National Union of Hospitality, Catering and Tourism Industries Employees v Sheraton Resorts Denarau [2007] FJAT 16; Award 17 of 2007 (26 February 2007)

THE REPUBLIC OF THE FIJI ISLANDS

NO 17 OF 2007

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTES BETWEEN

NATIONAL UNION OF HOSPITALITY CATERING AND
TOURISM INDUSTRIES EMPLOYEES

AND

SHERATON RESORTS DENARAU
SHANGRI LA’S FIJIAN RESORT
HOLIDAY INN SUVA
PENINSULA INTERNATIONAL HOTEL
RAFFLES TRADEWINDS HOTEL
THE WARWICK HOTEL
THE NAVITI RESORT
THE WEST MOTOR INN
FIJI MOCAMBO HOTEL
TANOA INTERNATIONAL HOTEL
RAFFLES GATEWAY HOTEL
TOKATOKA RESORT
PLANTATION ISLAND RESORT
MANA ISLAND RESORT
TOKORIKI RESORT

NUHCTIE: Mr F Anthony
Hotels: Mr J Apted

DECISION

These are disputes between the National Union of Hospitality Catering and Tourism Industries Employees (the Union) and the 15 Hotels/Resorts listed above concerning the Union’s 2004 Log of Claims.

The 15 Hotels/Resorts involved in these Disputes are members of what is now known as Fiji Islands Hotels and Tourism Association. At the time these disputes arose this entity was known as the Fiji Hotel Association (FHA). A Committee of the FHA had, with the consent of the parties, customarily negotiated with the Union on behalf of some or all of its members.

Trade disputes were reported by the Union on 15 February 2005. The reports were accepted on 7 March 2005 by the Chief Executive Officer who referred the Disputes to conciliation. By agreement dated 14 March 2005 the parties agreed to refer the Disputes to voluntary arbitration. As a result the Minister authorized the Chief Executive Officer to refer the Disputes to an Arbitration Tribunal for settlement pursuant to section 6 (i) of the Trade Disputes Act Cap 97.

The Disputes were referred to the Permanent Arbitrator on 16 March 2005 with the following terms of reference:

" - - - for settlement over the failure of the Hotels/Resorts to negotiate and complete agreement of the Union’s Log of Claims 2004".

The Disputes were listed for a preliminary hearing on 30 March 2005. At the request of the parties the Tribunal directed that the parties file their preliminary submissions by 27 May 2005 and the Disputes were listed for mention on 24 June 2005.

On 24 June the parties were granted a further 21 days to file their preliminary submissions and the Disputes were relisted for mention on 29 July 2005.

The FHA filed preliminary submissions on 28 July 2005.

On 29 July 2005 the Union was directed to file its preliminary submissions by 24 August and the Disputes were again listed for mention on 30 September 2005.

The Union filed its preliminary submissions on 3 August 2005.

On 30 September 2005 the parties indicated to the Tribunal that they did not intend to call evidence and that a hearing would not be required. The parties sought leave to file final submissions and a schedule was agreed upon by the Parties and the Tribunal.

The FHA filed further submissions on 1 February 2006. The Union filed further submissions on 2 February and 27 March 2006.

The Disputes were listed for mention on 24 February 2006 and on that day the parties were directed to file a signed statement of agreed facts within 14 days. However on 31 March 2006 the parties informed the Tribunal that a hearing would be required and as a result the Disputes were listed for mention on 28 April 2006.

It would appear that the parties had second thoughts about the need for a hearing and at their request the Tribunal directed that they file a signed statement of agreed facts within six weeks. The Disputes were listed for mention on 23 June, 28 July 1 September, 29 September, 27 October, 24 November 2006 and 19 January 2007, all at the request of one or other of the parties.

The Disputes were then listed for a special mention on 2 February and again on 8 February 2007. The parties requested the Tribunal to settle the Disputes on the submissions filed and on the agreed premise that some employees of the Hotels were covered by the relevant Wages Council Order and others were not.

Although the Tribunal’s terms of reference directed the Tribunal to settle disputes concerning the Union’s 2004 Log of Claims, the parties indicated that there were only two outstanding matters which required adjudication.

The first matter concerned a proposed amendment to the definition of week as it appears in the Collective Agreement. The second issue concerned a proposed amendment to clause 6 by the insertion of a new sub-clause dealing with merit increase payments. There was also an amendment proposed concerning performance evaluations as part of the merit increase machinery.

First, the amendment to the definition of week. The present definition of week is found in clause 2 of the Collective Agreement and states :

"week means a period of seven consecutive days".

It should be noted that this definition is almost identical to the definition which is found in section 2 of the Employment Act Cap 92. The statutory definition is of course for the purposes of defining the word week whenever it appears in the Act.

The definition which the Union proposed was:

"week means the period between midnight on Saturday and midnight on the succeeding Saturday night."

The Union has submitted that the definition should be changed to bring it into line with the definition of week which appears in the Wages Regulation (Hotel and Catering Trades) Order 2003 (the Order). This is the current Order made under the Wages Council Act.

As previously noted, the parties have agreed that the Order does not apply to all of the workers employed by the Hotels. It would appear that the Order applies only to workers whose remuneration (without allowances, bonuses, overtime or additional benefits) is $150 per week or less. What this means is that those workers employed by the Hotels who are covered by the Order have their working week defined by the definition in the Order. Those workers who are not covered by the Order have their working week defined by the definition in the Collective Agreement or the Employment Act.

The Union submitted that by amending the definition in the Collective Agreement there would be greater consistency in the terms and conditions of employment for its members. The Union also submitted that the change in the definition would bring about consistency amongst the various Hotels with the result that in all Hotels and for all the Union’s members employed by them, there would be consistency as to when the week commenced and when the week ended.

The FHA submitted that it was not necessary for the definition of week as it appeared in the Collective Agreement to be the same as that which appeared in the Order.

The FHA also submitted that the Order did not apply to all Hotel workers and nor did it apply to all union members who were employed by the Hotels.

It was also submitted that a reference in the Collective Agreement to a provision in the Order does not necessarily mean that other provisions in the Order are to be incorporated into the Agreement.

The FHA also submitted that the definition of week in the Employment Act provides the Hotels with greater flexibility and as a result enables the Hotels to comply more readily with the requirements of the employment legislation. The FHA also submitted that there would be considerable inconvenience caused as a result of the change to the definition without any benefit to the employees.

The Tribunal has already noted that the Employment Act states in section 2 that the definition of week is only a meaning for that word as it is used in the Act itself. The Dispute before the Tribunal does not really have anything to do with any provision dealing with "week" in the Act.

The Tribunal considers that the Employment Act, the Order, and the Collective Agreement are all different instruments for different purposes. The Act is of general application whilst the Order and the Agreement apply to the employment relationship between the Hotels and some of their employees. Pursuant to section 34 (7) of the Trade Disputes Act, the provisions of the Agreement are an implied condition of the contract of service between every employee and employer to whom the Agreement applies. The Order applies to, amongst other persons, those hotel employees earning less than $150 per week.

Under the circumstances it seems appropriate that the definition of week in the Order which applied to some of the Union members employed by the Hotels should be the definition which applies to the other employees who are union members employed by the Hotels and whose conditions of employment include the Agreement.

The Tribunal has considered the submissions of the parties carefully and has concluded that the definition in the Agreement should be changed to reflect that which appears in the Order and to bring about fairer consistency in the terms and conditions of employment.

However the Tribunal has concluded that it would not be fair to backdate this change and accordingly the change in the definition is to take effect on and from 1 April 2007. The Tribunal accepts that the parties had initially agreed to the definition in the Agreement. There was no indication that it implied a calendar week. The Hotels are entitled to a period of time to assess what arrangements will need to be made as a result of the amendment.

The second claim relates to further amendments to the Collective Agreement by the insertion of two new sub-clauses. The Union seeks to insert clause 6.4 as follows:

"Merit Increase Payment

6.4. All employees shall be paid in addition to all other entitled payments, merit increases based on their level of performance appraisal and evaluated as follows:

a) Poor – NIL Percentage

b) Satisfactory – 2% of basic rate of pay

c) Good – 3% of basic rate of pay

d) Excellent – 5% of basic rate of pay"

The Union also seeks to insert clause 7.3 as follows:

"7.3 Evaluation shall be conducted by the immediate supervisor for review and approved by the Department Head. The performance evaluation shall be the bases of an appraisal interview the supervisor will conduct with the employees concerned."

The Union submitted that there was no system in existence at the present time whereby employees were assessed and rewarded fairly for performance. The Union submitted that the Hotels could afford the proposed system. The present system adopted by Hotels of naming one employee as "the employee of the month", it was submitted, was outdated and inadequate. The proposed system would allow all workers to participate thereby improving productivity and efficiency and would reward workers where appropriate.

The FHA submitted that the proposed amendments should be disallowed. It submitted that the introduction of the proposed performance pay system would result in ever - escalating labour costs without taking into account a Hotel’s ability to finance the system. The FHA also submitted that the proposed amendments were ill-conceived and unworkable. As part of its submission FHA claimed that it would be more appropriate for each Hotel to negotiate and agree upon a pay system which suited its circumstances. However the submission stated that the present arrangement meet the requirements of rewarding workers fairly for performance in a transparent and objective manner.

It should be noted at the outset that there was no signed statement of agreed facts filed by the parties in this dispute. There was no hearing and hence no evidence. There were a number of conflicting assertions in the submissions which remained unsubstantiated.

The Tribunal accepts that there is not in place at the moment a proper system for rewarding employees for their performance. The Tribunal considers that the FHA’s member Hotels and Resorts should have in place a system that objectively and transparently rewards employees for performance. It is generally accepted that merit pay is directly related to work performance. To be effective and workable the proposed system must require each Hotel to critically review and assess each employee’s performance. An evaluation form should be used by the supervisor to rate each employee’s actual performance. An appraisal of that rated performance would then determine whether a merit pay increase was warranted.

The Tribunal accepts the submission put forward by the FHA that a worker appraised as having performed satisfactorily should not receive a merit pay increase. It is noted that the agreement with the Toberua Island Resort did not provide for a merit pay increase for workers assessed as satisfactory.

The Tribunal accepts that there is an inherent problem in mandating a single merit pay system across the board. There are obviously substantial differences in the membership of the FHA. As a result the Tribunal considers it appropriate to accept the Union’s proposal set out on page 5 of its submissions filed on 27 March 2006. The Hotels individually or the FHA on their behalf are to negotiate a merit pay increase system with the Union. The parties should take note of the Tribunal’s observations.

The negotiated arrangements are to be incorporated into the Collective Agreement. The merit pay agreements are to be finalized by 31 May 2007 and are to be implemented on and from 1 July 2007.

AWARD

The definition of week in the Collective Agreement is to be amended in terms sought by the Union.

The amended definition is to apply to the contracts of service of all member employees on and from 1 April 2007.

The parties are to agree upon merit pay systems either individually or collectively by 31 May 2007 and such system are to come into effect on and from 1 July 2007.

DATED at Suva this 26 day of February 2007

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL