Wong v Land Transport Authority [2012] FJET 30; ERT 55.2011 (5 April 2012)

IN THE EMPLOYMENT RELATIONS TRIBUNAL
AT SUVA
ERT/MA No. 55 of 2011

BETWEEN:

WILLIAM WONG
APPLICANT

AND:

LAND TRANSPORT AUTHORITY
RESPONDENT

Mr. N. Tofinga for the Applicant (or "the Grievor")
Ms. R. J. May for the Respondent (or "the Employer")
______________________________________________________________________________

RULING ON QUESTION OF LAW & ORDER OF COMPLIANCE

1.0 Interlocutory Application Before the Employment Relations Tribunal (or "the ERT")

1.1 On 1st September 2011, the applicant's representative as an interlocutory application, filed a Notice of Motion for determination on the question of law and Order of Compliance seeking the following redress and remedies:-

1. That the Tribunal so determine whether or not the employer in terminating the grievor by way of notice had acted contrary to sections 40 and 41 of the Employment Relations Promulgation 2007 (or "the ERP 2007) and whether or not Clause 10.0 of the employment contract is inconsistent with the said provisions of the ERP 2007;
   
2. That in the event the Tribunal so rules that the employer in terminating the grievor in the manner that it did, did act contrary to the relevant provision of the ERP 2007, the grievor reserves the right to take further and any action accordingly, including the withdrawal of his employment grievance to effect the necessary Compliance Order; and
   
3. That the employer pays cost of this application.
   

1.2 The application was brought forward by Mr Tofinga pursuant to s211, s212, s213 of the Employment Relations Promulgation 2007 and the relevant provisions of the Magistrates' Court Act, Cap 14.

1.3 Suffice to note, on 15 May 2009, the grievor had registered a complaint or grievance with Ministry of Labour, leading to various mediation attempts on 29th July 2009; 11th and 17th August 2009; and finally again on 17th September 2009. These attempts to mediate being unsuccessful, the mediator thereafter referred the matter to the ERT pursuant to 194 (5) of the ERP 2007. Relief sought by the grievor as contained in the terms of reference of the mediator stated as following:-

1. Retract termination letter; and
   
2. A reference letter reflecting performance for 2 years.
   

1.4 On 24th February 2012, this matter brought forward as a Miscellaneous Application was called before me where Mr Tofinga requested the ERT to first proceed with the determination of the interlocutory application before the substantive matter could be heard. By consent, both parties admitted three documents for this ERT's consideration that was attached to the Employer's Preliminary Submission, being the following annexure:

1. "LTA 01" – Agreement of Employment
2. "LTA 08" – Ministry of Works, Transport & Public Utilities: Minutes of Special Board Meeting

100. "LTA 11" – Letter of 'Termination of Contract'
     

1.5 In determining the interlocutory application, the ERT is required to decide whether or not the ERP 2007 allows for termination without cause and/or payment in lieu of notice (as per Clause 10.0 of the Agreement of Employment) that was in fact the employer's main reason for terminating the applicant (as per the letter of termination).

1.6 The termination was essentially carried out in accordance with an express provision in a contract of service between the parties under Clause 10.0, which Clause or provision was different from the decision of the Ministry's Board. The Ministry's Board had decided that termination would proceed in accordance with Clause 12.2 of the Contract of Service, which alludes to:

12.0 CODE OF CONDUCT

12.2 The Employee shall at all times adhere to the Code of Conduct o the Authority as provided for in the Human Resource Manual.

1.7 It appears that the Acting Board Chairman at the time overriding the Board's decision had in fact terminated the grievor under Clause 10.0 of the contract of service. The said Code of Conduct was not available to the ERT, although at this juncture, it would not be prudent to consider whether or not the actions of the acting Board Chairman was outside the scope of the employer's power's and functions, or that the Employer failed to comply with the protocols set down for a termination procedure, or that the Code of Conduct would have deemed the termination with cause if termination was implemented under Clause 12.0, hence the purported termination under Clause 10.0 amounts to unlawful or unfair termination. This aspect, as I understand is the crux of the substantive matter before this Tribunal in terms of grievor's allegations for unlawful, unfair and unreasonable termination of the grievor. For that reason it is best left to the evidentiary hearing to clarify what was the employer's rights and obligation as the interlocutory application without proper admission of evidence, oral or otherwise cannot determine these facts.

1.8 Focusing on the application before me, it is clear that the grievor is seeking determination on an issue of law: whether or not ERP permits for termination without cause. The applicant's position through their legal submissions filed on 23rd February 2012 is that sections 40 and 41 of the ERP have outlawed this practice.

1.9 The applicant further submitted that the natural and literal meaning of the said provision is in accordance with the criteria set down by the Fiji Court of Appeal "for interpreting legislations and legally binding agreements" as was interpreted in the case of Din -v- Westpac Banking Corporation [2004] FJCA 30; ABU)); 2003S (26 November 2004). Neither the full case citation nor the full text of the case authority or the actual dicta in the ruling was properly put before the ERT; nonetheless, this ERT has on its accord researched, read and noted the case authority cited by Mr. Tofinga.
1.10 The Respondent or the employer submitted through their legal submissions filed on 29th March 2012 that:

• "The Employer maintains the decision to dismiss the Grievor is lawful and is in compliance with the Employment Agreement between the Grievor and the employer. The actions of the Employer are within the ambit of the law and well established fair practices.
  
• The Employer submits that its action in terminating the Grievor's employment, hence dismissing him by paying the basic salary and allowance in lieu of notice is justified and within the ambits of the Employment Agreement as stated in paragraph 10.1 and 10.2 of the Employment Agreement".
  

1.11 The Respondent conversely relied on the case of Central Manufacturing Company Limited v Kant [2003] FJSC 5, where the Supreme Court held the Canadian Approach on the issue of "payment in lieu of notice" (at Clause 4.2 of the Employer's Submissions). The employer quoted the following dicta, which I quote also:-

"In the absence of just cause, an employer remains free to dismiss an employee at anytime provided that reasonable notice of the termination is given. In providing the employee with reasonable notice, the employer has two options; Either to require the Employee to continue working for the duration of that period or to give the employee pay in lieu of notice..." (Underlining was employer's emphasis)

1.12 In my earlier ruling of 26th March 2012 (in the preliminary matter of Prem Sushil –v- LTA), I have discussed the aspect of strictly interpreting a contract of service within its natural and literal meaning. There I had also discussed how a contract could be terminated "without a cause" and what sort of notice method would apply as per the agreed terms and conditions of the employment contract. I also applied ERP where relevant to clarify the current position under the labour laws of Fiji.

1.13 Clearly, this determination is no different, and accordingly I need not repeat the dicta other than perhaps, exploring sections 40 and 41 of the ERP to ascertain whether or not the applicant's assertion that termination without a cause or payment in lieu of notice is indeed prohibited under the ERP 2007.

2.0 Analysis of Law

2.1 It was an agreed fact that the Applicant's contract of service dated 14th February 2007 was terminated by the Employer on 14 April 2009 by way of giving notice through payment of salaries and allowance whereby the grievor was paid a sum of $19, 812.45 pursuant to Clause 10.1 (a) of the Employment Contract.

2.2 The said contract of service marked as "LTA 01", clearly shows that the duration of the employment contract was fixed for three (3) years under Clause 2.1, or, "unless sooner terminated in accordance with the provisions of this Agreement".

DURATION

2.1 This contract of Employment shall commence on the 21st day of May 2007 and shall continue for a period of three (3) years, unless sooner terminated in accordance with the provisions of this Agreement (bold/underlining is my emphasis).
2.3 Clause 10.0 of the Employment Contract between the Applicant and Respondent states as follows:-

"10.1 This contract may be terminated in accordance with the provisions of the Human Resources Manual as follows:

1. By either party giving 3 months notice in writing, or payment of basis salaries and allowances in lieu of notice.
   
2. By the Authority, it after reasonable inquires and after giving the employee the full and proper rights and opportunities to be represented and heard, it is satisfied that the employee is guilty of serious misconduct or has committed serious breach of any material term of this agreement.
   

100. On medical grounds on the recommendation of a properly constituted medical board." (Underlining is my emphasis).
     

2.4 As I have said earlier, the grievor has raised 'unlawful, unfair and unreasonable termination' as his allegations to be heard under his substantive grievance, seeking as remedies, a retraction of the termination letter and a reference letter reflecting performance for 2 years. Through this preliminary matter, he is requiring this ERT to determine whether or not Clause 10.0 of his employment contract is in compliance of sections 40 and 41 of the ERP; if not, this ERT is also sought to order a Compliance Order as per the Motion filed by Mr Tofinga. In addition, if the ERT grants a Compliance Order, then it appears the grievor may withdraw from his employment grievance to effect the necessary Compliance Order (ground two of the Motion).

2.5 In my opinion, any Compliance Order will essentially preempt the determination of the substantive grievance, which really should be heard on oral evidence to clarify each party's obligations and rights under the said contract of service. That said, it appears the substantive grievance hinges largely on the legal issues brought before this ERT, and if that is clarified under the ERP 2007 then it will make it easier for parties to determine how to proceed with the substantive matter, if at all.

2.6 I must reiterate that this is not the time or the right medium to consider whether or not the Employer was correct in opting to terminate the grievor pursuant to Clause 10.1 instead of Clause 12.0 of the employment contract. Proper evidence is required for this. Yet, I do note that there is nothing in the contract of service that puts the employer under compulsion to execute only Clause 12.0 for purposes of a termination if that is the basis or the employer's real reason for considering an employee's termination under the alleged breach of say, the Code of Conduct. In turn, Clause 10.0 gives a general basis for termination which can be carried out in three ways [see Clause 10.1(a-c)]. Under Clause 2.1, there is no vagueness or confusion that the contract can be "sooner terminated in accordance with the provisions of this Agreement".

2.7 Determining the issue of law under the ERP 2007 is a more reliable way of testing the current position of worker's rights in Fiji because the ERP is not just a statutory guide and trite law but one that is now legislated to put in perspective the minimum requirements for worker's rights in Fiji when in the past, case-law authorities were simply developed keeping in mind common law positions.

2.8 Failing that, in terms of any lacuna or ambiguity in the ERP, case authorities indeed aid in the interpretation, but first, it is best to test what is the position under the ERP 2007, in particular under sections 40 and 41 of the ERP.

Section 40, where applicable and relevant states that:-

Termination of contract by expiry of the term of service or by death

40 — (1) Subject to section 41, a written contract is terminated—

(a) by the expiry of the term for which the contract was made; or

(b) by the death of the worker before the expiry of the term for which the contract was made.

(2) The termination of a contract by the death of the worker does not limit any legal claims of the worker's heirs or personal representatives.

Section 41 states:

Termination of contract in other circumstances

41. If—

(a) the employer is unable to fulfill the contract; or

(b) owing to any sickness or accident the worker is unable to fulfill the contract,

the contract may be determined, subject to conditions safeguarding the right of the worker to wages earned, compensation due to the worker in respect of accident or disease and the worker's right to repatriation.

(Underlining in my emphasis)

2.9 A careful perusal of the ERP indicates that sections 40 and 41 is a component of 'Part 5' of the ERP dealing with 'Contracts of Service' generally, which divides sections 40 and 41 under 'Division 2' where it deals specifically with "Written Contracts". In my view, s40 and s41 of the ERP cannot be read or dealt with, in isolation without also considering the entire intention and spirit of Part 5.

2.10 Generally speaking, the employment contract dated 14th February 2007 between the parties clearly meets the requirements under sections 36 and 37 of the ERP which is laid down in writing, and where it states under Division 2:-

Division 2 — Written Contracts

Application and interpretation

36.—(1) This Part applies to contracts of service, which are required to be in writing.

Certain contracts to be in writing

37.—(1) If a contract of service of a worker with an employer, or a person acting on the employer's behalf-

(a) is made for a duration in excess of one month;

(b) is a foreign contract of service or as specified in the Regulations; or

(c) is a contract made between an employer within the Fiji Islands and a foreign worker to be performed within the Fiji Islands,

the contract must be in writing. For the purpose of this subsection, a collective agreement is deemed to be a written contract.

2.11 ERP under its interpretation section (s4 of the ERP), defines 'written contracts' to mean:-

"a contract of service which, under this Promulgation, is required to be made in writing"

2.12 There has to be a reason for compelling certain contracts to be in writing under the ERP when the drafters framed sections 36 and 37. In my mind nothing leaves to imagination that once it is written, agreed and signed by the parties, it has to be regarded with significance and value, in terms of its lawfulness and fair standing.

2.13 Undoubtedly, parties to a contract are bound by the terms to which they have agreed, usually even if the contract appears to be improvident or a bad bargain, as long as it did not result from fraud, duress, or undue influence. The binding force of a contract is based on the fact that it evinces a meeting of minds of two parties in Good Faith. A contract, once formed, does not contemplate a right of a party to reject it. Contracts that were mutually entered into between parties with the capacity to contract are binding obligations and may not be set aside due to the caprice of one party or the other unless a statute provides to the contrary. I understand this is the critical question before me to determine whether or not the termination of the grievor under Clause 10.0 of the Employment Contract as agreed in writing by the parties is in compliance with sections 40 and 41 of the ERP.

2.14 Section 40 of the ERP states that a written contract "is terminated" by the expiry of the term for which the contract was made for [as per s40(a)].

2.15 Or by the death of the worker before the expiry of the term for which the contract was made for [s40(b)]. This makes sense, if the worker passes away for whatever reason the contract cannot be carried forward due to his/her death. Termination in such circumstance is then inevitable or to be anticipated.

2.17 But to begin with, s40 appears to imply (I suspect through good faith intention) that parties to a written contract are required to generally carry out their respective rights and obligations till the expiration of the term for which the contract has been made for and thereafter upon the fulfillment of the full term, the contract is terminated.

2.18 However, even if the literal meaning is applied, I do not find that s40 makes it is mandatory for the parties to carry out the entire duration of the contract (nor it states that a "written contract can only be terminated"), in this instance at the expiry of the entire three years until of course, if and when the worker dies or passes away before the entire duration is fulfilled.

2.19 Clearly, where a termination of contract in other circumstances is concerned, section 41(a) of the ERP follows on to say that "if the employer is unable to fulfill the contract" (and I note here that no lawful cause or reason is a requirement as ERP is silent on this), then "the contract may be determined, subject to conditions safeguarding the right of the worker to wages earned, compensation due to the worker in respect of accident or disease and the worker's right to repatriation".

2.20 Suffice to note, section 29 (dealing with termination through notice period), section 30 (dealing with other methods for termination), and section 33(termination for summary dismissal) are all different methods or other ways a contract of service under Part 5 of the ERP, whether in writing or oral can be effectively or lawfully terminated.

2.21 In my view then, section 41 is to be regarded as a termination of contract of service in other circumstances that stretches the law to also encompass situations where if the death of the worker occurs (but is not limited to), it allows the parties to put in perspective the deceased's entitlement or rights in terms of wages and compensation that can be sought from the employer.

2.22 Section 41 also effectively gives room to presume that if contracts of service cannot be carried out or fulfilled by the employer [reasons or cause are not required under s41(a)], before the expiration of the entire term or duration (minus the issue of death of the employee), then in that circumstance, it alludes to how the employee's rightful entitlement under the written contract of service can be determined in case there is a confusion or ambiguity in the contract. There is, however, no doubt in my mind as to how the termination can be invoked and carried out under section 41.

• First, the termination may be determined according to the conditions in the written contract (if there is no clear conditions, or there is any disagreement, it shall be interpreted keeping in mind minimum requirements of the ERP as contract of service can be implied under the interpretation section 4); and
  
• Second, the right of the worker in terms of wages earned or compensation shall also be reasonably determined from the contract of service between the parties unless say, the death of worker is that of an accident or injury caused in the course of the employment then minimum statutory requirements under Workman's Compensation Act will have to be applied. This is assuming the contract of service is not compliant already.
  

2.23 Further, if the contract of service is offensively outside the minimum requirements of the ERP, then the ERT is obligated to bring the terms and conditions provided in the employment contract into conformity and compliance. I emphasize that ERP 2007 now being the law of the land for the workers in Fiji, provides for the minimum requirements in terms of worker's rights and obligation which does not preclude parties from negotiating and securing a contract of service that is mirrored on the very foundation of good faith and mutual respect and one that can give a worker above and beyond the minimum, in terms of benefits, entitlements and compensation for loss of earnings, etc.

2.24 In this instance, the termination, without carrying out the entire duration (or without a cause) is evidently allowed in the written contract of service under Clause 10.0. The question before the ERT is twofold:-

1. Is it unlawful under s40 or s41? In my assessment, I did not find that is the case here. In fact, there is clear presumption under section 41(a) that contracts can be lawfully terminated before their expiry term/date (even where the death of the worker is not an issue) as long as both parties have mutually agreed to the terms and conditions through a written contract. And this is clearly the case here.
   
2. Is it unfair and unreasonable condition between the parties who have agreed and signed the contract? Again I do not see it being so unreasonable and grossly outside the minimum requirements of the ERP that it in the slightest of the manner, goes against the principles of natural justice and fairness when in fact, both parties can utilize Clause 10.0 for mutual advantage and benefit. Either party can exit the contract before the expiry date/term as long as they comply with Clause 10.0 and they are able to convey to either party a clear intention to do so.
   

2.25 The latter aspect further requires me to examine whether termination can be carried out via payment in lieu of notice under the ERP as a lawful and acceptable termination method. Clause 10.0(a) alludes to termination "by either party giving 3 months notice in writing, or payment of basis salaries and allowances in lieu of notice". I have no doubt that ERP allows for this too which I shall come to shortly.

2.26 Needless to say, the fairness of a contract is not judged just by looking at the terms and conditions alone and whether it is in compliance with the law. One has to also look at the benefits to both patties on an equal footing. In my opinion, to make an employment contract mandatory to be carried out for a fixed three year duration without an exit clause is equivalent to an unfair term in the contract. Both parties cannot stand to gain anything within such an arrangement. A prudent, reasonable and modern labour law cannot force parties to stay in a contract when that intricate good faith working relationship, based on mutual trust and respect between parties have either deteriorated or reached a point of no return. Or simply the employee has found better working conditions and wishes to end the current contract to take up a new one with his/her prospective (new) employer. It makes sense to have flexibility and mutual understanding to terminate contract as and when the parties require. Otherwise it will have the potential to force employees to stay in a fixed-term employment contract which is not like a tenancy or commercial agreements build on a "profit and loss" paradigm. Here, productivity is linked to economic gain for the employer and the country as a whole while professional development and skill-building is contingent towards the worker's chances of achieving a decent livelihood and sustainability in the workforce. Hence, mutual benefits for both parties.

2.27 To then end "with cause" or "without a cause" a contract of service should be seemingly a mutual agreement between the parties. If the parties have achieved this in a written contract of service, a reasonable Tribunal should not substitute it with its own views unless the statute is breached, though here the law is silent on this. Section 41(a) does not state whether or not the termination must be 'with' or 'without a cause'. If taken within its literal meaning (as applied by Mr Tofinga), clearly it can be interpreted to be "without a cause". In that regard, I will not go beyond the interpretation but accept that "cause" is not a requirement under s41 of the ERP.

2.28 Turning to a reasonable notice period for termination, I have said that s40 and s41 cannot be considered in isolation from the entire Part 5 of the ERP, which in fact is a sub-component under Division 2. The relevant provisions in the ERP that deals with termination methods is cited above: sections 29, 30 and 33. Section 30 is more applicable and relevant to the situation in hand where it states:-

Further provisions as to termination of contracts

30.— (1) Upon the termination of a contract of service, the employer must pay to the worker all wages and benefits then due to the worker by end of the following working day.

(2) The wages and benefits due to a worker under subsection (1) must, in the case of a worker who is entitled to receive notice from the employer in accordance with this Promulgation or the worker's contract (the terms of which relating to notice are not less beneficial than this Promulgation), include wages and benefits payable in respect of services rendered during the period of notice or payable in lieu of the notice.

(3) If payment is made in lieu of notice the payment must include the wages and benefits that would have been payable to the worker if the worker had worked during the period of notice. (Underlining is my emphasis)

2.29 Section 30(2) and (3) allows for termination where a notice period can be reasonably substituted through payment made in lieu of notice, whether or not it is taken in its literal and natural meaning. As far as the ERT is concerned there is no other interpretation, when the law that is now regulating labour relations in Fiji is this clear, unambiguous and simple to understand.

2.30 For this reason alone, there is really no need to venture into case authorities as ERP is the guiding law and principles to be adhered and followed by the parties, particularly under a binding contract of service. Having said this, I have explored certain case-law authorities in my earlier decision of 26th March 2012, and so I do not wish to repeat myself. As for the case of Din -v- Westpac Banking Corporation [2004] FJCA 30; ABU)); 2003S (26 November 2004), I have read this to understand which aspect of the dicta Mr Tofinga was alluding to and how this was applicable here. I must say that with the ERP being this clear makes it easy to keep this determination within the confines of the ERP 2007 without really delving into the case-law authorities that has been submitted.

3.0 Final Determination

3.1 I do not find that the Contract of Service (under Clause 10.0) offends or contravenes the ERP 2007 in any way, particularly in accordance with sections 40 and 41 of the ERP.

3.2 As the employment agreement stands, the employer has a right and an entitlement to invoke Clause 10.0 within a written contract of service as agreed and signed by the parties. To further clarify the position in order to put this grievance matter into perspective, I also note that there is no exception under the termination clause to compel the employer to invoke Clause 12.0 in any circumstance, particularly where the employee may have breached any rules or polices (or Code of Conduct) of the employer. It would then appear that there is a prerogative of the employer how they wish to terminate an employee: either 'with' or 'without a cause'. There is nothing in the written contract that compels termination with cause only.

3.3 The employer is thus entitled to exercise Clause 10.1 (a) where they can effectively provide reasonable notice period via payment of basic salaries and allowance in lieu of notice (of three months) which they complied by paying the grevior at the time of his termination in a sum total of $19, 812.45. This was lawfully in compliance with section 30 (3) of the ERP.

3.4 In fact, the grievor accepting the payment (not a disputed fact so far), I am inclined to ponder whether there is really a good faith basis for the grevior to seek any further remedies against the employer. This is because I am utterly anxious to know if and when the parties proceed to the substantive hearing how the employer's actions became unlawful and unfair when the grievor did not object nor rejected the payment made by the employer in lieu of notice. This in itself would suggest or potentially put the grievor on the "good faith" pedestal to be judged against the alleged wrongdoing that is apportioned against the employer. As far as I am concerned, any acceptance of the payment is deemed as the grievor's unrestraint and good faith understanding of the contract of service. Thus he is deemed to have acquiesced to Clause 10.0 and its application of the employment contract. If the grievor is seeking relief by way of retraction of the termination letter, he is consequently seeking reinstatement as a remedy although this is not clear yet. In any given circumstance, he will need to show a reason why he accepted the payment if it was unlawful and unfair terms of the contract.

4.0 Decision and Orders

1. Applicant's first ground for interlocutory application is not successful. The Tribunal did not find that the employer in terminating the grievor without a cause by way of notice (via payment of salaries and allowance) or terminating the contract of service before the expiration of full term of three years had acted contrary to sections 40 and 41 of the Employment Relations Promulgation 2007 or that the Clause 10.0 of the employment contract is inconsistent with the said provisions of the ERP 2007.
   
2. Applicant's second ground for interlocutory application is consequently not successful as granting a Compliance Order becomes irrelevant in terms of the first ground being unsuccessful.
   
3. The Tribunal declines to grant the applicant's application for cost against the employer. ERT will not award cost against any party but reserves cost to be determined in the cause, if and when the matter proceeds to the substantive hearing.
   
4. If the parties still wish to proceed to substantive hearing, leave is herewith granted to set a hearing date.
   

DATED at Suva this 5th day of April 2012.

LEGAL TRIBUNAL