJAT 29; Award 46 of 2005 (4 August 2005)

THE REPUBLIC OF THE FIJI ISLANDS

NO. 46 OF 2005

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

TROPIK WOOD STAFF UNION

AND

TROPIK WOOD INDUSTRIES LIMITED

Union: Mr F Anthony
Employer: Mr J Bale

DECISION

This is a dispute between Tropik Wood Staff Union (the "Union") and Tropik Wood Industries Limited (the "Employer") concerning the retirement of Mr Jesoni Balewai (the "Grievor").

A trade dispute was reported by the Union on 17 May 2004. The report was accepted on 3 June 2004 by the Chief Executive Officer who referred the Dispute to a Disputes Committee. As a consensus decision was not reached, the Minister authorized the Chief Executive Officer to refer the 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 30 July 2004 with the following terms of reference:

"The Dispute is over the company unilaterally deciding to retire Mr Jesoni Balewai from the services of the company effective 28 May 2004. Clause 5.9 of the Collective Agreement gives the employer the discretion to extend the retirement age of employees after 55 years of age to 60 years. The company has decided to extend the retirement age of Mr Jesoni Balewai after 55 years and there was a clear understanding that all workers whose services were extended beyond 55 years would work up to 60 years subject to efficiency and satisfactory health. Mr Jesoni Balewai had no complaints against him in relation to performance and health. The Union contends that the decision of the company to retire Mr Baleiwai is unfair, unjust and wrong. The Union seeks that the company withdraws Mr Balewai’s retirement and allows him to continue working for the company without loss in pay and benefits".

The Dispute was listed for a preliminary hearing on 15 September 2004. As there was no appearance by or on behalf of the Employer on that day, the Dispute was listed for mention on 13 October 2004. On that day the parties were directed to file preliminary submissions within 21 days and the Dispute was listed for further mention on 19 November 2004. On that day the Dispute was listed for hearing on 21 February 2005.

The Union filed its preliminary submissions on 5 November whilst the Employer filed its submissions on 8 November 2004.

The hearing of the Dispute was held in Suva on 21 February 2005. Each party called one witness. At the conclusion of the evidence the parties sought and were granted leave to file written final submissions.

The Union filed its final submissions on 31 March 2005. The Employer filed answering submissions on 18 April and the Union filed its reply submissions on 21 July 2005.

The relevant clause of the Collective Agreement is clause 5.9 (a) which states:

"The employer may, at its absolute discretion, retain the services and employment of any employee beyond the normal retiring age of 55 years and up to the compulsory retiring age of 60 years subject to continuing efficiency and satisfactory health".

On page 4 of its preliminary submissions, the Employer has acknowledged that if the Company did exercise its discretion and retain the services of the Grievor beyond the normal retiring age of 55 years, it was obliged to retain him until he turned 60 years or was deemed either too inefficient or too sick to continue employment.

The question for the Tribunal is whether the Employer exercised its discretion to retain the services of the Grievor beyond the normal retiring age of 55 years.

The Grievor commenced work with the Employer on 11 May 1987. He turned 55 years of age on 1 October 2003. He was at that date Port Superintendent with the Employer. It was not disputed that he was not given any notice to retire on or before 1 October 2003. From 1 October 2003 he continued at work as the Ports Superintendent. The Employer continued to pay him his normal salary and other entitlements.

By memorandum dated 23 February 2004 from the Employer’s Human Resources Manager (HRM), the Grievor was informed of his retirement in the following terms:

"Please note that your services to the organisation will cease effectively on Friday 28 May 2004.

On behalf of Management may I also take this opportunity to thank you for your services and contributions over the years and wish you a happy retirement".

In a letter dated 17 April 2004 addressed to the Grievor from HRM this arrangement was confirmed in the following terms:

"This is to confirm that the official date of your retirement from the organisation shall remain as Friday 28 May 2004".

In a subsequent memorandum dated 8 May 2004 the HRM informed the Grievor that:

"..... Please note that apart from the job offer at Fenning Pacific there will be no further extension of your services with the organisation.

Finally, the Union is fully supportive of Management’s decision on staff retirement and you are therefore kindly advised that we would not waste any more time on the issue".

In reply to this memorandum, the Union in a letter dated 13 May 2004 stated in the last paragraph:

"..... the Union strongly supports Mr Balewai’s service to be extended to the age of 60 as per advise to the company by the Union in a letter dated 21 February 2004 and the Union is still waiting for the meeting with Management on the issue".

The HRM gave evidence that she started working with the Employer in May 2003. Prior to that time personnel issues were dealt with by Department heads. She stated that her Department looked at staff sizes in December 2003. In January 2004 a decision was taken to downsize and in February 2004 letters were sent to 11 employees concerning retirement. Of these, four employees (including the Grievor) had already passed the normal retiring age of 55 years and the remaining seven were to turn 55 years old during the year. The HRM stated that the motive behind this measure was to reduce the size of the workforce.

The Tribunal accepts that retirement is a different concept from dismissal and that the Employer is not required to justify retirement. It is accepted that management has the right to impose compulsory retirement so long as that right is not restricted by the language of the collective agreement. There may be restrictions expressly or impliedly spelled out in the collective agreement. In this Dispute clause 5.9 (a) expressly spells out the basis upon which employment may be extended beyond the normal retiring age of 55 years to the compulsory retirement age of 60 years. The discretion given to the Employer in that clause cannot be exercised in an arbitrary, discriminatory or unreasonable manner.

The Tribunal is satisfied that from 1 October 2003 the Employer, if not expressly then impliedly had exercised its discretion to extend the Grievor’s employment from the normal retiring age of 55 to the compulsory retiring age of 60. This discretion may be said to have been exercised by the continuation of the employment agreement evidenced by the fact that the Employer continued to provide work on the same terms and conditions and the Grievor continued to perform his duties on the same terms and conditions.

It is the Tribunal’s opinion that if the Employer did not wish to employ the Grievor beyond the normal retiring age then it should have indicated the exercise of its discretion prior to the date when the Grievor reached the normal retiring age. This was what happened in relation to seven of the 11 employees identified for retirement.

Furthermore, the Employer acknowledged in its correspondence that the Grievor’s employment had been extended, albeit for a total period of seven months. The Tribunal has concluded that having acknowledged that the employment had been extended, the Employer was required to continue to employ the Grievor until he reached 60 years old or was too inefficient or too ill to continue in employment.

Finally it is the Tribunal’s opinion that as the Employer had identified a replacement to take up the same post as that which had been occupied by the Grievor, it is apparent that downsizing was not the real reason for forcing the Grievor to retire. As a result the redundancy provisions of the Collective Agreement were most probably not applicable in this case.

It should also be noted that there was no evidence upon which it could be inferred that the Grievor was either too inefficient or too sick to continue in employment up to the compulsory retirement age of 60 years.

AWARD

The forced retirement of the Grievor was in breach of clause 5.9l(a) of the Collective Agreement for the following reasons:

(a) The Company had continued to employ the Grievor beyond the normal retiring age of 55 yeas.

(b) There was no evidence to suggest that the Grievor was inefficient or sick to an extend that would enable the Employer to force the Grievor to retire before he reached the compulsory retirement age of 60years.

(c) The Employer retired the Grievor before he attained the compulsory retirement age.

The Employer’s decision was unreasonable and wrong.

The retirement notice is to be withdrawn and the Grievor is to resume his employment with effect from 29 May 2004 without any loss in pay or benefits.

DATED at Suva this day 4 of August 2005.

Mr. W. Calanchini
PERMANENT ARBITRATOR