Singh v New Zealand Pacific Training Center [2012] FJHC 937; ERCC 04.2010 (12 March 2012)

IN THE EMPLOYMENT RELATIONS COURT AT SUVA
ORIGINAL JURISDICTION

CASE NUMBER: ERCC NO. 04 of 2010

BETWEEN:

THAKUR TARA SINGH
APPLICANT

AND:

NEW ZEALAND PACIFIC TRAINING CENTRE
RESPONDENT

Appearances: Mr. N. Tofinga for the applicant.
Mr. Kunal Singh for the respondent.
Date/Place of Judgment: Monday, 12th March, 2012 at Suva.
Coram: Hon. Justice Anjala Wati.

JUDGMENT

CATCHWORDS:
EMPLOYMENT LAW – COMPLIANCE ORDERS – jurisdiction of Court – need for clear obligation to order compliance.

LEGISLATION:
The Employment Relations Promulgation 2007 ("The ERP").

CASES CITED:
Air NZ Ltd. v. NZ Air Line Pilots Association IUOW [1987] NZILR 656.
Waikato Asphalt Ltd. v. Northern Industrial District Distribution Workers, etc, IUOW (1990) 3 NZELC 98, 233.

The Cause

1. The employee is seeking an order for compliance of s. 34 of the ERP and clause 6 of the employment contract.
   
2. In my earlier ruling of 17th November, 2011, I had discussed the aspect of jurisdiction. I need not repeat the dicta; save to note that the employee's main concern is that he was not paid his wages when he was summarily dismissed. What his dues are could be ascertained from the contract. As such, the Court, in order to order compliance with the ERP, has to look at the provisions of the contract.
   

Grounds in Support

3. The employee filed an affidavit in support and stated that on or about the 25th day of May, 2007 he was appointed as a Manager in Nasinu of New Zealand Pacific Training Centre ("NZPTC") from 22nd May 2007. His salary was $13,000 per annum with other benefits. The other benefits included 4% of the sales and fixed commission per student per annum being $10.00 for each certificate student, $50.00 for each TAFE diploma student, $15.00 for each advance certificate and other certificate student and $25.00 for each local diploma student.
   
4. The employee further deposed that the contract has since varied with increments in 2008 to $15,000 and in 2009 to $22,000. On or about the 14th day of May, 2010 his salary was reduced to $10,000 per annum with the understanding that the difference would be set off and normalized on or before the end of July 2010. He was assured verbally by the CEO that his short paid salary and commission on students would be paid in July, 2010. Upon his enquiry on the outstanding payments on or about mid July, 2010 he was simply told that he would be paid later. His relationship with the CEO deteriorated since then.
   
5. On or about the 17th day of August, 2010, the employee deposed that he was terminated from the employment. Upon termination his dues are not paid to him which are as follows:-
   
   • (a) 2007 - 4% sales ( Nasinu) - $4,800.

Per student income per year - $3,540.

(b) 2008 - 4% sales - $16,000.

Per student income per year - $10,950

(c) 2009 - 4% sales (Suva) - $14,000.

Per student income per year - $10,860.

(d) 45 days annual leave @ $22,000 per annum - $3043.93

(Less FNPF & PAYE)

(e) Short paid from 14/05/2010 to 06/08/2010 - $2,159.01

(Less FNPF & PAYE)

(f) 1 week's wages from 09/08/2010 to 13/08/2010 - $676.43

(Less FNPF & PAYE).

Grounds in Response

6. The employer also deposed an affidavit through its Academic Manager. The employer agreed that the employee was initially appointed Manager of Nasinu. The employer avers that after the commencement of the employment, it was agreed by the parties that instead of being paid any commission or benefits, the employee will be paid a base salary of $13,000 per annum. The payment of the annual salary was subject to clause 6(d) which read that the "institute will deduct your salary and if required put a claim on you, if you allow students to study without paying the required fee or without required approvals".
   
7. The employer deposed that the applicant was manager for the period of 22/05/2007 to 30/09/2008 and during this period, he was paid the base salary of $13,000. On 1/10/2008, the employee was appointed as a General Manager and his annual base salary was $22,000. The employee was to execute a fresh contract but he did not do so. The employee however continued his employment on the new contract. The draft contract was attached as evidence. The employer stated that it was never agreed that the employee be paid $15,000 as salary. In May 2010, all staff took pay reduction. There was no assurance by the employer of reinstatement of original salary.
   
8. The employer further stated that the employee was to ensure that all fees due from the students were to be collected and banked in the employer's account. The employee breached the contract as a result of which the employer suffered an average loss of $50,000 per year for 4 years making a total claim of $200,000.
   
9. The employee was terminated for breaching the contract of employment. Firstly the employee was not to engage in any other form of employment or carry on any other business whilst in the employ of the employer but the employee was operating two taxi business and also importing second hand vehicles and selling the same. As a result of the said breaches the employer suffered damages in that it did not get the employee's full attention to his various responsibilities and duties. Further, in collusion with one Atul Sharma, and an officer of Fiji National University namely Rishi Dutt, the employee planned to set up a similar business to that of the employer. The employee also complained about some Indian international students which resulted in the employer refunding the sum of $66,000 and paying $4,000 as accommodation cost for students from India.
   
10. Secondly, the employee was to ensure that all other staffs performed their work under his supervision and he was also to ensure that all payments were made to the creditors on the due date. He was also to ensure that there was no misuse of company properties or services and ensure that company equipments were well protected. The employee failed in his duties in the following ways:-
    
    • (a) There was a theft of a Laptop and computer data. The employee did not report the matter to the police despite being advised to do so. The value of the laptop and data was $10,000.
      
    • (b) A former staff named Mere did not account for $20,000. The employee was advised to report the matter to the police, he failed.
      
    • (c) The employee was required to pay monies to Boxhill Institute and he failed so the directors had to pay a sum of AU$50,000.
      
    • (d) The employee failed to properly check and supervise the course relating to Rachana Devi and Pooja Pritika resulting in the students claiming from the employer a sum of $11,000. The employer has been ruled liable to $11,000.
      
    • (e) The employee failed to pay rental for the premises on time.
      
    • (f) The employee used the internet services to use unauthorized materials resulting in the system to catch virus.
      
11. The employer further stated that the employee had been paid his dues and that he has already taken his leave due to him. There are no monies due and outstanding to him.
    
12. The employer contends that the employee ought to refund all the above monies to the employer.
    

Applicant's Submissions

13. Mr. Tofinga submitted that the parties had entered into a contract on the 25th day of May, 2007. His contract was terminated on 17th August, 2010. The letter of termination had asked the employee to put forward his claim and that the same would be paid within 1 month. The employee put forward his claim and the employer acknowledged it. The employer thus must pay the dues as promised.
    

Respondent's Submissions

14. Mr. Kunal Singh stated that the employees' claim is not substantiated.
    
15. Mr. Singh further argued that the contract did not stipulate the salary detail as $13,000. There seems to be some oral agreement between the parties. The employer says that there was an oral agreement which stated that the base salary would be $13,000 to include all benefits. The subsequent increase also included all benefits. The Court therefore must have this aspect tested in Court to make a finding of fact.
    
16. Mr. Singh drew the Court's attention to the "pay as you earn slip" for the year 2008. He drew the Courts attention to the 2 slips which were issued for the same period. One showed the earnings to be $5769.23 and the other showed it to be $9769.23. Mr. Singh submitted that from the slips, it is not clear as to what represents his wages and what represents his benefits. There is ambiguity as to what the employee's entitlements are and oral evidence is needed for clarification.
    

Applicant's Submission in Reply

17. Mr. Tofinga stated that although the contract did not stipulate that the base salary was $13,000 the employer in its affidavit agrees that the annual salary was $13,000. Further, Mr. Tofinga stated that the so called uncertainties raised by the employer could only be clarified by the employer as they have access to all the documents. The employer has failed to submit the necessary evidence and also to challenge the evidence of the employee. The employee's evidence, thus, must be relied on to make compliance orders.
    

The Law and Analysis

18. S.34 of the ERP states that "if a worker is summarily dismissed for lawful cause, the worker must be paid on dismissal the wages due up to the time of the worker's dismissal".
    
19. The employees claim for unpaid salary, and commission falls under the term "wages". S. 4 of the ERP defines wages to mean "all payments made to a worker for work done in respect of the worker's contract of service...". The definition goes on to make certain exclusions but the commission as claimed by this employee is not in the list.
    
20. The ERC, thus, has jurisdiction under s. 34 to order compliance, if it unequivocally finds that the salary and commission are indeed due to the employee.
    
21. I will analyse each item of the employees claim in turn. The first aspect is unpaid wages being:
    
    • Wages short paid from 14/5/2010 – 06/08/2010; and
    • 1 week's wages from 09/08/2010 – 13/08/2010.
      
22. The employer states that the claim for wages short paid during the period of 14/5/2010 to 06/8/2010 is not proper as the employee had agreed to pay reduction and that there was no agreement for reinstatement of wages. The other sum for a period of 09/08/2010 to 13/08/2010 is not due as the employee breached the contract and is liable to pay the employer the losses as a result of the breach.
    
23. The employee indisputably was appointed General Manager of the NZPTC from 1/10/2008 for a period of 3 years. His base advance was $22,000 per annum to be paid fortnightly. The contract specifically stated that the said contract could not be changed or modified except by a written contract. The alleged changes to accept a reduced pay was never agreed to in writing so is not valid. However one part of the contract by clause 6(d) stated that the salary would be deducted if students are allowed to study without paying the required fee or without approvals.
    
24. The employer says that the employee did not collect $200,000 from the students and as such his wages are to be deducted.
    
25. In light of the allegations, one has to establish vide oral evidence whether the employee's wages ought to be deducted. I cannot ascertain such a fact on the affidavit evidence. It has to be proved vide oral evidence.
    
26. The second aspect of the employees claim is for 4% sales and student commission from the year 2007 – 2009.
    
27. Once again a lot of finding of fact has to be made like:-
    
    • For the year 2007 until 1st October 2008, what were the sales income and the number of students in each category?
      

The employer will have the evidence but that too, one has to consider the employers claim for loss and set off the claim if necessary.

• For the year 1st October, 2008 till 2009, the contract governing the parties as the employer alleges that there was a new contract and that the parties acted on the same. The subsequent contract does not have any sales and per student commission as in the initial contract. It only binds the parties to a performance bonus to be calculated and paid as per a schedule less the base advance paid. The schedule is missing from the contract.

Once again the claim has to be set off against the employer's claim.

28. The third claim is for annual leave for 45 days. A finding of fact has to be made as to which years leave is due and which years is pending and the salary at which the leave shall be calculated.
    
29. Mr. Tofinga says that the employer had asked in the termination letter as to the employees claim and undertaken to pay the same within 1 month and when the employee tendered his claim the employer acknowledged the same. There is no clear acknowledgment or denial of the claim via the email and skype messages between the parties. I am not precluded from analyzing the employers defence and counter claim for the compliance order application.
    
30. The obligation of the employer and the right of the employee upon summary dismissal is unpaid wages. What is properly due is seriously disputed and I cannot clearly ascertain the obligation of the employer and the right of the employee on this compliance order application which now necessitates a grievance procedure in the ERT where an open Court hearing is prudent.
    
31. In the case of Air NZ Ltd v. NZ. Air Line Pilots Association IUOW [1987] NZILR 656 at 662 Justice Williamson said, which comments I adapt as material to the matter before me:-
    

"...my second preliminary comment concerns the general nature of the order for compliance jurisdiction ....procedure is not meant to be a method of evading disputes procedure nor of "fast tracking" disputes procedures ....if the breach of the obligation is clear the order to comply may flow, but if the obligation itself is unclear there must first be proceedings to define the obligation.

...it seems to me there is a difference between an applicant saying to the Court "enforce the obligation" and another saying "enforce my version of the obligation". It may be that, in cases where the obligation is fairly clear, the court ...will define the obligation and issue an enforcing order. The course of action seems inappropriate in a case where the obligation is unclear and seriously in dispute.

In the case presently before me the point in dispute is the nature and extent of the obligation ...without first deciding that point it is hard to see how I can make a finding that there has been a breach of obligation or make a finding defining the status quo. The appropriate procedures for deciding the point are dispute proceedings and not s.207 procedure".

32. Another important case of Waikato Asphalt Ltd v. Northern Industrial District Distribution Workers, etc, IUOW (1990) 3 NZELC 98,233 reinforces my point that if I find that the obligation under s.34 is seriously disputed or is unclear, I cannot order compliance but order the employee to file an employment grievance in the Employment Relations Tribunal. Justice Colgan said:
    

"....the now well recognized principles governing the grant of compliance orders apply without modification. In this case I must be satisfied on the balance of probabilities that the respondent is acting in breach of the statute. Because of the conclusive nature and effect of a compliance order and the sanctions which may flow from non-observance, I should be satisfied that the breach is of a provision, the application of which is either well settled, or at least not open to serious argument as to its proper operation, application or interpretation. In other words, a statutory or award provision which would otherwise be properly argued, tested and established in more appropriate proceedings (for example the dispute of rights procedure) should not be established in a case which has been granted urgency and in which, as a result, comprehensive argument has of necessity not been able to be presented or considered".

33. The compliance orders cannot be made in light of my observation above. To recover the dues, the employee can file proper proceedings, which will clarify the obligation first.
    

Final Orders

34. The compliance order application is dismissed with an order that each party bears their own costs.
    
35. The employee is at liberty to file fresh papers in the Tribunal.
    

ANJALA WATI
Judge

12.03.2012

To:

1. Mr. Noel Tofinga, representative of the applicant.
2. Messrs. Suresh Maharaj & Associates, counsel for the respondent.
3. File Number: ERCC No. 04 of 2010.