Mine Workers Union of Fiji v Emperor Gold Mining Company Ltd [2007] FJAT 13; Award 13 & 14 of 2007 (20 February 2007)

THE REPUBLIC OF THE FIJI ISLANDS

NOS 13 AND 14 OF 2007

AWARDS OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTES BETWEEN

MINE WORKERS UNION OF FIJI AND VATUKOULA MINE WORKERS STAFF ASSOCIATION

AND

EMPEROR GOLD MINING COMPANY LIMITED

MWUF: Mr R Singh with Mr P Rae
VMWSA: Mr A Singh
E G M: Dr M S Sahu Khan

DECISION

These are disputes between the Mine Workers Union of Fiji (the Union) and Emperor Gold Mining Company Limited (the Employer) and between Vatukoula Mine Workers Staff Association (the Association) and the Employer concerning the quantum of the redundancy package

Both the Union and the Association reported trade disputes on 6 July 2006. The reports were accepted on 7 July by the Chief Executive Officer who referred the Disputes to a Disputes Committee. By agreement dated 13 July 2006 the parties agreed to refer the Disputes to Arbitration. As a result the Minister authorized the Chief Executive Officer to refer the Disputes to an Arbitration Tribunal for settlement pursuant to section 5 A (5) (a) of the Trade Disputes Act Cap 97.

The Disputes were referred to the Permanent Arbitrator on 14 July 2006 each with the same terms of reference:

"for settlement over - - - failure to reach an agreement on the quantum of redundancy package."

The Disputes were listed for preliminary hearing as a matter of urgency on 18 July 2006.

On that day the parties were directed to file their preliminary submissions by 8 August and the Disputes were listed for mention on 18 August 2006.

The Association filed its preliminary submission on 6 August, the Employer did so on 8 August and the Union filed its submissions on 15 August 2006.

Due to the urgent nature of the outstanding issue, the parties were directed to appear before the Tribunal on 17 August 2006. On that day the Tribunal gave directions to the parties concerning the disclosure of documentary material. The Dispute was listed for further mention on 31 August 2006.

As the Tribunal’s earlier directions had not been complied with, further and more specific directions were given to the parties to enable discovery and disclosure to be completed by 8 September 2006 when the Disputes would be listed for mention.

At the mention on 8 September 2006 the parties informed the Tribunal that the discovery process had been completed. Following discussions with the parties concerning the availability of advocates the Tribunal directed that the hearing of the Disputes would commence on 25 October 2006.

The hearing of the Disputes did commence on 25 October in Suva. The hearing was adjourned part heard and resumed on 2 November 2006. On that day the hearing was again adjourned part heard and was completed on 10 November 2006.

During the course of the hearing the Association called two witnesses, the Union called three witnesses and the Employer called one witness to give evidence.

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 15 December 2006. The Association filed its final submissions on 1 February 2007. The Employer filed answering submissions on 9 February 2007. The Association filed a reply submission on 15 February 2007 and by letter dated 19 February 2007 the Union indicated that it did not intend to file a reply submission.

The redundancy payment which is the subject matter of these Disputes related to staff and hourly paid employees who were made redundant as a result of the decision by the Employer "to temporarily close all operations from 13 April 2006. "

It would appear that both the Union and the Association were advised by letter dated 12 April 2006 that the Employer intended to temporarily close down all operations other than essential services. Although the date of the closure was stated to be 18 April 2006, the circulars dated 13 April 2006 and distributed to all employees stated the date of closure as 13 April 2006.

There were two circulars dated 13 April 2006. One was for those employees employed as staff who were represented by the Association and the other for hourly paid employees who were represented by the Union. The circulars are virtually identical and, so far as is relevant to the present Disputes, stated that:

" - - - We will temporarily close all operations from Thursday 13 April for a period up to 6 months. Needless to say, essential services will be engaged from the 13th as necessary.

Under the circumstances we have no choice than to reduce our workforce and the reduction will be applied across the workforce including staff and management team.

From next week we will:

1. require all employees with accumulated leave entitlements to take that leave

2. recall employees based on skills required, performance, attitude and employment history.

3. put all recalled employees into a retraining and development programme. Your personal training development and performance improvement will be on-going.

Employees who do not get selected will be offered a redundancy payment as early as possible which will be finalized between the Company and your representatives (or the Union) to avoid any misunderstanding in that respect.

During the stand-down the Company will provide some assistance on a Social Plan which will help employees out of work and their need to provide for their families.

Essential services employees will be advised today of their requirement to continue work."

It should be noted that hourly paid workers were advised in their circular that they would be contacted within the next two weeks to discuss the matter further. Staff were requested to report to their usual place of work on 18 April 2006 to discuss the matter further.

From the evidence it was not entirely clear how many employees were to continue to be employed to provide essential services during the period of the temporary closure. For those employees who were not to be retained for essential services, the redundancy was not voluntary.

In implementing the above measures in respect of the hourly paid workers, the Employer relied on part of clause 17.0 of the Agreement between the Employer and the Union. The clause stated:

"In the event that circumstances warrant the closure of a section or sections of the operation for a fixed period of time, an employee may be required to take all or part of his annual leave due up to that point in time. Consultation with the Union should be carried out prior to lay off.

Where necessary. employees may be laid off without pay during the period not exceeding six (6) months. Thereafter, if redundancy becomes necessary, Clause 10.0 will be affected."

Clause 10.0 of the Agreement stated:

"In the event of redundancies becoming necessary, the Company shall notify the union as early as possible so that consultations and negotiations shall take place between the parties. Insofar as possible and practicable, such factors as length of service, work record, skills, experience and employees abilities will be considered. Where skills, experience and ability of employees are equal, employees will be made redundant on the basis of "Last in First Out" "

The Tribunal is satisfied that between January and April there had been consultation and negotiations between the Employer and the Union concerning measures which might be taken to alleviate the operating and financial difficulties being faced by the Company at that time.

So far as staff members of the Association were concerned, their individual contracts determined what options were available to the Employer.

It would appear that the mine ceased its operations after the Easter break on 18 April 2006. It would also appear that all employees were paid their wages by the Employer up till 18 April 2006.

The parties and the Government entered into an agreement on 18 April 2006 which provided, amongst other things, that:

"Employees who have been stood down are eligible to receive the following :

- $50 weekly food voucher

- $25 weekly cash payment for those living outside Vatukoula

- Government subsidy payments from a $300,000 Workers Relief Fund will ensure that workers receive the equivalent of their respective weekly pay.

- A redundancy package for those not re-employed to be negotiated between the Unions (i.e. the Union and the Association) and the Company based on an agreed redundancy formula."

As a result of that agreement, those employees who were not retained by the Employer for the provision of essential services at the mine were to receive $75.00 from the Employer and the difference between their normal take home pay (net) less the $75 was to be paid out of the $300,000 provided by the Government.

Whilst these payments were being made, the parties attempted to negotiate a redundancy package. By letter dated 22 May 2006 the Unions put forward a joint proposal that the formula should be one year’s salary plus three weeks pay for each year of service. The joint proposal also sought a $700 allowance for relocation expenses.

Following further negotiations the Employer wrote a letter dated 29 June 2006 to the Association’s General Secretary. Omitting formal and irrelevant parts, this letter stated :

"

- The Company will stop paying the salaries for the 21 staff employees who will be made redundant. This is to take effect on 7 July 2006.

- The reviewed and final offer is 3 months pay upfront plus2 weeks for every year of service. This is inclusive of the notice period.

- If no agreement is concluded on the package by 07 July, we will terminate the services of the 21 redundant employees and pay their packages into their bank accounts based on our final offer."

By letter dated 4 July 2006 the Employer wrote in similar terms to the Union’s General Secretary in respect of 99 hourly paid employees who were to be made redundant.

Agreement was not reached and the Employer terminated the services of all employees being made redundant with effect from 13 August 2006. This was when the Government Fund had been exhausted.

The evidence of Mr Farid Khan on behalf of the Association was to the effect that some of his members had accepted an initial redundancy package from the Employer of four weeks upfront and two weeks for each year of service. He then stated that some others had accepted the second redundancy package offered by the Employer of three months pay upfront plus two weeks for each year of service. Those who had accepted the first offer received a top up to reflect the second offer.

Mr Farid indicated that the counter-offer put forward by the Association was for six months upfront plus two weeks pay for each year of service. He also indicated that as far as the Association was concerned the relocation allowance claim of $700.00 had been dropped.

Mr Farid stated in his evidence that the Association claimed the additional three months upfront component of the package because of the unique nature of the mining industry in Fiji. Because there was no other mining operation in Fiji, redundant workers required additional time to find suitable alternative employment.

He also pointed out that the educational level of the Association’s members was generally low and their mining skills provided limited opportunities for surface employment.

In his evidence Mr Satish Chandra indicated that the Union’s claim for its redundant hourly paid workers was for six months upfront and two weeks pay for each year of service. The Union was also persisting with its claim for a $700 relocation allowance for its redundant members. It would appear that a considerable number of the Union’s members accepted the Employer’s second offer of three months upfront plus two weeks for each year of service. The Union’s witnesses gave evidence as to the nature of the work they performed at the mine and the difficulties faced following their being made redundant. They also pointed out the problems mine workers faced in finding alternative employment in Fiji.

The Employer’s Acting General Manager gave evidence concerning the financial and operational problems which had existed at the mine for some time and which had forced the decision taken in April 2006 to temporarily close the mine and cease operational mining. The Employer made a loss of F $27m in the 12 months to June 2005 and a loss of F$54m in the 12 months to June 2006.

The terms of reference requires the Tribunal to do no more than to determine the quantum of the redundancy package.

The material before the Tribunal indicated that the Employer’s offer fell within the range of redundancy packages recently offered to employees although at the lower end and in some cases those packages were in respect of voluntary redundancies.

The issue for the Tribunal is whether there were any special circumstances which would indicate that the Employer should be required to pay an increased package to the redundant employees whose employment was terminated on 13 August 2006. It is a question of balancing the concerns of the redundant employees with the Employer’s financial and operational situation.

The Tribunal accepts that the nature of the work performed by most employees at the Employer’s premises resulted in them having acquired rather limited and virtually non- portable skills. There are no other mining operations being carried out in Fiji at the present time.

The Tribunal also accepts that almost all of the redundant employees stayed in and around the Vatukoula and Tavua areas. The Tribunal also accepts that alternative employment opportunities for such a large number of workers all looking for new employment since the temporary closure were virtually non-existent in Vatukoula and Tavua.

The Tribunal accepts that there were really only two courses of action open to the redundant employees. They could either undertake retraining or re-skilling programmes or look for and accept employment where the skill requirement was lower and hence so was the remuneration.

Finally the Tribunal accepts that for many of the redundant workers, there would be substantially longer periods of unemployment before alternative employment might be found. This was partly because of the large number of workers who had been thrust into the job market due to the compulsory redundancies having come into effect since the temporary closure.

The Tribunal notes the evidence given on behalf of the Employer that a retraining grant of $500.00 was offered to redundant workers but had not been widely taken up.

The Tribunal also accepts that the Employer could have laid off the hourly paid workers for six months without pay under clause 17 of the Agreement and then made them redundant if necessary under clause 10 of the Agreement. The Staff Association members could have had their employment terminated by notice or payment in lieu of notice pursuant to their individual contracts of service. The Tribunal has concluded that the Employer by not having taken those options demonstrated not only its concern for but also its obligation to its employees whose labour made a significant contribution to the mine’s more successful operations in years gone by.

The Tribunal has concluded that the Employer’s current financial and operational problems cannot be considered in isolation. The Tribunal must also consider the plight of those redundant employees whose prospects were in some respects more pressing and gloomy.

The Tribunal also notes that there was during the course of the hearing some discussion concerning the tax arrangements applied by FIRCA in circumstances such as in the present Dispute. The Tribunal assumes that the parties will pursue this matter with FIRCA.

Having considered the evidence the Tribunal has concluded that the circumstances which existed in the case of the employees whose employment was terminated on 13 August 2006 and who as a result have been compulsorily made redundant were sufficiently unusual to justify a more substantial package. As mine employees their situation was unique in Fiji.

The Tribunal has concluded that the redundant employee members of the Union and the Association should be paid five months up front and two weeks for each year of service. The Tribunal accepts that there are virtually no employment prospects in the Vatukoula and Tavua areas. However the Tribunal considers that the increase in the upfront component of the packages takes into account any relocation expenses that may be incurred.

AWARD

The redundant employee members of the Union and the Association are to be paid a redundancy package of five months upfront together with two weeks for each year of service.

DATED at Suva this 20 day of February 2007

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL