Fiji Airline Pilots Association v Air Fiji Ltd [2007] FJAT 68; Award 70 of 2007 (28 September 2007)

THE REPUBLIC OF THE FIJI ISLANDS

NO 70 OF 2007

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

FIJI AIRLINE PILOTS ASSOCIATION

AND

AIR FIJI LIMITED

FAPA: Mr A Khan
Air Fiji: Mr N Lajendra

DECISION

This is a dispute between Fiji Airline Pilots’ Association (the Union) and Air Fiji Limited (the Employer) concerning the termination of employment of Mr Mohammed Azeem (the Grievor).

A trade dispute was reported by the Union on 24 November 2005. The report was accepted on 19 December 2005 by the Chief Executive Officer who referred the Dispute to a Disputes Committee.

As a consensus decision was not reached 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 29 March 2006 with the following terms of reference:

"- - - for settlement over the termination of employment of Mr Mohammed Azeem with effect from 7 November 2005, and the Company’s failure to extend his paid sick leave in terms of clauses 14.5.1.3 and 14.5.1.4. The Association views the company’s actions as harsh, unjust unreasonable and unfair, as well as unfair discrimination and seeks compensation for annual leave entitlements and re-instatement without any loss of pay and benefits from the date certified fit to resume flying duties."

The Dispute was listed for a preliminary hearing on 28 April 2006. On that day the parties were directed to file preliminary submissions within 21 days and the Dispute was listed for mention on 26 May 2006. The Employer filed its preliminary submissions on 18 May and the Union did so on 25 May 2006.

The Dispute was fixed for hearing on 7 June 2006.

When the Dispute was called for hearing Counsel for the Union made an application for the hearing date to be vacated. The Union wanted to file further submissions. The Employer did not oppose the application. The Tribunal directed that the hearing date be vacated and the Dispute was relisted for mention on 1 September 2006. The Tribunal gave directions for the filing of supplementary submissions by the parties.

On 1 September 2006 the Tribunal granted a further 21 days for the Employer to file its supplementary submissions. The Dispute was listed for mention on 29 September 2006. On that day directions were given for disclosure of documents by the parties and the Dispute was listed for further mention on 27 October 2006. The Dispute was then listed for special mention on 30 October 2006, for mention on 24 November 2006, for special mention on 20 November 2006, for mention on 19 January, 23 February, 25 May and 29 June 2007, at the request of one or both of the parties.

The hearing of the Dispute commenced on 19 July 2007 in Suva. The Dispute was adjourned part heard to 30 August 2007 on which date the hearing was completed. The Employer called one witness and the Union called two witnesses including the Grievor to give evidence. At the conclusion of the evidence the parties presented closing oral submissions.

In its preliminary submissions at paragraph 4.1 the Union indicated that it did not wish to pursue the claims relating to unfair discrimination, sick leave and annual leave entitlements. The Union’s claim was that the dismissal was unfair and the Union sought re-instatement.

However, in its supplementary submissions the Union indicated that it was pursuing the claims relating to unfair discrimination, sick leave and annual leave entitlements.

Apart from the Union’s supplementary submissions which were filed on 5 July 2006, no further submissions were filed prior to the commencement of the hearing.

When the Dispute was called for mention on 23 February 2007 Counsel for the Union informed the Tribunal that the Grievor was no longer pursuing re-instatement as he had obtained permanent full time employment. In his closing submissions Counsel for the Union confirmed that the Grievor was in full time employment. The Grievor claimed compensation for the period he was unemployed.

The Union had previously worked for the Employer from 1994 up till 2000 when he resigned on account of the May civilian coup d’etat.

The Grievor commenced employment with the Employer for a second time on 6 November 2003 pursuant to a contract of service signed by the Grievor and the Employer. Clause 3 of the contract dealt with the period of employment and clause 16 dealt with termination of contract.

Clause 3.1 stated:

"The period of employment offered is initially for two years and may be extended and/or amended by mutual agreement between the parties. However such extension or amendment will be subject to an annual performance appraisal to be conducted by the company."

Clause 3.3 stated:

"This contract may be terminated by either party giving to the other, one calendar month’s notice in writing. In the event of a breach of the terms of service or serious misconduct on the part of the employee the company reserves the right to terminate the employment without notice."

Clause 16.1 stated:

"The Employer or the employee may cancel this agreement at any time outside the probation period by giving one month’s written notice to the other."

Clause 16.2 stated:

Where the employer exercises his rights under this clause he may pay the employee three months salary in lieu of requiring the employee to work the notice period."

It should be noted that the period of notice to which reference was made in clause 16.1 was initially stated as being three months. This was amended by the parties to one month. The parties omitted to amend the amount of salary in lieu of notice in clause 16.2.

The Grievor was employed as a Captain Harbin Y12 and was based at Nausori. The contract expressly stated that employment commenced on 6 November 2003.

The material before the Tribunal established that the Grievor joined the Union on about 25 July 2004. Pursuant to section 34 (7) of the Trade Disputes Act Cap 97 the provisions of the Collective Agreement between the parties became an implied condition of the Grievor’s contract of service so far as they were applicable or relevant to the Grievor.

By letter stated 17 October 2005 the Grievor was informed that his contract was being reviewed as it was to expire in November 2005. The letter stated:

"Records from your personal file reveals that your Contract of Employment with the Company will expire on 6 November 2005.

This is to advise that we are in the process of reviewing your contract and will advise you of the status in due course.

It is also noted that you are on continuous sick leave since 19 August 2005 and there is no definite date provided to state the day which you will resume duties. In the meantime you are required to kindly furnish us with an update on this.

In July you requested to take your annual leave of 30 days to be effective from 6 October 2005, considering your sick leave status, your annual leave is approved and you are to resume duties on Saturday 5 November 2005."

At that time the Grievor was on annual leave of four weeks as stated in the letter referred to above. At the same time the Grievor was still recovering from an illness known as vertigo. His evidence was to the effect that he did not recover till the end of October 2005. It would appear that a medical check-up on 28 October 2005 indicated that the Grievor had recovered.

The Grievor also stated that he had successfully undertaken the mandatory six monthly base check in July 2005. In addition his pilot’s licence had been renewed in July 2005.

The Employer’s Chief Pilot and Manager Flight Operations (since 2003) gave evidence to the effect that the Grievor’s performance was assessed as being satisfactory. He also acknowledged that in a letter dated 16 February 2005 he had commended the Grievor for his hard work, commitment and dedication towards his work.

The evidence also established that the Grievor had not flown for the Employer from 19 August 2005 (being the commencement date of his certified sick leave) until 5 November 2005 (being the last day of the two year contract period).

The evidence established that it was the Manager Flight Operations who decided whether or not a pilot’s contract was to be renewed. The Manager Flight Operations acknowledged that he was aware of the Grievor’s vertigo illness. He also stated that he was directly involved in an incident involving the Grievor and a cancelled Savusavu flight on 21 July 2005.

As noted the letter dated 17 October 2003 from the Employer directed the Grievor to resume duties on 5 November 2005. It should be noted that if a two year contract commenced on 6 November 2003 it would end at the close of work on 5 November 2005.

The Tribunal accepts that as at 17 October 2005 the Employer had not yet decided whether to renew the Grievor’s contract. Under those circumstances it does not appear unusual that the Employer directed the Grievor to resume work at the end of his annual leave which also happened to be the last day of his 2 year contract term.

By letter dated 7 November 2005 the Employer informed the Grievor that his contract was not renewed. The letter stated:

"Your contract of service expired on 6 November 2005. We wrote to you on 17 October, 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 terms of clause 3 thereof not to extend the contract. Consequently your services with the company are no longer required with immediate effect and this letter will serve as the formal advice.

By way of further compliance to your contract of employment, the company shall pay you one month’s salary in lieu of notice upon return of Company property in your possession to the Personal Officer, Ms Meliki Temo."

The contents of this letter together with the fact that prior to 5 November 2005 the Grievor was placed on a roster to fly on 8 November 2005 raise an important question concerning the termination of the employment relationship.

The issue concerning the Grievor being rostered for flight duties on 8 November 2005 was explained by the Employer. It would appear that the Employer prepared pilot rosters seven days in advance. The roster for Tuesday 8 November 2005 was prepared on Tuesday 1 November 2005. Subsequent versions of the roster for that day indicated that the Grievor’s name had been removed. There were, however no dates on any of the roster sheets to indicate when they were prepared.

There was no explanation from the Employer for the fact that the Grievor was not rostered on 5-7 November 2005.

The Grievor gave evidence that he attended the workplace on 8 November 2005. There was no evidence whether he had attended the workplace on any day from 5 to 7 November 2005.

He indicated that he received the letter dated 7 November either on the afternoon of that day or the morning of the following day.

The Employer has submitted that this was a case where it has been decided not to renew or extend the Grievor’s two year contract. However the facts as established by the evidence and the contents of the letter dated 7 November 2005 do not assist the Employer’s stance.

The Tribunal does not accept that union membership altered the nature of the Grievor’s contract. Union membership had the effect of incorporating into the Grievor’s contract of service as an implied condition those provisions of the Collective Agreement which were applicable to the Grievor.

The two year fixed term contract came to an end on 5 November 2005. The Employer knew or ought to have known that the Grievor’s two year contract came to an end on that date. However the Employer wrote to the Grievor and informed him that his services "are no longer required with immediate effect". In other words with effect from 7 November 2005 the Grievor’s services were no longer required. The Grievor’s contract had been extended by at least two days. It was not stated in the letter that the Grievor’s services were no longer required with effect from 5 November.

That conclusion is re-inforced by the fact that the Employer indicated in the third paragraph of the letter that the Grievor would be paid one month’s salary in lieu of notice as a result of the decision to terminate the employment relationship.

The Tribunal has concluded that the Grievor’s contract of service had been extended beyond 5 November 2005 and that by its actions the Employer had waived the requirement prescribed in clause 3.1 of conducting an annual performance appraisal.

It was not disputed that the Grievor was ultimately paid the one month’s salary in lieu of notice on about 18 May 2007 after all company property had been returned.

The extended contract was terminated on 7 November 2005. The extension was a consequence of the Employer’s letter. The contract was not renewed for two years as a result of the Employer’s letter. Pursuant to the contract, the Employer was entitled to terminate the relationship by one month’s notice or payment in lieu of notice. The only question for the Tribunal is whether the Employer acted in good faith when it advised the Grievor that his services were no longer required. Although the Employer may well have decided sometime between 17 October and 5 November 2005 that it was not going to renew or extend the Grievor’s contract, the manner in which it went about bringing an end to the employment relationship was unfair to the Grievor.

However the Tribunal is not satisfied that the Employer acted in bad faith. Bad faith suggests conduct on the part of the Employer which would be more serious than simply not treating the Grievor fairly.

The Union submitted that the Grievor’s period of sick leave due to vertigo, the incident on 21 July 2005 and his complaints about the Employer’s defective equipment all played a part in the Employer’s decision to terminate the employment relationship. The Tribunal is not satisfied that the evidence has established that these matters played any significant part in the Employer’s decision. If they had been taken into account then it would have been reasonable to assume that the Employer would have indicated in its letter dated 17 October 2005 that the contract was not going to be renewed. There would not have been any requirement on the part of the Employer to give a reason for reaching that decision. Instead the Employer indicated that the matter was still being reviewed.

However, in treating the Grievor in the manner just described the Employer has treated the Grievor unfairly. As a result the Employer has breached the implied term of the Grievor’s contract of service. This implied term requires the Employer to deal fairly with the Grievor, even in the context of termination.

The Employer was required to treat the Grievor with appropriate respect and dignity in effecting the termination of the employment relationship. (See Central Manufacturing Company Limited –v- Yashni Kant, a decision of the Fiji Supreme Court – unreported civil appeal No 10 of 2002 delivered 24 October 2003 at page 21).

Under the circumstances the Tribunal has concluded that the Grievor is entitled to two months salary in respect of the breach of the implied term to treat the Grievor fairly in the context of terminating the employment relationship.

The parties informed the Tribunal during the course of the hearing that they would settle any issue arising out of the claim for unpaid sick leave.

AWARD

The Grievor was not treated fairly by the Employer when it terminated the employment relationship by letter dated 7 November 2005.

The Grievor is entitled to two months salary as compensation for the breach by the Company of that implied term of the Grievor’s contract of service.

DATED at Suva this 28 day of September 2007.

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL