PAFCO Employees Union v Pacific Fishing Company Ltd [2007] FJAT 60; Award 62 of 2007 (17 September 2007)

THE REPUBLIC OF THE FIJI ISLANDS

NO 62 OF 2007

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

PAFCO EMPLOYEES UNION

AND

PACIFIC FISHING COMPANY LIMITED

PAFCOEU: Mr T Tokalauvere
PAFCO: Mr H Nagin

DECISION

This is a dispute between PAFCO Employees Union (the Union) and Pacific Fishing Company Limited (the Employer) concerning the alleged breach by the Employer of two Agreements.

A trade dispute was reported by the Union on 8 June 2006. The report was accepted by the Chief Executive Officer who referred the Dispute to a Disputes Committee.

As the Union did not comply within the prescribed time, 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 18 October 2006 with the following terms of reference:

"- - - for settlement over the employer’s failure to follow:

1. Master Agreement signed by the parties and duly registered with the Labour Ministry on 12/07/01

2. Memorandum of Agreement signed by the parties and registered with the Labour Ministry on 24/09/06.

The Union contends that:

1. All the said union workers be fully re-instated wef 29/09/06.

2. All the said union workers be compensated from the day not re-instated ever since the signing of the MOA document on 29/09/03.

3. All the said union workers are compensated without loss of any benefits and years of service.

The Dispute was listed for a preliminary hearing on 27 October 2006. On that day the parties were directed to file preliminary submissions within 28 days and the Dispute was listed for mention on 24 November 2006.

The parties were subsequently granted a further 28 days to file their submissions and the Dispute was relisted for mention on 19 January 2007.

The Employer filed its preliminary submissions on 21 December and the Union did so on 28 December 2006.

The hearing of the Dispute commenced on 21 May and was completed on 22 May 2007. During the course of the hearing the Union called four witnesses and the Employer called one witness to give evidence. At the conclusion of the evidence the parties were granted leave to file written final submissions.

The Union filed its final submissions on 26 June 2007. The Employer filed answering submissions on 10 July and the Union filed a reply submission on 1 August 2007.

At the commencement of the hearing the Union informed the Tribunal that the correct date of the second Memorandum of Agreement to which reference was made in the Terms of Reference was 24 September 2003. As a result the Tribunal amended the dates 24/09/06, 29/09/06 and 29/09/03 to 24/09/03.

The terms of reference in this Dispute were unfortunately vague to the extent that the essential nature of the Dispute was not apparent. As a result, the Union indicated that the Dispute concerned the shut down of the Employer’s business on a number of occasions in 2006 whereby 614 employees were laid off without pay for the duration of each of those shut downs. The Union contended that the Employer’s actions were in beach of clause 20 of the Collective Agreement dated 12 July 2001 (the Agreement).

Clause 20 stated:

"The Company shall give written notice to the Union of any factory shut down not less than 10 clear days for consultation to take place. During this period, the permanent workers may be required, along with all other workers of the Company to cease work for periods when the Company closes its factory for reasons such as annual maintenance work, capital upgrading work, lack of fish etc."

By letter dated 9 March 2006, the Employer advised the Union, that :

"In accordance with clause 20 of the Master Agreement, we hereby advise that due to fish shortage which is beyond our control we will shut down our operations for at least three weeks effective from 27 March 2006.

However if during this shut down period some improvement of fish supply happens we will try our best to reduce our shut down. We will advise you on the situation as it arises. We look forward for your co-operation and support on the matter."

On 13 March 2006 the Union wrote to the Employer. Unfortunately the letter was lengthy and raised a number of long standing unresolved issues between the parties. So far as the present Dispute is concerned the Union maintained that the:

"- - - the Company should engage Union in a fruitful dialogue as according to the Master Agreement rather than imposing your will - - -"

By letter dated 14 March 2006 the Employer replied to the Union in the following terms:

"Thank you for your undated letter sent in response to our letter of 9 March 2006 on the above subject matter. (Factory shutdown due to fish shortage).

We gave you notice in accordance with clause 20 of the Master Agreement of our intention to shut down the factory due to shortage of fish. This is not the first time to shut down the factory due to lack of fish.

We have done this on many occasions in the past and you are fully aware of them through your personal involvement in the matter. We are therefore fully aware of the requirements under the said clause.

Rather than confirming your availability for consultation so that no time is wasted, you have instead responded by providing two pages interpretation and application of clause 20 of the Master Agreement. Please note that we do not wish to indulge in unnecessary correspondence on irrelevant matters and urge upon you to confirm your availability to meet us to finalise the factory shut down process. The matter is serious and for that reason we would appreciate an early response from you - - -".

By a letter dated 16 March 2006 the Union responded to the Employer’s letter. Again the letter is long and deals with irrelevant material. The following extract is relevant to the present Dispute:

" - - -

Company’s suggestion to confirm my "availability" is much welcomed and appreciated, however, Union hopes and prays that the meeting will not be used merely as a pretext to satisfy the provisions in clause 20 as demonstrated by PAFCO in past experience rather than a meaningful consultation and dialogue.

Note: In view of the above, Union is free to meet with Company, Mon, March 20, - Thurs March 24, 2006, Union Office, Levuka, Ovalau, Lunch provided, please advice.

- - - ".

It would appear that a meeting did take place between the parties on 29 March 2006 in Suva. A copy of the Minutes which were dated 30 March 2006 and signed by the Employer’s Industrial Relations Officer (Mr G Singh) revealed that the main purpose of the meeting was to discuss the shutdown notice given by the Employer to the Union.

The Minutes stated that the Employer’s General Manager Finance and Administrating (Mr C Prakash) explained that the supply of fish was so low that the Employer was forced to close the factory. It was noted that the Union’s General Secretary (Mr Tokalauvere) urged the Employer to try and bring back normal operations as quickly as possible.

At this stage it should be noted that three weeks from 27 March 2006 meant that the factory was to be shut down till Sunday 16 April 2006.

In a letter dated 7 April 2006, the Employer’s General Manager operations (Mr J. C Guenegen) advised the Union that:

"Fish supply is still not improving and due to the fish shortage, we would like to inform PAFCO Union that the Factory will have to shut down operations several weeks during the next two months.

As today please find attached weeks concerned. Could you please manage a meeting with Mr Chandra Prakash our GM – Finance/Admin as soon as possible for consent regarding the shut down.

As we already informed you last time, if any improvement of fish supply should happen we will reduce this shut down period and we will inform you accordingly.

Week	Working Days
10/4/06 – 14/4/06	3 days
24/4/06 – 28/4/06	5 days
01/5/06 – 05/5/06	4 days
29/5/06 – 02/6/06	4 days
05/6/06 – 09/6/06	5 days"

In his evidence before the Tribunal, the Employer’s General Manager –Finance/Administration referred to a meeting which subsequently took place on 20 April 2006. There was a typed note of this meeting in the Union’s preliminary submissions to which the witness was referred. The note stated that the Union was concerned with the late notice of the shut down and the question of pay for the workers during the shut down periods.

The note indicated that the Employer’s representative (Mr Prakash Chandra) replied that the shut down was due to lack of fish as it was off-season. He stated that the Employer was attempting to generate work for there to be a two weeks on and one week off arrangement. He also indicated that the Company could not afford to pay full pay or even half pay to the laid off workers.

Although there was a reference to late notice (i.e. less than 10 days notice) in respect of the shut down, it should be noted that the first week (10/4/06 – 14/4/06) was covered by the first notice dated 9 March 2006. The second shut down period (24/4/06 – 28/4/06) was well in excess of the 10 day notice given in the letter dated 7 April 2006 and complied with clause 20.

By letter dated 4 May 2006 the Employer again advised the Union of a further shut down:

"As advised vide my letter dated 7 April 2006, there is still no improvement to the supply of fish. For that reason there is need to further review the shut down periods. I wish to advise you that the proposed revised shut down periods are as follows:

Week	No of Working days
22/5/06 – 26/5/06	5 days
29/5/06 - 2/6/06	4 days

However, the Company is doing everything possible with the partners to reduce the shut down periods.

I do appreciate the fact that you have very busy schedule ahead, none the less we still need to sort out this crucial issue. For that reason I would be grateful if we could meet as early as possible to sort out this problem".

The first shut down period in this notice is an additional period which was not referred to in the letter dated 7 April 2006. However there was more than 10 days notice given. The second shut down period listed in the letter of 4 May 2006 was previously notified in the letter dated 7 April 2006.

In his evidence Mr P. Chandra stated that there were other meetings held with the Union to discuss the shutdowns but that no minutes were recorded. He also stated that at the time of these events the Union’s General Secretary was not always available as he was a candidate in the 2006 May General Elections.

In a letter dated 19 May 2006 the Employer confirmed the two shutdown periods already notified in the letter dated 4 May 2006 and advised an additional 4 day shut down in the week 12/6/06 – 16/6/06. This additional shut down notification complied with the 10 days notice required under clause 20.

In the same letter the General Manager again requested a meeting with the General Secretary to sort out the question of the shut down.

On the evidence before it the Tribunal is satisfied that, in respect of the notifications of shut downs in the letters dated 4 May and 19 May 2006, either meetings took place to discuss the shutdowns or meetings did not take place because the General Secretary was too busy to attend meetings or too busy to arrange union representation at such meetings. The General Secretary was a candidate for the House of Representatives at the 2006 General elections.

Consultation is not defined in the Collective Agreement. However the Tribunal has concluded that the Industrial Relations Code of Conduct provides guidance as to what is meant by consultation. The purpose of the Code is to give practical guidance for promoting good industrial relations in Fiji. Good industrial relations are the responsibility of both the Employer and the Union. The Code provides guide lines in relation to the day to day problems of industrial relations.

Clause 65 of the Code of Practice states:

"Consultation means jointly examining and discussing problems of concern to both management and employees. It involves seeking mutually acceptable solutions through a genuine exchange of views and information."

Having considered the written record of the meetings which followed the notifications contained in the letters dated 9 March and 7 April 2006, the Tribunal is satisfied that the parties had jointly examined and discussed the problem of the shut downs and payment during the shut downs. Although there was a genuine exchange of views it would appear that the parties did not reach a mutually acceptable solution. The Tribunal accepts that this is a consequence of the Union’s report of the trade dispute. In relation to the third and fourth notifications, the Tribunal is satisfied that if consultations did not take place, it was on account of the General Secretary being otherwise occupied with the Elections. If there were meetings, the Tribunal is satisfied on balance that there was consultation in compliance with clause 20.

Consequently the Tribunal is satisfied that consultation either did take place in respect of each of the four notifications or if it did not take place, it was due to the non-availability of the Union’s General Secretary. There was no breach of clause 20 in respect of the requirement to consult. There was no breach of clause 20 in respect of the requirement to give 10 days notice of the shut downs notified in the four letters.

There was an issue raised during the hearing concerning the meaning of clause 20 and whether consultation should take place before the 10 days notice was given by the Employer.

The Fiji Court of Appeal in Din and Another –v- Westpac Banking Corporation (Unreported Civil Appeal No 66 of 2003 delivered 26 November 2004) has set out guidelines for the interpretation of collective agreements. Applying those guidelines the Tribunal has concluded that clause 20 means that 10 clear days notice is required to be given by the Employer to ensure that consultation takes place before the shut down commences.

The Tribunal is also satisfied from the evidence that the purpose of that consultation is not to attempt to prevent the shut down but to consider alternatives for the workforce.
In his evidence the President of the Union (Mr Abele Basi) stated that the Union had reported a trade dispute because it considered that the Employer had not given notice in the correct manner and that there was no consultation. The Tribunal has already dealt with these two matters.

The Union President also stated that it did not challenge the bona fides of the reason for the shut down, namely fish shortage nor did it challenge the refusal to pay workers during the period of the shut down. He stated that these matters were not the issues in the trade dispute.

Certainly no where in the material before the Tribunal had the Union sought to question the Union’s justification for the shut downs. The issue had not been raised in correspondence by the Union and was not discussed at the meetings.

It was for that reason that the Tribunal rejected the Union’s application, made after it had closed its case, to call evidence from a customs officer concerning the level of fish supplies at the Employer’s premises during the shut down periods. Once the Union President had given evidence in cross-examination concerning the basis upon which the Dispute had been reported (and the fact that Mr Tokalauvere did not seek to clarify those answers in re-examination), the hearing was from that point on only concerned with evidence which related to the issues of consultation and notice.

As a result the Tribunal does not intend to examine the bona fides of the reason for the shut downs. Although the Union raised a multiplicity of legal issues in its preliminary submissions, it did not attempt to challenge the factual basis of the shut downs which had been conveyed to the Union in each of the four notifications.

It is appropriate however to make some observations about the issue of payment to workers during the shut down periods. This is an issue which arises out of the terms of reference and was addressed in the parties’ submissions.

The workers who were stood down as a result of the shutdowns did not receive their normal wages. However, the Union’s President stated in cross-examination that non-payment of wages for the shutdowns in 2006 was not the problem.

The Tribunal notes the evidence from the Union President and the General Manager Finance/Administration that when there have been shut downs in previous years (since at least 2000) workers have not been paid their normal wages during the time of the shut downs. There has not been a trade dispute reported to the Ministry in respect of any of those occasions when normal wages had not been paid

On that basis alone, the Tribunal is satisfied that in accordance with past practice the Employer was not obligated to pay normal wages to workers during periods of shut down due to fish supply shortages. However there is a wider issue involved in this Dispute concerning the payment of wages in circumstances such as those which existed in this Dispute. The issue arises as a result of the provisions of the Collective Agreement.

Clause 3 of the Agreement sets out the normal working hours while clause 5 specifies that overtime is that time worked in excess of normal working hours and approved by the Employer.

Section 16 of the Employment Act Cap 92 requires an employer to provide an employee with work, in accordance with the contract of service, on the number of working days expressly or impliedly provided for in the contract. The section also states that an employee is to be paid his wages for each day on which work was not provided in respect of those working days when work should have been provided according to the contract. Although Clause 20 of the Agreement allows the Employer to shut down the factory under certain circumstances, the payment of wages during the shut down is not expressly provided for in the clause.

In Award No 15 of 2005 (NUFCW –v- Voko Industries Limited) the Tribunal concluded that a clause such as clause 3 in the present Collective Agreement had the purpose of regulating when overtime entitlements were activated and did not guarantee a certain number of hours of work for employees.

In a decision of the High Court in The State –v- The Arbitration Tribunal and Voko Industries ex parte National Union of Factory and Commercial Workers (Unreported JR No 28 of 2005 delivered 31 October 2005) the abovementioned Award was quashed and a declaration granted that the employees in that dispute were entitled to be paid for the period they were stood down due to a fish supply shortage. Whilst of course this Tribunal accepts the binding effect of a decision of the High Court, the text of the unreported decision contains an error on page 4 where it is stated:

"The Tribunal was of the view that clause 4 has the objective of regulating when overtime payments are to be activated and guarantee a certain number of hours of work for employees".

However that was not what the Tribunal said in its Award. As will be noted above, the Tribunal had concluded that the effect of the clause was to determine when overtime payments became an entitlement and NOT to guarantee a certain number of hours of work for employees.

It is on account of this error in the text of the High Court’s decision that the Tribunal proposes to deal with this issue in slightly more detail on this occasion.

It should be noted at the outset that in this Dispute the Employer sought to reduce the number of days worked by shutting down operations for specified periods rather than reduce the number of employees employed by the Employer.

In a useful text Canadian Labour Arbitration Third Edition (Brown & Beatty) at para 6.2210 it is noted that:

"- - - when an employer unilaterally reduces the work hours of all of its employees - - - (it) is generally not a violation of provisions which delineate the regular or normal working day or work week. Rather in their usual form these clauses have been interpreted, almost without exception, to regulate the payment of overtime premiums and not to guarantee a certain number of hours of work for such employees."

The question for the Tribunal is whether clause 3 of the Agreement dated 12 July 2001 delineates the payment of overtime or whether it guarantees a certain number of hours of work for employees.

Clause 3 states:

"The parties agreed to refer this issue to the Arbitration Tribunal for ruling meanwhile prevailing hours of work shall remain in force."

The ruling to which reference was made in clause 3 was delivered in an Award dated 4 April 2003 (a decision of the Ad Hoc Arbitrator in a dispute between the parties). On page 9 of the Award, the Tribunal concluded:

"- - - I am not satisfied that there should be a change in the hours of work, therefore it remains unchanged."

The parties informed the Tribunal on 14 September 2007 that the hours of work which were to remain unchanged were those set out in clause 3 of an earlier agreement dated 19 June. 1998 (the earlier Agreement) made between the Employer and the Union.

In view of the ruling of the Ad Hoc Arbitrator in 2003, the Tribunal has concluded that it is appropriate to infer that clause 3 of the earlier Agreement became the substantive version of clause 3 in the Agreement.

Clause 3 of the earlier Agreement was headed "Hours of Work" and stated:

"(a) The normal working hours shall not exceed 42 ½ hours for 5 days a week; Provided that 1 hour 30 minutes is provided for meals and breaks.

(b) All meals and break hours to be in line with the schedule agreed upon by the parties."

Clause 5 of the Agreement dealt with "Overtime and stated:

"Overtime means any approved Company work carried out in excess of 8 ½hours in addition to normal working hours per day and 42 ½ hours per week. Overtime rate of pay shall be as follows"

(a) - (f) - - - "

Clause 2 of the Agreement dealt with "Basic Rate" which was also the subject of the Dispute before the Ad Hoc Arbitrator (supra). On page 9 of the Award, the basic hourly rates of pay for skilled and unskilled workers were settled.

The principles to be applied by the Tribunal in determining the meaning of clause 3 of the Agreement were discussed in detail by the Fiji Court of Appeal in Hassan Din and Another –v- Westpac Banking Corporation (supra). The interpretation of clause 3 is to be approached objectively.

The Tribunal is required to determine what meaning would the clause convey to a reasonable person having the relevant background knowledge.

In this case such a person would be aware that clause 3, in the context of the Agreement as a whole, was intended to set out the numbers of hours at which a workers would be paid the basic rate prescribed in clause 2.

Furthermore, the Court of Appeal considered it appropriate to look at the syntax of clause 3. This means considering the arrangement of words and phrases to form a sentence. The phrase "normal working hours" appears in clause 3. The parties have defined normal working hours as not exceeding 42 ½ hours for a normal working week of 5 days.

If the only purpose of clause 3 was to articulate the aggregate hours to be worked by an employee over a specified number of days on a weekly basis, the use of the word "normal" by the parties would be redundant.

However the presence of the word "normal" cannot be disregarded. It must serve some purpose.

The Tribunal has concluded that the use of the word "normal" served to delinate those hours which have a certain recognized value set out in clause 2 as basic rates of pay from those hours which attract other rates of pay (clause 5 and overtime).

The identification of the normal working hours during a week does not indicate or point to a guaranteed number of hours or days of work. On the basis of this interpretation of clause 3, there is no restriction in the clause that prohibits the Employer from reducing the stipulated hours or days of work since the use of the word "normal" does not guarantee a set number of hours a day of work in a week. Clause 20 provides for a reduction in working hours or days in certain stipulated circumstances. It does not conflict in any way with the provisions of clause 3.

Therefore the Tribunal has concluded that clause 3 of the Agreement does not guarantee a certain number of hours or days work for the purpose of section 16 of the Employment Act.

Even if clause 3 did amount to such a guarantee, clause 20 represents an exception to that guarantee and would result in any shut down falling outside the obligation imposed by section 16 of the Employment Act.

Under those circumstances section 16 of the Employment Act has no application and the Employer is not legally required to pay the workers for the shut downs which were activated pursuant to clause 20 of the Agreement.

Finally, in view of the frequency with which Disputes between the parties have come before the Tribunal, it is appropriate to refer to observations made in earlier Awards by other Arbitrators

In Award No 40 of 1996 the then Permanent Arbitrator (Ratu Joni Madraiwiwi) noted at page 3:

"Frankly much of the material put before the Tribunal was irrelevant. Its utility was to allow the parties to fully ventilate their feelings in this forum as a means of exercising their respective frustrations. Now that has been done, the Tribunal trusts that the parties will deal more fruitfully with each other in future for the greater good of all concerned".

In his Award dated 4 April 2003 the Ad Hoc Arbitrator had occasion to make the following observations at page 8:

"In view of the above the Tribunal is displeased with the approach in which the submissions have presented and drafted. It is clear that there was direct personal attacks made in the submission against both parties. This negative approach is not conducive to the employer and employee relationship and should not be encouraged in future no matter what circumstances may arise. At that note the Tribunal recommends that there should be a more professional approach in the way submissions are to be prepared without making direct personal attacks which is unacceptable."

The Tribunal is concerned that, despite these observations, the parties appear not to have altered the manner in which they undertake their employment relations responsibilities. The parties are urged to adopt both the practices and the spirit of the Code of Conduct.

AWARD

The Employer has not breached clause 20 of the Agreement.

There is no requirement express or implied imposed on the Employer to pay normal wages during shut downs implemented under clause 20.

DATED at Suva this 17 day of September 2007

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL