Transport Workers Union v Air Fiji Ltd [2007] FJAT 30; Award 31 of 2007 (19 June 2007)

THE REPUBLIC OF THE FIJI ISLANDS

NO 31 OF 2007

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

TRANSPORT WORKERS UNION

AND

AIR FIJI LIMITED

TWU: Mr S Sharma
Air Fiji: Mr N Lajendra

DECISION

This is a dispute between the Transport Workers Union (the Union) and Air Fiji Limited (the Employer) concerning the issue of fixed term contracts and in particular the fixed term contract of Said Hassan (the Grievor).

A trade dispute was reported by the Union on 1 March 2004. The report was accepted on 12 March 2004 by the Chief Executive Officer who referred the Dispute to a Disputes Committee. As a consensus decision was not reached by the Committee, 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 23 April 2004 with the following terms of reference:

"- - - for settlement over the company’s actions of:

(i) Purportedly engaging staff on fixed term contracts and contrary to the collective agreement between the parties, which envisages permanent employment following successful completion of probationary period on the terms and conditions as contained in the collective agreement, thereby breaching the collective agreement.

(ii) Terminating the employment of our member, Said Hassan by refusing to extend or renew his purported fixed term contract contrary to his rights as a permanent employee under the collective agreement.

(iii) Insisting that it has the right to engage staff on fixed term contracts because they are not members of the Union at the time of the initial agreement.

(iv) The Union therefore, sought all purported fixed term contracts to be revoked and such employees to be declared permanent employees and Said Hassan to be re-instated to his former position without loss of benefits."

The Dispute was listed for preliminary hearing on 12 May 2004. On that day the parties were directed to file their preliminary submissions by 2 June and the Dispute was listed for hearing on 13 July 2004.

The Employer filed its preliminary submissions on 4 June and the Union filed its submission on 7 July 2004.

When the Dispute was called for hearing the parties made some initial observations to the Tribunal concerning the future conduct of the proceedings. As a result the Tribunal gave directions for the filing of further written submissions by the parties and the hearing of the Dispute was adjourned to a date to be fixed.

The Union eventually filed its further submissions on 18 March 2005. The Employer filed an answering submission on 16 June 2005. By letter dated 9 September 2005 the Union informed the Tribunal that it did not intend to file a reply submission.

The Dispute was then listed for mention on 28 October 2005. The continuation of the hearing was fixed for hearing on 7 December 2005. However, by letter dated 24 November 2005, the legal practitioners acting for the Union applied for the hearing date to be vacated. That application was listed for hearing on 25 November. As the application was not opposed by the Employer, the Tribunal directed that the hearing date be vacated and the Dispute was relisted for mention on 27 January 2006.

The continuation of the hearing was then listed for 3 May 2006. Due to the illness of the Grievor that hearing date was also vacated.

The Dispute was relisted for mention on 26 May, 23 June, 28 July, 1 September, 29 September and 24 November 2006. These mention dates were required because of some concern expressed by the Tribunal about the legal representation of the parties.

The continuation of the hearing took place on 24 January 2007 in Suva. During the course of the hearing the Union called two witnesses and the Employer called one witness to give evidence. At the conclusion of the evidence the parties requested and were granted leave to file written final submissions.

However, by letter dated 6 March 2007 the legal practitioners for the Union informed the Tribunal that the Union did not intend to file any further submissions and would rely on submissions already filed.

Following a further mention hearing on 23 March 2007, the Employer filed further submissions on 9 May 2007. At the mention hearing on 25 May 2007 the Union through its legal representative informed the Tribunal that it did not intend to file a reply submission.

At the hearing the parties indicated to the Tribunal that by consent certain documents were to be admitted into evidence. First, the documents numbered 1-37 in the Union’s List of Documents were marked by the Tribunal as exhibits 1-37 respectively.

Secondly, the documents numbered 8 and 15 in the Employer’s Bundle of Documents were marked by the Tribunal as exhibits 38 and 39 respectively.

At the outset, it should be noted that this Dispute did not involve a discipline issue. The issue before the Tribunal was the decision by the Employer not to renew the Grievor’s contract. The Tribunal will consider the Grievor’s position first and then move on to consider the more general issues raised by the terms of reference.

The Grievor commenced employment with the Employer on 1 December 1997. The document by which he was engaged was an Air Fiji Memorandum dated 3 December 1997. Although the memorandum stated that he was employed until 31 January 1997, it was apparent that this was a typing error and in fact the Grievor was employed for two months up until 31 January 1998. The memorandum stated that the Grievor was to be employed as a senior travel consultant at the Suva office. It would appear that he was engaged for the period of the Travel Centre Manager’s annual leave. His rate of pay was also specified in the memorandum. There were no other express terms in the memorandum. The Grievor continued in full time employment with the Employer after 31 January 1998. In September 1998 the Grievor signed a contract of service which provided for a commencement date of 1 January 1998 for a fixed period of two years. At that time, the Grievor was not a member of the Union. There was however a Collective Agreement between the parties dated 1 January 1990.

The Union has submitted that the Employer breached the Collective Agreement by entering into a fixed term contract with the Grievor. The Union submitted that the Collective Agreement did not provide for fixed term contracts.

The Tribunal accepts that the Collective Agreement does not make provision for fixed term contracts. However, it should be noted that the Collective Agreement does not contain any provision which expressly prevented the employer entering into a fixed term contract of service with an employee. The Tribunal does accept that the Employer could not enter into a fixed term contract with an employee who was a member of the Union. The question is did the Collective Agreement prevent the Employer from entering into a fixed term contract with an employee who was not a member of the Union.

The Collective Agreement (as amended) was entered into by the Union "acting for and on behalf of all employees of the Company" except those who were listed in the recognition clause. In the recognition clause the Union was granted recognition "as the sole representative for the purpose of collective bargaining in all matters pertaining to - - - other conditions of employment of all salaried and industrial staff" of the Employer except for those expressly exempted. The list of positions exempted from recognition did not apply to the Grievor.

However, the Trade Unions (Recognition) Act 1998 provides for the system of union recognition for collective bargaining purposes in Fiji. The scheme of the legislation implies that only members of the Union constitute or make up the bargaining unit for which the Union acts as agent for the purposes of collective bargaining. Further, section 33 (3) of the Constitution provides each employee with the right to fair labour practices. The Tribunal is satisfied that when the provisions of that Act are read with section 33 (3) of the Constitution, the Employer was not prevented from entering into a fixed term individual contract of service with an employee who was not a member of the Union.

As a result the Employer did not breach the Collective Agreement by entering into a fixed term contract with the Grievor who was not a union member at that time.

Clause 2 (a) of the contract provided for a probation period which did not apply to the Grievor. His contract was for two years and would therefore come to an end on 31 December 1999. Clause 2 (b) stated:

"After the probation period the employment contract will be for a period of two (2) years being reviewed yearly in the month of January and thereafter may be extended by mutual agreement between the parties."

The Grievor gave evidence that he was not part of any review in either January 1999 or in January 2000. This was not challenged by the Employer. The Grievor continued to work in full time employment beyond 31 December 1999.

By memorandum dated 14 June 2000 the Grievor was informed that his contract had been extended up to 1 January 2001 on the same terms and conditions. The Grievor stated in his evidence that there were no discussions with the Employer prior to his receipt of the memorandum.

The Grievor’s contract was extended each year from 1 January 2001 to 31 December 2003 for 12 months on the same terms and conditions as the 1998 contract.

The Grievor applied to join the Union on 17 July 2003 and his application for membership was approved shortly afterwards.

By letter dated 5 January 2004, the Grievor was informed that his contract of employment had come to an end on 31 December 2003. He was requested to make himself available for a review on 16 January at 3.30pm. The Grievor had continued to work up until that date.

In his evidence the Grievor stated that the review did not take place on 16 January 2004. On that day at about 12 noon the Grievor received a telephone call from the HR Supervisor (SS Goundar) and was informed that the review had been deferred to a later date. Later, on the say day, Mr Goundar delivered a letter from the Chief Executive Officer. Omitting formal parts the letter stated:

"Your contract of service expired on 31 December 2003. It was extended to 16 January 2004 because the company wanted more time to review the question of whether or not the contract of service between you and the company should be further extended.

We regret that we have decided in the terms of clause 2 thereof not to extend the contract. Consequently your employment with the Company is no longer required with immediate effect and you are hereby accordingly informed that it is terminated.

You will be paid one month’s pay in lieu of notice."

The evidence also established that following the Grievor’s departure, the position of senior travel consultant was downgraded to two travel consultant positions which were subsequently advertised.

The first question for the Tribunal to consider is whether the Employer’s letters dated 5 and 16 January 2004 were in accordance with clause 2(b) of the 1998 contract.

Up until 31 December 2003 the Grievor’s contract had been extended on annual basis. Although the Grievor had not been part of any negotiations in respect of those extensions, his conduct amounted to acceptance in each year. The Tribunal is satisfied that the reference to an annual review in January meant a review by the Employer to determine whether there was a requirement to renew the contract of service. The review referred to was not necessarily a performance review.

Although the Employer did not extend the Grievor’s contract in January of each year, the Tribunal is not satisfied that it was required to do so by clause 2 (b). In each year, the extended contract was backdated.

There is one narrow issue which arises from these facts. This concerns the period between 1 and 16 January 2004. The extended contract expired on 31 December 2003. The question is does the Grievor’s initial contract determine his terms and conditions for the period 1-16 January 2004. As clause 2 (b) appears to have the effect of providing on-going employment for at least the month of January of each year following the extended period, the Tribunal has concluded that the terms and conditions of the 1998 contract continued to apply to the period 1-16 January 2004.

There is a further issue which arises from the Employer’s letter dated 16 January 2004. The Employer indicated that the Grievor was to be paid one month’s pay in lieu of notice. The breakdown of the Grievor’s Final Pay (Exhibit 38) showed that he was paid his wage for the week ending 18 January, 20 days leave and one month’s pay in lieu of notice.

Clause 2 (c) of the Grievor’s 1998 contract provided that the contract could be terminated by either party giving to the other party one calendar month’s notice in writing.

The usual meaning of such a clause is that it applies when one of the parties wishes to bring the employment relationship to an end prior to the date upon which it is due to end, whether it be at the end of a fixed term or upon reaching retirement age. The words used in the first part of clause 2 (c) do not lead to the conclusion that the clause has a different meaning in this agreement. The Tribunal is left with the conclusion that the payment was made either by mistake or as an ex gratia payment.

The extended period of the contract had already come to an end and the Employer had made a decision in accordance with clause 2 (b) not to extend the contract further. There was no requirement for a payment in lieu of a month’s notice as there was no requirement for the Employer to give a month’s notice.

The remaining issue, and perhaps from the point of view of the parties to this Dispute, the more weighty issue is for the Tribunal is to determine the effect of the Grievor becoming a member of the Union in July 2003. This was about half way through the last of the Grievor’s extended contracts which commenced on 1 January and concluded on 31 December 2003.

By virtue of section 34 (7) of the Trade Disputes Act upon becoming a union member, the provisions of the Collective Agreement became an implied condition of the Grievor’s contract of service, but to what extent. This issue was discussed by Mr Justice Kermode in Director of Public Prosecutions –v- Gyanendra Naveen Prakash Singh and Others (1977) 23 F.L.T 135 The Court at page 144 (H) observed:

"Section (34) (7) cannot in my view be applied literally. It is only, in my view, those terms of the collective agreement which are appropriate and have direct reference to an employee’s contract of service which should be considered as being implied operative terms when considering that contract of service."

And at page 145 (H) the Court stated:

"In my view in section (34) (7) of the Act the words "the provisions of such agreement" must be construed as relating to the terms and conditions of employment which regulate the employment of an employee referred to in section (34) (1) of the Act and be related to that employee’s contract of service:

As a result the Tribunal is satisfied that from July 2003, only those terms and conditions set out in the Collective Agreement which were applicable to the Grievor and consistent with the nature of his contract of service became an implied condition of the Grievor’s employment contract. The fact that the Collective Agreement did not provide for fixed terms contracts did not in any way affect the nature of the Grievor’s extended one year contract. The Collective Agreement could not convert the Grievor’s contract into one of permanent full time employment.

The Tribunal has therefore concluded that the Employer had acted in accordance with the employment contract when it decided in January 2004 that it did not wish to extend the Grievor’s contract for a further period of 12 months. There was no breach of the contract by the Employer. Furthermore there was no breach of any of the terms of the Collective Agreement which became a condition of the Grievor’s contract of service upon his joining the Union. At all times the Grievor remained an employee on a fixed term contract which was renewable for a further 12 months in January of the following year.

Finally, on the general issue of the Employer entering into fixed term contracts, the Union acknowledged in paragraph 8 of its submission dated 16 March 2005 that :

"It is not disputed that Air Fiji may be entitled to enter into fixed term contracts"

The Tribunal agrees with that concession and also agrees with the Union’s further observation in the same paragraph that fixed term contracts cannot be offered to union members.

However these observations do not affect the outcome of the present dispute so far as the Grievor is concerned for the reasons stated above.

The Tribunal does not consider it appropriate to make any declaration in respect of any other employees who may have entered into fixed term contracts with the Employer. The Tribunal has not heard any evidence in relation to the matters which would need to be considered in the case of each employee.

AWARD

1. The Collective Agreement did not prevent the Employer employing a non-union employee on a fixed term contract.

2. The Grievor’s employment was terminated as a result of the decision by the Employer not to extend the contract of service for a further 12 months.

3. That decision was in accordance with the provisions of the Grievor’s fixed term contract.

4. That decision was not in breach of the Collective Agreement as only those provisions of the Collective Agreement which were relevant to the Grievor became a condition of the employment contract pursuant to section 34 (7) of the Trade Disputes Act.

DATED at Suva this 19 day of June 2007

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL