Fiji Bank and Finance Sector Employees Union v Life Insurance Corporation of India [2007] FJAT 74; Award 76 of 2007 (13 November 2007)

THE REPUBLIC OF THE FIJI ISLANDS

NO 76 OF 2007

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

FIJI BANK AND FINANCE SECTOR EMPLOYEES UNION

AND

LIFE INSURANCE CORPORATION OF INDIA

FBFSEU: Mr P Rae
LICI: Mr V Maharaj

DECISION

This is a dispute between the Fiji Bank and Finance Sector Employees Union (the Union) and Life Insurance Corporation of India (the Corporation) concerning disciplinary penalties imposed on Nitendra Prasad (the Grievor).

A trade dispute was reported by the Union on 28 March 2007. The report was accepted on 19 April 2007 by the Permanent Secretary who referred the Dispute to a Disputes Committee.

Subsequently the Minister authorized the Acting Permanent Secretary to refer the Dispute to an Arbitration Tribunal for settlement pursuant to section 5(A) (5) (a) of the Trade Disputes Act Cap 97.

The Dispute was referred to the Permanent Arbitrator on 31 May 2007 with the following terms of reference:

"- - - over the Corporation’s failure to grant annual increments to Nitendra Prasad due on 1/11/2005 and 1/11/2006 in breach of clause 7 (D) of the Collective Agreement and the unilateral reduction of his annual salary in breach of the Collective Agreement and section 51 of the Employment Act. The Union views the Corporation’s action as unfair and unjustified and seeks that Life Insurance Corporation of India remedies the said breach by paying all increments due on 1/11/2004, 1/11/2005 and 1/11/2006 that has been withheld or withdrawn to date to the Grievor and restoring his salary to the correct level.

The Dispute was listed for a preliminary hearing on 8 June 2007. On that day the parties were directed to file preliminary submissions by 26 June 2007 and the Dispute was listed for mention on 29 June 2007.

The Corporation filed its preliminary submissions on 26 June and the Union did so on 28 June 2007.

The Dispute was initially listed for hearing on 14 August 2007. Due to unforeseen circumstances it was necessary for the Tribunal to vacate that date. The Dispute was listed for mention on 24 August 2007 and subsequently fixed for hearing on 15 October 2007.

The hearing of the Dispute commenced on 15 October 2007 in Suva. The hearing continued on 16 October and was completed on 17 October 2007. The parties presented closing oral submissions on 23 October 2007. During the course of the hearing the Employer called three witnesses and the Union called the Grievor to give evidence.

During the course of the proceedings, the Union raised an issue concerning the payment of wages to the Grievor whilst he was in attendance at the Tribunal for the hearing of the Dispute. Counsel for the Corporation gave an undertaking to the Tribunal that the Grievor would be paid his wages whilst he was at the hearing and that there would be no deduction from his annual leave entitlement for that period.

In its preliminary submissions the Corporation raised preliminary issues which were concerned first of all with acquiescence and estoppel and secondly with time limits and prejudice. Those matters also formed the principal thrust of the Corporations closing submissions.

In a trade dispute which has been reported to the Permanent Secretary and which is subsequently referred to the Arbitration Tribunal, the parties to that Dispute are the Union and the Employer. If the Dispute concerns an employee or employees, they are referred to as the grievor or grievors. In this Dispute the parties are the Union and the Corporation. The employee, Nitendra Prasad, is the Grievor.

In its submissions, the Corporation made reference to both clauses 16 and 17 of the Collective Agreement. Clause 17 deals with the Grievance Procedure. The Tribunal has consistently taken the view that a Grievance Procedure clause has no application to disciplinary matters which are expressly provided for elsewhere in the Agreement. The Grievance procedure is applicable for issues related to the terms and conditions of employment other than disciplinary matters. (See Suva City Council Staff Association –v- Suva City Council Award No 7 of 2000 at page 20).

The Corporation relied in part on clause 16 of the Agreement in support of its submissions. Clause 16 deals with Disciplinary Procedure and clause 16 (g) states:

"An employee upon whom the employer has imposed disciplinary action shall have the right to appeal against such disciplinary action. The employee shall advise the Manager, and if he so wishes, the National Secretary of the Union in writing (giving all material statements and arguments on which he relies) within seven days of the disciplinary action being imposed, of his desire to appeal. The Manager and the employee, or if the employee has so elected, the Union, shall arrange for an appeal to be convened and heard as soon as possible. Any appeal under this paragraph shall be heard by the Chief Manager or the person relieving in his position/post (hereinafter referred to as ’the Appellate Authority’) and the Appellate Authority shall make such orders, as he thinks fit, which shall be binding on all the parties:

Provided however that the Appellate authority shall not enhance the penalty imposed on the employee without allowing the employee to show cause why the penalty should not be enhanced."

It was not disputed that the Grievor did not advise the Manager in writing (or even orally) within seven days (or at all) of his desire to appeal against the disciplinary sanctions imposed on him by the Corporation.

The Tribunal does not consider that the Grievor’s failure to exercise his right of appeal affects the Union’s right to pursue a trade dispute under the Trade Disputes Act. The Tribunal accepts that there was Union representation present with the Grievor during the disciplinary procedures. However the Tribunal does not consider that it was necessary for the Union to ensure that the Grievor exercised his right to appeal within the prescribed time before a trade dispute could be reported under the Act. The time limit for the Grievor to exercise his right to appeal under clause 16 (g) of the Agreement has no relevance to the time limit applicable to the Union for reporting the existence of a trade dispute. That time limit was discussed by the Fiji Court of Appeal in The Permanent Secretary for Labour and Industrial Relations and Another –v- Air Pacific Limited and Another (Unreported Civil Appeal No 23 of 2002 delivered 16 May 2003).

In any event, any challenge to the legitimacy of a reference to the Tribunal on account of the non-compliance with any time limit, or for any other reason, must be by way of an application for judicial review in the High Court. The Tribunal has no jurisdiction under the Trade Disputes Act or pursuant to its terms of reference to examine the propriety of the reference. The reference is presumed to be proper and regular unless and until the High Court directs otherwise. In Fiji Electricity Authority Staff Association –v- Fiji Electricity Authority (Award No 24 of 1998) at page 6, the Tribunal stated the position as being :

"In the exercise of these powers, (the Permanent Secretary) is subject to the supervision of the Courts of law. If a party takes issue with his decision, the party should immediately seek the assistance of the court through judicial review of the Permanent Secretary’s decision. If the Permanent Secretary has exercised his discretion improperly, it is the court’s function to over-rule him, not the Tribunal’s"

Counsel for the Corporation also submitted that the Employer had acted to its detriment by accepting the Union’s representations on penalty and substituting a lesser penalty in lieu of dismissal. The Corporation submitted that it had been prejudiced by the Union subsequently challenging the lesser penalty and should be estopped from doing so.

The Tribunal has concluded that whilst the Union did make representations to the Corporation for the imposition of a lesser penalty, it did not seek the penalty that the Corporation imposed whereby the Grievor’s incremental increases in salary were either withdrawn or withheld. It is that penalty which is in issue in the Dispute with the Corporation.

The Dispute is essentially concerned with two decisions taken by the Corporation as disciplinary penalties. The first decision was contained in a letter dated 15 December 2005 whereby the Grievor’s annual increment due on 1 November 2005 was to be withheld. The second decision was contained in a letter dated 19 July 2006 whereby the Grievor’s annual increment which had been granted on 1 November 2004 was withdrawn the annual increment due on 1 November 2006 was to be withheld.

The Tribunal is required under the terms of reference to determine whether the decisions or either of them breached the Collective Agreement, breached section 51 of the Employment Act or were unfair and unjustified.

The Tribunal proposes first to determine whether the decisions taken by the Corporation breached either the Collective Agreement or the Employment Act. If necessary, the Tribunal will then consider the second ground of challenge, namely whether the decisions were unfair and unjustified.

As noted, the first decision was set out in a letter dated 15 December 2005 addressed to the Grievor from the Corporation’s Chief Manager for Fiji. It stated :

"Further to the enquiry against yourself held on 14.12.2005, it is found that you have acted against the interests of the Corporation in the following issues/manner:

1. You have used the office telephone for your personal work, unauthorized.

2. Even though you were on leave under medical grounds continuously from 18.11.2005 to 29.11.2005 without intimation to the Office, you have played on soccer on 26.11.2005 which shows that you were really not that sick and that you could have attended office at this busy time of the year.

3. You are continuously negligent in carrying out your duties. In the latest incident, the Cash Paid Book was misplaced by you for some time, before the same was regained by the Paying Cashier. You will recall the earlier instances of warnings issued to you, on 30.06.2005 (written) and on 14.01.2005 (oral).

Your conduct outlined above merits a harsh punishment. However, taking a lenient view of the whole situation, it has been decided to withhold your Annual Increment due on 01.11.2005.

You are advised to be more careful in your conduct and improve your working to meet the expectations of the Corporation."

The second decision was set out in a letter dated 19 July 2006 addressed to the Grievor and again from the Chief Manager of Fiji. It stated :

"We refer to your letter dated 17.07.2006.

Please note that your explanation has not been found satisfactory. This is the second time wherein it is found that you have been unauthorisedly using the office phone for making personal calls for engaging in activities which goes against the office decency and decorum. Please also note that during the last one year or so, the following action has been taken against you:

- Vide letter dated 12.04.05, you were warned for coming late to office on 4 occasions during March 2005.

- Vide letter dated 30.06.05, you were warned to be more careful in your work.

- Vide letter dated 29.11.05, you were told to report to office for duty in view of unauthorized absence.

- Vide letter dated 15.12.05, a punitive action of withholding of Annual Increment due on 01.11.2005 was imposed for the reasons outlined in that letter.

In view of your unsatisfactory explanation, we find that your behavior has violated the duties of Employees listed under item 20 (i), (ii), (ix) and (x) of Agreement dated 07.02.2000 between Union and Management and Items 8 (a), (b) and (l) of your appointment letter dated 20.10.2003. Such a repeated misdemeanor warrants summary dismissal.

But taking a lenient view again, I have decided to withdraw the increment granted to you on 01.11.2004 and also to withhold the Annual Increment due to you with effect from 01.11.2006. Hence, your Annual Pay will be at the starting scale, that is, F$6013.00 with immediate effect till 31.10.2007. Please note that this is the final warning and any instance of violation of staff duties/responsibilities listed in the Agreement dated 07.02.2000 and/or your appointment letter in future is liable to attract a summary dismissal."

It is apparent that both the withdrawal and withholding of incremental payments were decisions taken by the Corporation as a result of findings of misconduct. In other words the decisions represent what the Corporation considered to be appropriate penalties for the Grievor’s misconduct. They were clearly financial penalties as there was no suggestion that the decisions were to be regarded as compensatory in nature or for the purpose of restitution.

The entitlement to progression through salary ranges is dealt with in clause 7 (D) of the Agreement which states:

"Progression within each grade shall be based on annual review to the maximum prescribed salary for the Grade.

Provided however that such progression shall be released at the discretion of the employer subject to satisfactory performance of the employee."

The Tribunal has concluded that the meaning of this clause is that an employee shall progress through his salary grade on an annual basis at the discretion of the Corporation and subject to his work performance being assessed as satisfactory as a result of the annual review. It is not to be regarded as automatic.

In exercising its discretion, not only must the Corporation provide reasons to the employee in the event that it refuses to grant an annual progression payment [clause 7 (H) ], but it must also act in good faith and reasonably.

The Tribunal accepts that the effect of clause 7 (D) was that the Grievor’s salary increased by an incremental amount as he progressed from one step to the next step in the salary grade. In simple terms, the Grievor’s salary increased as a result of the grant of an incremental increase by way of progression payment based on satisfactory performance.

Clause 7(A) of the Agreement provided that the salary scales and grades which were set out in Schedule I to the Agreement could "only be varied as agreed between the parties". The Tribunal is satisfied that by withdrawing an amount equal to the incremental increase the Corporation varied the Grievor’s salary. The Grievor was no longer receiving the salary applicable to his position in the Grade.

Such a variation was not by agreement between the parties and as a result was in breach of the Agreement.

Although unsatisfactory work performance and misconduct can sometimes overlap, in this case the Tribunal is satisfied that the Grievor was disciplined for misconduct which did not directly relate to the standard or quality of his work.

As a result the Tribunal has concluded that by indicating that it intended to withhold the Grievor’s incremental increases the Corporation based its decision on considerations (i.e. misconduct requiring disciplinary action) which fell outside of the criteria prescribed by clause 7 (D) of the Agreement i.e. satisfactory work performance. Satisfactory work performance relates more to the degree to which an employee has performed to an agreed or expected standard in terms of quality and quantity.

There is one further significant consideration which arises from the Corporation’s decisions. Generally, unless it is explicitly authorized by the terms of a Collective Agreement or some statutory instrument to do so, or unless the deduction is compensatory in nature an employer may not impose monetary penalties or fines on an employee as a matter of disciplinary sanction.

Clause 16 of the Collective Agreement deals with Disciplinary Procedure. The penalties which are available to the Corporation under that clause are warnings [16 (a)], suspension [16 (b) (l) (i)] and dismissal [16 (e) and clause 4[. There is no explicit authorization in clause 16 or in any other clause which authorizes the imposition of a monetary penalty or a fine.

Section 51 of the Employment Act Cap 92 sets out the circumstances under which an Employer may make deductions from the wages of an employee. A penalty by way of the withdrawal of an incremental increase in an employee’s salary is in effect a deduction each pay period from the Grievor’s wages. As such it is unauthorized as it is not included in the list of authorized deductions set out in section 51.

As previously noted there was no evidence before the Tribunal to indicate that the decisions were based on the notion of compensation. They were entirely penal in nature.

The Tribunal has concluded that the two decisions by the Corporation to impose monetary penalties on the Grievor as a disciplinary sanction were in breach of the Collective Agreement and accepted employment relations practices and cannot be permitted to stand.

There was before the Tribunal a considerable amount of evidence, some of it conflicting, concerning the incidents involving the Grievor. In view of the conclusion reached by the Tribunal it is not necessary to delve into that evidence. However the Tribunal is satisfied that the Grievor’s behaviour in relation to the telephone calls to Ms Lata’s parents and to Ms Kumar amounted to misconduct. They were inappropriate and improper. The contents of the conversations were unrelated to the Grievor’s work.

It was apparent to the Tribunal that the Grievor was still relatively young and certainly lacked maturity when it came to identifying appropriate boundaries in the workplace. However the Tribunal considers that the Corporation must
shoulder some responsibility. Other employees were aware that the Grievor’s behaviour was at least immature if not inappropriate. The Grievor’s supervisor either knew or ought to have known of the Grievor’s issues with Ms Lata and the Grievor’s lack of maturity. Early intervention by way of counseling may have assisted the Grievor.

The Tribunal has concluded that under all the circumstances, the Grievor should receive warnings in place of the each of the two decisions taken by the Corporation. The first warning is deemed to have been given on 21 March 2007 being the date on which the Dispute was reported. The second warning is deemed to have been given on the date of this Award. Clause 16 (a) of the Agreement then operates accordingly.

AWARD

The decisions taken by the Corporation to withdraw and/or withhold the Grievor’s incremental increases as a disciplinary sanction were contrary to the Collective Agreement and general principle.

The Grievor is to receive two warnings. The first is deemed to have been given on 28 March 2007 and the second on the date of this Award. Clause 16 (a) of the Agreement applies accordingly.

The increments which had been granted and then withdrawn are to be re-instated.

The Grievor’s entitlement to any increment which was to be withheld is to be assessed according to clause 16 (D) of the Agreement and in accordance with the Tribunal’s observations.

DATED at Suva this 13 day of November 2007.

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL