Fiji Bank and Finance Sector Employees Union v Fiji National Provident Fund [2006] FJAT 8; Award 55 of 2006 (26 October 2006)

THE REPUBLIC OF THE FIJI ISLANDS

NO 55 OF 2006

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

FIJI BANK AND FINANCE SECTOR EMPLOYEES UNION

AND

FIJI NATIONAL PROVIDENT FUND

FBFSEU: Mr J Apted and Mr P Rae
FNPF: Mr N Lajendra

DECISION

In Award No 34 of 2006 (dated 5 June 2006), the Tribunal delivered a Ruling dealing with the interpretation of clause 2 of an Agreement between the parties dated 8 December 2004 (the Agreement).

In that Interim Award the Tribunal concluded that the agreement was not so uncertain as to render it unenforceable.

The Tribunal concluded that the Union carried the burden of establishing that the Employer had failed to pay salary increases in accordance with the agreement. The Union was also required to set out in detail the amount claimed by each employee or alternatively set out the formula which it claimed the Employer should have used to calculate the pay increases.

Following the publication of the Interim Award, the Dispute was listed for mention on 23 June 2006. On that day the Employer was directed to provide discovery in accordance with the Union’s request within seven days. The Union was directed to file supplementary submissions within 21 days and the Dispute was listed for further mention on 28 July 2006.

The Union filed supplementary submissions on 21 July 2006.

On 28 July 2006 the Employer was directed to file answering submissions within 21 days and the Union was directed to file any necessary reply submission within seven days thereafter.

The Employer filed an answering submission on 28 August and the Union filed reply submissions on 29 August and 29 September 2006.

The parties indicated that they did not intend to call any further evidence and the hearing was not re-opened. The parties relied on their written submissions.

The Union submitted that under clause 1 of the Agreement some employees had been paid their performance merit awards as salary increases whilst others had received their rewards in part as salary increases and the remainder as a one-off bonus.

The Union submitted that those employees who received only part of their performance merit increase by way of salary increase would be adversely affected in that increases due under clause 2 of the Agreement (and future merit increases) would be calculated on a lower base salary figure.

The Union claimed that there was no agreement between the parties for performance merit increases to be paid partially as a one-off bonus payment.

In relation to its claim under clause 2 of the Agreement, the Union submitted that, in accordance with the Tribunal’s interpretation of that clause, increases in salary were to be determined by applying the appropriate percentage for each grade to individual salaries of members in each grade as at 1 July 2004 and then deduct any increase already paid to each worker.

The Employer submitted that the method of calculation set out in clause 2 may be disregarded for the purposes of salary scales. The Employer submitted that the purpose of clause 2 was to regulate increases in individual salaries in accordance with the Price Waterhouse Market Survey of 2004 and the Employer’s practice line.

Unfortunately the Employer’s submission was mainly concerned with a justification of its implementation of the Agreement. That implementation was based on an interpretation of the Agreement, and in particular on clause 2, which was inconsistent with the interpretation adopted by the Tribunal in its Interim Award No 34 of 2006.

The Employer submitted that the method of implementation which it applied reflected the parties intentions and should be upheld. The method of calculating each employee’s salary increase was described in paragraph 2.0 of the Employer’s submission dated 25 August 2006.

The Employer submitted that the Union’s approach to calculating wage increases would result in employees being paid more that what the market would offer them for their respective positions.

The Tribunal should indicate that the evidence adduced during the hearing and the material submitted did not satisfactorily support the Employer’s contentions.

In its submissions filed on 29 August 2006 the Union claimed that clause 1 of the Agreement did not provide for the arbitrary partial payment of salary increases by one-off bonus payments.

The Union also set out the basis of its claim under clause 2 of the Agreement. It is convenient at this stage to quote the relevant paragraphs of that submission:

"9.0 ..................... As part of the 2002 Job Evaluation agreement FNPF employees were placed at salary points on the 2002 scales based on their "Job Fit Index" at the time. The 2002 scales were constructed at 5% above the Banking and Finance Sector market median. Subsequently in 2003 and 2004 employees moved up in those scales to higher salary points by performance or merit index increases.

In adopting the 2004 salary scales the parties accepted

that the values of jobs in the respective grades increased by the percentages shown for each grade relative to the Banking and Finance Sector in Fiji and that FNPF salary scales would be maintained at 5% above that sector.

Increasing the salaries of individuals in each grade by the percentages shown would place each employee at the same relative position on the new scale that he was on the old scale thereby retaining his position relative to others by virtue of performance gains made in previous years as well as recognizing the increase in the value of his job relative to the market agreed between the Employer and the Union".

The Tribunal has concluded that pursuant to clause 1 of the agreement the merit index of 5% as approved by the Board should be paid by way of salary scale increases. There is no basis on the material before the Tribunal to conclude that the parties intended the merit index increase of 5% to be paid partially by one-off bonus payments.

The Tribunal is also satisfied that the Employer has paid the merit index increase to some workers by way of one-off bonus payments. In doing so the Employer is in breach of clause 1 of the Agreement.

The Tribunal notes, however, that in its final submission dated 28 September 2006 the Union is not claiming any further increases pursuant to clause 1. Instead it seeks to have the entitlements under clause 2 to be calculated on salary scales which would have been applicable had the 5% merit index been paid as a salary increase.

The Tribunal accepts the submission of the Union concerning the implementation of clause 2 of the Agreement. The Union’s proposal for implementation is consistent with the Tribunal’s the interpretation of that clause. That interpretation is set out in some detail in the Tribunal’s interim Award No 34 of 2006. The Employer has not put forward any alternative substantive proposal which is consistent with the Tribunal’s interpretation of clause 2.

As a result the Tribunal considers it appropriate to accept the Union’s claim as set out in its submission dated 28 September and filed with the Tribunal on 29 September 2006.

AWARD

The Tribunal awards to the union the salary increases claimed in its Final submission dated 28 September 2006 in Table UFI.

DATED at Suva this 26 day of October 2006

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL