Fiji Bank and Finance Sector Employees Union v Fiji Development Bank [2008] FJAT 16; Award 16 & 17 of 2008 (1 April 2008)

THE REPUBLIC OF THE FIJI ISLANDS

NOS 16 AND 17 OF 2008

AWARDS OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTES BETWEEN

FIJI BANK AND FINANCE SECTOR EMPLOYEES UNION

AND

FIJI DEVELOPMENT BANK

FBFSEU: Mr P Rae with Mr D Singh
FDB: Mr D Sharma with Ms Y Fatiaki

DECISION

These are two disputes between Fiji Bank and Finance Sector Employees Union (the Union) and Fiji Development Bank (the Employer) concerning claims for allowances by two Grievors under clause 27 of the Collective Agreement.

The first dispute concerns an allegation that the Employer failed to provide housing subsidy to Shovna Prasad (Grievor 1) and wrongfully withdrew rental allowance. In doing so the Union claims that the Employer has breached clause 27 of the Collective Agreement.

This dispute was reported on about 16 April 2007 by the Union. The report was accepted on 2 May 2007 by the Permanent Secretary who referred the Dispute to a Disputes Committee.

Subsequently the Minister authorized the Permanent Secretary 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 6 August 2007 with the following terms of reference:

"- - - over the Bank’s failure to provide housing subsidy to Ms Shovna Prasad for the period 14 July 2003 to 16 February 2006 following her transfer to Nadi Branch and the unilateral withdrawal of her rental allowance with effect from 8 November 2006 in breach of clause 27 of the Collective Agreement between the Union and the Bank. The Union seeks that the Bank remedies the said breach immediately by paying Ms Prasad all her unpaid rental allowance from the date of her initial transfer to Nadi Branch and restore her $600 rental allowance from the date of its withdrawal."

The second Dispute concerns an allegation that the Employer had unilaterally withdrawn the rental allowance paid to Neel Suresh Chand (Grievor 2).

This Dispute was also reported by the Union on about 16 April 2007. The report was accepted on 2 May 2007 by the Permanent Secretary who referred the Dispute to a Disputes Committee.

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

The Dispute was referred to the Permanent Arbitrator on 6 August 2007 with the following terms of reference:

"- - - over the Bank’s unilateral withdrawal of the rental allowance paid to Mr Neel Suresh Chand with effect from 8 November 2006 in breach of clause 27 of the Collective Agreement between the Union and the Bank. The Union seeks that the Bank remedies the said breach immediately by restoring Mr Chand his monthly housing rental with effect from the date of its withdrawal."

The Disputes were listed for preliminary hearing on 14 August 2007. On that day the parties were directed to file their preliminary submissions by 8 September and the Dispute was listed for mention on 14 September 2007.

The Union filed its preliminary submissions on 7 September and the Employer did so on 20 September 2007.

On 21 September 2007 the parties were directed to file a signed statement of agreed facts within 14 days. This was done on 10 October 2007. It was agreed that the Disputes would be heard together.

The Disputes were subsequently listed for mention on 19 October and then fixed for hearing on 3 December 2007.

The hearing of the Disputes commenced on 3 December 2007 in Suva. The hearing was adjourned part heard for further hearing on 11 December and was completed on 12 December 2007.

During the course of the hearing, the Union called the two Grievors and the Employer called the Division Support Services General Manager (Mr N Hazelman) to give evidence. The parties presented closing oral submissions on 11 and 30 January 2008.

The signed Statement of Agreed Facts provided only some of the relevant material. The evidence given by the two Grievors during the course of the hearing was in far greater detail. There were clearly areas of conflict in some of the details given in evidence by the Grievors on the one hand and by Mr Hazelman on the other.

For the present purposes it need only be stated that both Grievors were transferred to Branches in locations which were not their point of recruitment and were outside of Suva. At some stage both Grievors occupied houses in those locations which were owned by them or their families.

Towards the end of their closing submissions, the parties indicated to the Tribunal that there was only one essential issue for the Tribunal to consider in the Dispute. That issue concerned the eligibility of an employee who had been transferred to a branch outside of Suva and the employee’s point of recruitment to receive housing assistance under clause 27 of the Collective Agreement if that employee when transferred occupied premises which he or she owned. The settlement of the two Disputes, it was acknowledged by the parties, would depend upon the meaning of clause 27 of the Collective Agreement.

As a preliminary issue the Tribunal is required to determine whether clause 27 had been amended by the parties prior to the time the facts giving rise to the disputes arose.

The Collective Agreement was dated 8 March 2004 and had come into force on 1 July 2003. The agreement was registered with the Ministry of Labour on 18 March 2004. Clause 27 of the Agreement with the heading "Housing" states:

"a) All officers are responsible for their own housing at point of recruitment. However, in the event an officer is transferred to a Branch other than Suva or the point of recruitment and the cost of the provision of satisfactory unfurnished accommodation exceeds 11% of the officer’s gross annual salary, the Bank will bear the cost of the accommodation and the officer will pay a rental of 11% of his gross annual salary to the Bank.

b) Employees occupying bank residence are not, under any circumstances, permitted to charge rentals or sub-lease to any other person. The residence is made available for immediate members of his family or persons dependent upon him.

c) The Bank will pay the water rates for premises owned or leased by the Bank that are occupied by employees. However, should it become evident that an excess amount of water is being used the Bank reserves the right to require the tenant to pay a portion of the account.

d) The Bank will pay the rental for telephones installed in houses occupied by Branch Managers and Divisional Managers. The officers are expected to pay for their personal calls but should they wish to do so, they may keep a record of calls made on the Bank’s behalf and the Bank will pay.

e) The Bank will provide a stove and one set of curtains, at reasonable cost, to those staff who occupy Bank or Bank-rented premises. All subsequent replacement of curtains will be the responsibility of the staff occupying the premises.

f) Officers occupying Bank houses are required to pay rental deducted from the officer’s salary at the rate of 11% of the officer’s gross annual salary."

In a letter dated 13 September 2004 the Employer wrote to the Union on the question of "Housing Allowance". The letter stated:

"Further to our discussion in your office on Tuesday 7/9/04 we wish to advise you of our intention to offer our staff, some of whom are your members, a housing allowance.

As we had stated in our discussions, the bank would like to gradually remove itself from entering into contractual rental arrangements on behalf of its staff in the branches. The bank has initially sought expressions of interest from staff and we confirm that majority of staff posted to branch have shown genuine interest to the bank offer for housing allowance to be paid directly to them.

We would like to proceed and offer those employees who have indicated to us their desire for rental allowance of $400 gross per month.

The normal housing allowance as outlined in our existing Collective Agreement will remain unchanged and staff affected are free to choose between the options available to them.

Below are the procedures and rules that govern the bank’s proposed housing allowance option.

1. Rental allowance of $400 gross to be paid on fortnightly basis together with salary.

2. Officers taking up the rental allowance are not to withdraw or opt for 11% deduction during the period that they are based in the branch. They may however opt to change their rental arrangements if they are transferred to another Branch.

3. Officers occupying their personal residential properties and travelling to work daily are not eligible for the allowance.

We request an early response as staff in the branch are eagerly awaiting a confirmation to the bank’s offer.

In a letter dated 14 September 2004 the Union replied to the Employer as follows :

"Your letter of 13 September and our earlier discussion refers.

1. The Union has no objection to the Bank offering staff the option of receiving a housing allowance of $400 in lieu of the 11% deduction. However this quantum should be subject to periodical review (say annually) in line with market rental movements especially in high rental centres such as Nadi.

2. Agree that once officers exercise an option they may not opt out while at that branch.

3. Options are to be available to staff on transfer as per collective agreement with no additional conditions."

The effect of this correspondence has caused the Tribunal some concern. First, there is the question whether there has been an agreement reached by the parties in the sense that the Employer has made an offer which was accepted by the Union. It would be more than reasonable to have concluded that the Union’s response represented a counter offer rather than an acceptance. If there was an agreement then the issue is one of interpretation. Secondly, section 34 of the Trade Disputes Act provides certain mandatory procedural requirements in respect of collective agreements and amendments. So far as is relevant, Section 34 states:

"(1) A copy of every collective agreement and any amendment thereof regulating the terms and conditions of employment - - - shall be registered with the Permanent Secretary."

(2) The terms of every such agreement shall be set out in writing, shall be endorsed by or on behalf of the parties - -- -.

(3) It shall be the duty of every party to every such agreement to ensure that a signed copy of such agreement is lodged with the Permanent Secretary within twenty-eight days after it is made.

(4) .............. (7) ........

(8) A registered agreement shall, subject to the provisions of section 24, take effect from the date on which it is signed by the parties - - - "

(9) .......... "

The principal problem with the correspondence dated 13 and 14 September 2004 is that any agreement which was set out in that correspondence and which clearly purported to amend the Collective agreement was not lodged within 28 days and nor was it registered with the Ministry. Even if the Tribunal were to accept that the correspondence constituted prima facie a valid agreement and even if it was possible to determine what the parties had agreed to, the non-registration of the agreement was a technical defect which meant that it was not capable of being enforced by one or other of the parties.

In ordinary legal language the words "enforceable" and "unenforceable" may refer either to the judicial or court remedies that are available for the enforcement of a contract or to all the remedies available for the enforcement of a contract, including those provided by the contract itself. Non-compliance with section 34 of the Act (e.g. non-registration of the agreement or amendments thereof) is an example of unenforceability of the first kind.

The word "unenforceable" does not appear in section 34 of the act. However the effect is to render a nonconforming agreement unenforceable in the sense that judicial or court remedies are not available at the suit of one or other of the parties. (See Pavey & Matthews Proprietary Limited –v- Paul (1982) 162 C.L.R 2210 @ page 226).

The Tribunal notes that in National Union of Factory and Commercial Workers –v- Carpenters IMEL and Carpenters Morris Hedstrom (Awards 5 and 6 of 1995 dated 26 May 1995) the then Permanent Arbitrator took the view that:

"Non-registration in the present case did not render the side agreement invalid. Its application and status as settled practice was more than sufficient to offset non-registration."

However in that Dispute the unregistered side agreement had been concluded 19 years earlier and had been applied even since that time. The facts of the present Dispute can be distinguished from the facts of the 1995 Award and as a result the Tribunal does not consider itself obliged to apply that decision.

For the purposes of this Dispute the agreement (if there was one) contained in the correspondence dated 13 and 14 September 2004 is unenforceable on account of its non compliance with the requirement that it should have been or should be registered under section 34 of the Act. It is unenforceable in the narrow sense that judicial remedies for the enforcement of such an agreement are not available to one or other of the parties.

The question for determination then is whether clause 27 of the registered Collective Agreement applied to a transferred employee who occupied premises owned by that employee.

The approach to be taken in determining the meaning of a clause in a Collective Agreement was discussed by the Fiji Court of Appeal in Hassan Din and Another –v- Westpac Banking Corporation (Unreport Civil Appeal No 66 of 2003 delivered 26 November 2004).

Commencing at paragraph 25, the Court observed :

"- - - the evidence relating to the negotiations between (the parties) that led to the Collective Agreement should have been excluded as inadmissible. What the parties may have said or done or offered or rejected in the course of those negotiations is irrelevant when determining the meaning to be attributed to the clause in question. Similarly, what the parties say they intended the clause to mean is inadmissible and irrelevant.

- - - The interpretation of the clause is to be approached objectively. It is the meaning that the clause would convey to a reasonable person having the relevant background knowledge that is to be determined, not the meaning that the parties to the agreement thought the clause would have - - -

It follows from this analysis that any belief the parties may have had about how the clause should be interpreted is irrelevant. The parties agreed that the clause should be included in the collective agreement that they signed."

What then is the meaning that would be conveyed by clause 27 and in particular clause 27 (a) to a reasonable person with the relevant background knowledge. Such a person would be aware that the clause was intended to provide housing assistance to an employee transferred to a Branch other than in Suva or the point of recruitment. That requirement represented a condition precedent for obtaining assistance.

There was a second condition precedent. The cost of the provision of satisfactory unfurnished accommodation must exceed 11% of the employee’s gross annual salary. If those two conditions were satisfied, the Employer would bear the cost of the accommodation and the employee would pay a rental of 11% of his gross annual salary to the Bank.

When the clause says that the Employer "will bear the cost of the accommodation" it means that the employer will either make available to the employee a house which the Employer owns or alternatively, will enter into a leasing agreement with an owner and pay the rent. Once the employee has commenced to occupy premises under either category then that employee pays rent to the Employer at the rate of 11% of his gross annual salary.

It follows that the only way in which an employee could occupy a house owned by him or her and receive the benefit under clause 27 (a) would be if (a) the employee had been transferred to a Branch outside of Suva and the point of recruitment, (b) the cost of providing satisfactory unfurnished accommodation exceeded 11% of the officer’s gross annual salary, (c) the Employer entered into a leasing agreement with the employee (as owner) and (d) the employee was then prepared to pay 11% of his gross annual salary as rent to the Employer. Although, this would appear to be an artificial arrangement, it was not an uncommon arrangement.

The reference to Bank houses in clause 27 (f) is a reference to houses either owned by the Bank or leased by the Bank, including a house owned and occupied by an employee. That clause confirms the requirement to pay rental deducted at the rate of 11% of the employee’s gross annual salary.

If the employee and the Employer did not enter into a leasing agreement then the employee was not be required to pay rental. In other words, clause 27 (a) would not apply to an otherwise qualified employee if he chose to occupy a house that he happened to own and which was not a Bank house.

It would appear that if the cost of the provision of satisfactory unfurnished accommodation (i.e. the agreed marked rental of the house owned by the employee) exceeded 11% of the employee’s gross annual salary then it would be in the interests of the employee as owner to enter into a leasing agreement with the Employer for that agreed marked rental and then agree to have 11% of the salary deducted as rental.

Grievor 2 was aware that this was the position when he wrote his Minute dated 12 May 2004 to GMDSS and GMC S&S. At the time Grievor 1 was based in Suva and was to be posted to Nadi which was not his point of recruitment. Grievor 1 wrote :

"In the New Bank, I have been posted to Nadi as Relationship Manager Corporate Business Services. Since, I’ll be mostly involved in sales and marketing, I prefer to stay in Lautoka and request the Bank to :

1. Rent my house (furnished) at monthly rental of $850.00. (The current rental of standard three bedroom furnished house is quite high ranging from $900.00 to $1300 per month. I am agreeable for Bank to deduct 11% of salary towards housing.)

2. - 4 - - - ."

It is noted that the Employer from time to time provided short term assistance for housing both in excess of and different in kind from that which was prescribed by the Collective Agreement. However such assistance was capable of being discontinued by the Employer at any time as it was a benefit that fell outside the parameters of the Collective Agreement.

In a Memorandum of Agreement dated 10 June 2004 and subsequently registered with the Ministry of Labour on 17 June 2004, it was agreed by the parties that

"4.2.2 The Bank shall pay for all transfer costs including stamp duties on property sale/purchase as applicable;

4.2.3. Officers will continue to enjoy full housing benefits as specified under Clause 27 of the Master Agreement. However those employees who are required to move to Suva Head Office will be given a one off payment of $2,400 for the purpose of securing accommodation."

The Tribunal has concluded that the reference to "transfer costs" in clause 4.2.2 did not extend to including housing costs. It indicated that if an employee either wanted to or was required to sell or purchase a house as a result of transfer then the Bank would pay the stamp duty on the transaction.

However, under clause 4.2.3 the provisions of clause 27 continued to apply to officers who were transferred as part of the restructure.

As was stated earlier, the Tribunal is not necessarily satisfied that the correspondence dated 13 and 14 September 2004 passing between the parties actually constituted an agreement to amend the Collective Agreement. The Tribunal is not satisfied that the parties were "ad idem". In other words the Tribunal is not satisfied that they were of the same mind in respect of all the matters that were referred to by each party.

If there was agreement, it was unenforceable by a court, a Tribunal or any judicial forum as it was not registered pursuant to the requirements of Section 34 of the Trade Disputes Act.

As there was no enforceable amendment, the legal position of the parties was the position set out in clause 27 of the Collective Agreement. As there was no entitlement under clause 27, the Tribunal has concluded that it cannot award to the Grievors the fixed rental assistance which the Employer subsequently introduced.

The Tribunal is also satisfied that it was never the intention of the Employer that owner/occupier transferred officers should receive the fixed rental assistance. The Tribunal is satisfied that owner/occupier transferred officers were entitled only to the assistance provided by clause 27 of the Collective Agreement.

As the Tribunal has concluded that there was either no amending agreement or alternatively an amending agreement which was unenforceable, the Tribunal does not propose to consider in detail the evidence relating to the particular circumstances of each of the Grievors.

AWARD

The only enforceable claim the Grievors have in respect of housing assistance as owner occupier transferred officers is under clause 27 (a) of the Collective Agreement.

DATED at Suva this 1 day of April 2008.

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL