National Union of Factroy and Commercial Workers v Carperntars Hardware [2011] FJHC 829; ERCA5.2011 (23 December 2011)

IN THE EMPLOYMENT RELATIONS COURT
AT SUVA
APPELLATE JURISDICTION

CASE NUMBER:

ERCA NO. 5 OF 2010

BETWEEN:

NATIONAL UNION OF FACTORY AND COMMERCIAL
WORKERS ("NUFCW")
APPELLANT

AND:

CARPENTERS HARDWARE
RESPONDENT

Appearances: Mr. V. Maharaj for the Appellant.
Mr. M. Saneem for the Respondent.

Date /Place of Judgment: Friday, 23rd December, 2011 at Suva.
Judgment of: The Hon. Justice Anjala Wati.

JUDGMENT

Catchwords:

Employment Law – Collective Agreement – Variation- Procedure.

Legislation:

The Employment Relations Promulgation 2007 ("ERP")

The Cause

1. The appeal arises from the decision of the Employment Relations Tribunal ("ERT") of the 23rd day of July, 2010 wherein it ruled that the employees were not entitled to be paid wages for the period during which their working hours were shortened, that is, from May, 2009 until the date of restoration of the working hours. The basis of the ruling was that the employers act of reducing the employees working hours in May 2009 was in liaison with the Union and that the restoration of working hours on 15th October 2008 was conditional on the economy improving and only for a period of three months which was agreed to by the parties.
   

The Cause at "ERT"

2. The terms of reference to the ERT was:
   

"The dispute is over the employer's unilateral decision to reduce working hours. The union claims that the decision made by the employer was a clear breach of clause 2 and 36 of the Collective Agreement, and therefore demands the (a) restoration of normal working hours and; (b) compensation of all union members for the period they were short paid".

3. At the ERT, the parties presented their agreed facts and issues for determination on the 20th day of October, 2009. It was in the following form:
   

"A. Agreed Facts

(1) The applicant is a registered trade union and represents the grievors in the matter;

(2) The respondent is the employer for the grievors;

(3) The parties executed a Collective Agreement (Master Agreement) registered on the 15th of February 2006;

(4) The Master Collective Agreement amongst other provisions, states the hours of work in clause 2, for administration staff at Suva and other employees in other branches;

(5) In April 2007, the parties mutually agreed to reduce the working hours initially for three months, which was extended until October 2008. This variation was reflected in an agreement termed as "Memorandum of Understanding" dated 5th April 2007. This agreement in clause 1 reduced hours of work from 42½ hours per week to 37½ hours;

(6) A meeting was held between the parties on the 15th of October 2008 and the parties after deliberation agreed on the restoration of the hours of work from 1st week of November 2008;

(7) The parties entered into a further agreement dated 15th December 2008 which agreement at clause 1 stated that the working hours of all hourly paid employees shall be 45 hours per week;

(8) The union has alleged that the respondent unilaterally reduced the normal hours of work from the 1st of May 2009. The union and the respondent were in liaison on the issue and emails in respect of the matter were sent by both the parties.

B. Areas of Dispute

(i) The respondent/employer maintains that the agreement to restore the working hours referred to in paragraph 6 of the agreed facts was "Conditional Restoration" whereas the applicant maintains it was "Unconditional".

(ii) The respondent maintains in paragraph 8 of the agreed fact that the applicant and the respondent were in liaison with each other over the issue of reduced working hours and exchanged 3 mails between the parties as evidence of such exchange.

C. Issues to be determined

(9) Whether the respondent has unilaterally reduced the working hours of the union members without consulting the union?

(10) If the answer to the above is in the affirmative, are the union members entitled to compensation for the period they were short paid?

(11) Was the restoration of working hours on 15th October 2008 conditional and valid only for three months as alleged by the respondent or was it unconditional?

(12) If so, was the union notified of the intention of the respondent in respect of the conditional restoration of working hours? If so, what was the mode of notification? Does the exchange of e-mails constitute notification as alleged by the respondent?

(13) Was there a need for a formal memorandum of understanding reduced in writing signed by both parties for any reduction in working hours to be effective and valid?

(14) Furthermore, if the tribunal finds for the union, are the union members entitled to restoration of the working hours as per the agreement dated 15th December 2008?

(15) If the award of the tribunal is in favour of the applicant, is the applicant entitled to costs, if so, on what scale?"

The Ruling of ERT

4. The ERT determined the issues in the following way:-
   

"Analysis and Conclusion

Whether the employer has unilaterally reduced the working hours of the union members without consulting the union?

There were two reductions of working hours one through a "memorandum of understanding" dated 5th April 2007 and the other in May 2009. The controversial one was the deduction done in May 2009 as the union is alleging that the employer has breached Clauses 2 and 36 of the Collective Agreement dated 14th December 2005.

Clause 2 provides for a total minimum hours of 42.5 hours a week and Clause 36 stipulates that any desire to alter any conditions of employment of an employee both the union and the employer shall negotiate to determine such alteration by collective bargaining and shall reduce any agreement to writing.

Reading through the submissions of the employer the tribunal is satisfied that the union was consulted and that there were e-mails exchanged on the matter and in that regard the employer did not unilaterally reduce the working hours.

If the answer to the above is in the affirmative, are the union members entitled to compensation for the period they were short paid?

The union members are therefore not entitled to compensation for the period they were short paid.

Was the restoration of working hours on 15th October 2008 conditional and valid only for three months as alleged by the employer or was it unconditional?

The tribunal perused the minutes of the meeting held on 15th October 2008 and is satisfied that the restoration was conditional on the economy improving and that an initial period of three months was agreed to.

If so was the union notified of the intentions of the employer in respect of the conditional restoration of working hours? If so what was the mode of notification? Does the exchange of emails constitute notification?

The tribunal sees the working hour issue as a process starting from April 2006 when the first reduction was agreed to, the agreement to restore the working hours made on 1st December 2008 and again the reduction in May 2009. During this process, the employer was always conscious and mindful of the economic situation of the country and the global economy and these have always been referred to the union. The mode of notification was through email and that is an acceptable way of giving notice as provided for in the Employment Relations (Administration) Regulations 2008.

Was there a need for a formal memorandum of understanding reduced in writing signed by both parties for any reduction in working hours to be effective and valid?

The Collective Agreement of the parties provides for that but in this case there was no understanding, there were disagreements as the union was challenging the action and the employer had to act as the owner of the business and capital it was not normal times and the employer had to make a decision.

Determination

The minutes of the meeting held on 15th October 2008 between the parties where the hours were restored and then increased to 45 hours show that the employer had warned of a review in January 2009 and that the return to reduced hours could not be discounted. At that meeting even the union was considering redundancy but the employer preferred to give an opportunity for everyone to work rather than reduce staff. That is further confirmed by the emails exchanged between the parties on 5th and 6th May 2009.

The tribunal observes that the union in this case may be guilty of 'acquiescence"... That is the tacit approval of conduct that might otherwise have provided grounds for an action but which cannot be objected to if undertaken with the consent of the party affected. Consent may be express or implied, and one circumstance where consent may be implied is where the party affected, in full knowledge of his rights takes no action.

In that connection, the tribunal accepts the submission made by the employer that restoration of working hours was 'conditional restoration' and that reduction of working hours done in May 2009 was in liaison with the union".

The Grounds of Appeal

5. The appellant raised 5 grounds of appeal as follows:-
   

"1. The Chief Tribunal erred in fact and in law in holding that the restoration of working hours was conditional on the improvement of the economy;

2. The Chief Tribunal erred in fact and in law in holding that whilst the collective agreement of the parties provided for variations in the terms and conditions of employees to be reduced in writing, it was not a requirement in the current instance;

3. The Chief Tribunal erred in fact and in law in not ordering compensation to the members of the union for the period that they were short paid, that is, from May 2009 to date of judgment;

4. The Chief Tribunal erred in fact and in law by considering extraneous matters such as the economic situation and the global economy when there was no evidence tendered to that effect;

5. The Chief Tribunal erred in law by holding that the union was guilty of 'acquiescence' when there was no evidence adduced".

The Appellants submissions

6. The appellant made detailed submissions in respect of each ground. They are as follows:-
   
   • The meeting minutes of 15th October, 2008 contains no reference or agreement between the parties to the effect that the restoration of normal hours, i.e. from 42.5 hours to 45 hours was 'conditional on the economy improving."
     

There is also no evidence of any agreement that restoration was for a period of three months only.

Although the company suggested that the situation may be reviewed in late January but the union representative did not agree to the suggestion. Mr. John Mudaliar (union representative) in fact said that any review "would be part of the union agreement change which can be proposed separately".

• The Tribunal also stated that there was no need for the reduction of working hours to be in writing.
  

It is not in dispute that in April 2007 both the union and the employer agreed to reduce the working hours of the workers by one hour per day 'due to the adverse effect of the coup.'

Both the union and the employer discussed the employer's financial difficulties and mutually agreed to reduce the working hours. The agreement reached was reduced to writing in the form of a Memorandum of Agreement and signed by both parties. This was in conformity with clause 36 of the Collective Agreement.

Subsequently, both parties agreed to restore the working hours of the workers as a result of the discussion held between the parties. The agreement reached once again was reduced in writing, signed by both parties, in the form of a Memorandum of Agreement dated 1st December 2008. This agreement was treated as a variation to the master agreement and was registered with the Registrar of Trade Unions on 20th day of January, 2009.

It is therefore apparent that both the employer and the union acted in good faith when they both agreed to reduce working hours and later restored the original working hours. There was no reason why the parties could not have formally met as they did on two previous occasions to discuss the matter formally. There is evidence in the email sent by the union to Mr. Abdul Shah on Tuesday 5th May 2009 through which the union clearly expressed its wish to discuss the matter with the employer, when the union stated:-

"If the company again would like to discuss the said matter further than we are prepared to do so. However, prior to any further discussions we would like to request the company to submit its proposal in writing with all the details to the union."

It is clear that the employer failed to put its proposal in writing as requested by the union and went ahead and unilaterally reduced the working hours.

In the absence of the details that the union had requested for, it was wrong of the tribunal to thereby assume and make a finding that the employer was left with no option but to act "as the owner of the business and capital". If this assertion and finding is not set aside it may create a dangerous precedent in future in the sense that any employer would be in a position to disregard the clear process of the Collective Agreement in the pretext of acting as the owner of the business and capital.

• The tribunal further erred when it said that:-
  

"It was not normal times and the employer had to make a decision."

It appears that the Tribunal erroneously took judicial notice that people were not living in normal times. There was no evidence produced by the employer to establish that it was affected by the global crisis.

• In terms of clause 36 of the Master Collective Agreement, any alteration must be in writing. Clause 36 does not permit parties to unilaterally change any conditions of employment based on grounds that the other party was consulted. It defeats the purpose of having the agreement if parties can unilaterally change conditions of employment merely by consulting each other.
  
• Mr Maharaj also submitted that the ERT erred in law and in fact by considering extraneous matters such as economic situation and the global economy when there was no evidence tendered to that effect. The tribunal had no evidence before him of what was the country's economic situation or what was the state of global economy when the employer reduced the working hours of the workers in 2009.
  
• The tribunal erred in construing that emails exchanged between the employer and the union was sufficient to comply with the Collective Agreement.
  
• There was no evidence that the union acquiesced with the actions of the employer. This finding is inconsistent with the tribunal's earlier finding when he stated;
  

"...there was no understanding; there were disagreements as the union was challenging the action..."

The Respondents Submissions

7. Mr M. Saneem, counsel for the employer submitted as follows: -
   

• The minutes of the meeting dated 15th October 2008 ought to be read as a whole. It must be noted that the appellant at the meeting requested the respondent to seriously reconsider reinstating the hours of work for the workers. To this, Mr. Abdul Shah, the then General Manager for the respondent, answered, saying that the company will allow the increase in the working hours and even raise the working hours to 45 hours instead of 42.5 hours. This will then be reviewed in late January and the company might return to reduced hours.
  

In support of this, the respondent submitted at the tribunal that:

"It is respectfully submitted by the employer that the financial crisis is far from over and that the economic situation in Fiji has deteriorated further. The employer has tried its level best to keep all the staff employed by reducing the working hours rather than make the staff redundant. The refusal of the union to cooperate with the employer in these hard and difficult times has the effect of creating more job losses than anything else."

The appellant was aware at all times that the reinstatement of the working hours was conditional. Therefore, the ERT was correct in law and in fact in finding that the restoration was conditional on the improvement of the economy.

• The learned tribunal understood that the union was not acting reasonably and attempting to pressure the respondent. The appellant was contemplating redundancy which would not have helped anybody. Meanwhile the respondent had to survive and the measures it had proposed were reasonable and necessary to sustain the employees.
  
• Since the reinstatement of working hours was conditional, the claim by the appellant for compensation cannot be substantiated and was correctly dismissed by the learned tribunal.
  
• The union was aware at all times that the reinstatement of the working hours was a temporary measure and that the reinstatement was to be reviewed by the employer and communicated to the employees and the union which it had done.
  

The world economy was in recession and the learned tribunal was correct in taking judicial notice of the same. The appellant does not see that the decision of the tribunal was for an overall justice and fairness and not bogged down with petty complaints put forward by the appellant.

The Law and the Analysis

8. The first ground of appeal relates to the tribunal's finding that the decision to restore the working hours was conditional on the improvement of the economy.
   
9. The discussion about restoring of the working hours is found in the meeting minutes between the parties of 15th October 2008.
   
10. The ERT had stated in its ruling that it was satisfied that the restoration was conditional on the economy improving and that an initial period of three months was agreed to. The meeting minutes clearly indicate that Mr J. Mudaliar, representing the NUFCW never agreed to the review of the reinstatement of working hours in late January. He did clearly indicate that these issues of reviewing of working hours could be proposed separately. The only agreement reached was in respect of the restoration of hours of work to 45 hours.
    
11. I find that the ERT erred in fact when it made a finding that the restoration of the working hours was agreed to be three months and conditional upon the improvement of the economy. The employer had given its point of view but that does not become an agreement.
    
12. Further, my reading of all emails, suggest to me that the employer had unilaterally maintained its decision to implement the reduction of working hours and informing the union of the same. The union had forever defended the implementation and kept calling for a proposal in writing and for a discussion but to no avail.
    
13. I understand the term consultation to mean of an act of discussion where ideas, opinions and beliefs are exchanged. I do not consider it as the act of imposing a decision and advising others of the same.
    
14. The second ground relates to the finding of the ERT that whilst the Collective Agreement provides for variations in the terms and conditions of the employees to be reduced in writing, it was not a requirement in the current instance.
    
15. There are two clauses in the Master Collective Agreement pertinent to the issue. The first is clause 2 which specifically discusses how working hours could be changed and second is clause 36 which relates to how either party can propose a change in the Collective Agreement and how an amendment is to be included.
    
16. Clause 2 provides that any changes to the working hours shall be done by "mutual agreement". I do not find that the May 2009 reduction of working hours was agreed to by the parties. There is no record of any oral agreement, although proposed by the employer, or any agreement in writing.
    
17. If there was any such agreement, that would have had to be reduced in writing. The Master Collective Agreement by clause 36 required the variation of any condition of employment to be in writing. No matter what difficulty the employer faced, it had no right to breach the provisions of the Collective Agreement.
    
18. Collective Agreement is defined in s.4 of the ERP to be "an agreement made between a registered trade union of workers and an employer which –
    
    • (a) Prescribes (wholly or in part the terms and conditions of employment of workers of one or more descriptions;
      
    • (b) Regulates the procedure to follow in negotiating terms and conditions of employment; or
      
    • (c) Combines paragraph (a) and (b);"
      
19. If the Collective Agreement is amended to vary the terms and conditions of employment, the amendment also becomes a Collective Agreement under s.4 of the ERP and thus is only binding if it is in writing, signed by each party and registered by the registrar: s .162(1) of ERP.
    
20. S. 162(3) (f) of the ERP states that a Collective Agreement must contain a clause providing how the agreement can be varied. In this case the employer neither followed clause 2 and clause 36 of the Collective Agreement nor did it follow the statutory procedures of clause 162(1) of the ERP.
    
21. The reduction of working hours in May 2009 was therefore in breach of the Collective Agreement.
    
22. Ground 3 is consequential to my findings in ground 1 and 2 of the appeal. The workers need to be compensated for the period they were short paid.
    
23. In respect of ground 4, I find that the employer's assertion of global crisis was not backed up by evidence. Everyone knows of the global crisis. That is not the issue. The employer must have produced its financials to establish that it was affected by the crisis. It is baseless to rely on a defence of this nature without substantiating it with evidence.
    
24. In respect of ground 5, I do not find that the employees had at any time by agreement or conduct waived their right to be provided with work for the period agreed to in the Collective Agreement in May, 2009.
    

Final Orders

25. The appeal is allowed.
    
26. The employees must be paid back for all the period they were short paid pursuant to s. 24(b) of the ERP.
    
27. The appellant is also entitled to costs of this appeal proceeding in the sum of $1,000.
    
28. Orders accordingly.
    

Anjala Wati
Judge
23.12.2011
_____________________________

To:

1. Mr. V. Maharaj, counsel for the appellant.
2. Mr. M. Saneem, counsel for the respondent.
3. File: ERCA No. 05 of 2010.