Pacific Coatings Ltd v Sahai [2016] FJHC 3; ERCA08.2014 (8 January 2016)

IN THE EMPLOYMENT RELATIONS COURT
AT SUVA
APPELLATE JURISDICTION

CASE NUMBER: ERCA08 of 2014

BETWEEN:

PACIFIC COATINGS LIMITED
APPELLANT

AND:

ASHWIN HAMENDRA SAHAI
RESPONDENT

Appearances: Ms. S. Narayan for the Appellant.
Mr. J. Subarmani for the Respondent.

Date/Place of Judgment: Friday 8 January 2016 at Suva.
Coram: Hon. Madam Justice A. Wati.

JUDGMENT

Catchwords:
Employment Law – Appeal –Termination of Employment –Summary Dismissal – Assessing lawfulness of the dismissal: examine cause and procedure – Assessing fairness of the dismissal – examine conduct of employer and manner of treatment provided to employee when the dismissal was carried out- assessing remedies-duty of employee to mitigate loss.

Legislation:

1. The Employment Relations Promulgation 2007 ("ERP"): s.33.
   

Cause and Background

1. The appeal arises from the decision of the Employment Relations Tribunal ("ERT") of 12June 2014 wherein it held that the employee was unlawfully and unfairly dismissed from employment on 6 December 2010.
   
2. The employee held the position of Manager Sales Accounts when he was terminated. The reason why he was terminated were basically as follows:
   
   • (i) Continuous disrespect to fellow staff and use of abusive language at them.
     
   • (ii) Decreased performance at work, quoting and signing the contract for an incorrect price for a work which caused loss to the employer in the sum of $26,000 when he did not have the authority to sign the contract on behalf of the employer and failing to advise the management of the same until the issue was discovered.
     
3. In respect of being continually disrespectful and use of abusive language to fellow workers, the employee was issued with a warning letter of 5 March 2010.
   
4. When the first warning letter of 5 March 2010 was issued, the employee was suspended from work for a week without pay. The letter reads as follows:
   

"Following our meeting of today at the GM's office, you are being suspended for a week without pay with immediate effect.

This has come about as a result of the following:

1. verbal warning given by the Management on your continuous disrespect shown to fellow staff members who have complained about the abusive language you have been using.
   
2. disregard of management directions on the procedures of having your vehicle serviced and repairs done on them.
   
3. your general attitude towards the company staff and management.
   

I sincerely hope that during this break you will reflect upon yourself and return with a changed attitude".

5. Within a month of the first warning letter and the suspension, two staff of the employer wrote to the operations manager and complained against the employee for the same rude behavior. The letter read as follows:
   

"This internal memo is to serve as a complaint against our trade sales rep. Mr. Ashwin Sahai for the continuous use of abusive language against us (customer services) on numerous occasions.

In a recent incident – last week he swore at me (Anupa Singh) for some orders that were late due to raw material storage and both Filo and I were really saddened by this as we were on call with our customers in the sales office.

As per our discussion, I am re-looking at my work here as I cannot continue under this condition as it's both unprofessional and very personal now.

I trust that you will address this with management and that this matter is taken seriously".

6. For the second reason in (ii) above, the employee was issued with a final warning letter of 26 November 2010. The letter of 26 November 2010 reads as follows:
   

"It is with great displeasure that I have to write to you concerning your performance and recent blunders at the FIT, Samabula paint project.

I wish to advise that this letter serves as a warning to you whilst we await the return of our General Manager who is away in Australia on a business trip. He will decide on the course of your continued employment with Pacific Coatings Limited.

You very recently had been suspended from work without pay for a week on a separate issue relating to abusive language used at work and your attitude towards fellow work mates. This has not helped your case much.

In this letter, I wish to address two issues.

Firstly, as discussed your sales performance is not acceptable. For the last several months you have not been able to achieve your budgets and own forecasts.

Secondly, you tendered incorrect quantities for the Samabula FIT paint project which will cost the company approximately $26,000. This amount is a direct cost to us with chances of recovery very slim in the future. You also went ahead and signed the same tender contract without the General Manager's knowledge and approval.

These are serious issues which are being addressed at the moment. Meanwhile I trust you will give your best to the company in order to mitigate the above factors which could lead to your termination.

I look forward to a significant improvement on your behalf".

7. The above was followed by a termination letter of 6 December 2010. The letter reads:
   

"Please be advised that following discussions at the General Manager's office today, your services to PCL is terminated with immediate effect.

Your one month's salary in lieu of notice will be paid to your bank account by the end of this week together with your annual leave entitlements.

We request that if you have any company property in your custody, please make arrangements with our Operations Manager, Mr. Joe Leqa (mobile [phone]) for handover of the same. Failure to do this may lead the company to instigate legal actions against you..."

8. Then on 8 December, 2010, the employee filed an action for unfair dismissal. His concern in his claim was that the employer issued him with a final warning letter of 6 December 2010. Then the employer advertised in the newspaper that he was no longer employed at Pacific Coatings Limited. He said in his complaint that he wrote a letter to the employer asking why he was terminated but there was no response from the employer. The reason he wrote to the employer was that he was not given a termination letter. He therefore claimed unfair dismissal.
   
9. The matter went for hearing and after a defended hearing the ERT found that the employee was unlawfully and unfairly dismissed. It therefore granted the employee 13 months' wages for unlawful dismissal and 6 months wages for unfair dismissal. The 6 months' wages for unfair dismissal was on the basis that from the date of dismissal to the date of hearing, the time period was about 19 months. The ERT also took into consideration that the employee has contributed to the situation that gave rise to the termination. In total, the employee was entitled to 19 months' wages lost as a result of the termination.
   
10. In arriving at the conclusion that the dismissal was unlawful, the ERT found that the employer had established the cause warranting dismissal but that it did not follow the correct procedure in carrying out the dismissal. The procedure that was identified by the ERT that ought to have been followed were:
    
    • (i) The termination letter did not state the reasons why he was terminated;
      
    • (ii) The employee said and did things without proper advice and representation.
      
    • (iii) There was no disciplinary or grievance procedure established by the management which could have been followed.
      
    • (iv) The employer should have taken the employee to one side and whispered in his ears that he did not have the right to swear at the workers. That would be full of passion instead of giving verbal and written warnings which did not come about as a result of any established system of disciplinary and grievance procedure.
      
    • (v) What the employer did would not have been done by any other reasonable employer.
      
11. In holding that the dismissal was unfair, the ERT found that it was humiliating to the worker when it was published in the papers that he was no longer employed by the company. If the employers are to publish notices like this, they have to have a contractual right to do so or an oral permission from the employee. The employee did not give any such permission and so he lost the respect of those who did business with him.
    

Grounds of Appeal/Submissions of Parties

12. Aggrieved at the decision of the ERT, the employer appealed. It raised 5 grounds of appeal. The first ground of appeal asserts that the ERT erred in law and in fact by holding that the employer failed in its fair process of dismissing the employee and failed to consider that the employer had provided warnings to the employee and also suspended him prior to terminating him.
    
13. Ms. Narayan submitted that the nature of the misconduct of the employee was such that it did not require any explanation or reasoning before dismissal. Even the ERT held that the cause for dismissal was justified.
    
14. The employee was fully aware of the reasons for which he was dismissed. He was given warning letters and he was also told in a meeting why he was being dismissed. There need not have to be reasons given to him again for why he was being dismissed.
    
15. Ms. Narayan also argued that the ERT held that the employer had advertised in the papers that the employee was no longer employed by Pacific Coatings Limited. This was used to assess the fairness of the termination when the proper factor is to consider the manner of treating the employee. This employee had been very abusive to fellow workers and was causing the employer loss with his actions. That led to his termination. What the employer did was to safeguard its interest in advertising in the papers that the employee was no longer employed by it.
    
16. There was no malice shown on the part of the employer when the unemployment was advertised. The employer did not ever state in the papers as to how the employment came to an end. It just mentioned that the employee was no longer employed with it and that the employer will no longer be responsible for any transactions carried out by him.
    
17. There was no evidence given by the employee that the advertisement was humiliating to him. The ERT was therefore wrong in finding that this caused the employee humiliation and loss of respect.
    
18. Mr. Subarmani argued that at the time of the dismissal, the employee was not given a chance to explain his position. He was denied the natural justice of being heard. That makes the dismissal unlawful as the employer made the decision unilaterally.
    
19. It was further argued by Mr. Subarmani that there was no need to advertise in the papers that he was no longer employed. This jeopardized his career. He could not find a job in Fiji and had to go to PNG.
    
20. The second ground of appeal raises that the ERT erred in law and in fact in concluding that the employer was wrong in not consulting the employee prior to informing the public that it would not be responsible for any dealing done by him when the employer had no such responsibility or obligation.
    
21. Ms. Narayan argued that there is no obligation on the employer to seek permission of the employee to put a notice in the papers that the employee is no longer employed. There is also no requirement that the employer can only publish this notice if there is a provision in the contract. All employers publish such notice to avoid any losses that may result to it if the dismissed employee carries out any transactions on its behalf.
    
22. Mr. Subarmani repeated his argument that there is no procedure that the unemployment be advertised in the papers.
    
23. The third ground of appeal states that the ERT erred in law and in fact in concluding that the employee was humiliated and had lost respect of those who had done business with him and awarding him 6 months' wages when there was no such evidence to this effect.
    
24. It was submitted by the counsel for the employer that there was no evidence of any humiliation as the employer did not act in bad faith or acted unfairly whilst carrying out the dismissal. The employee did not give any evidence that he was humiliated by the actions of the employer. The remedy awarded is thus not based on any proper findings of fact.
    
25. Mr. Subarmani argued that the remedies were founded on correct principles of law and ought to be upheld by the Court.
    
26. In the fourth ground of appeal, it is asserted that the ERT erred in law and in fact in holding that the employer was liable to pay the employee 19 months' wages when it failed to consider that the employee's actions at work had led to several circumstances of him being given warnings over his period of employment with the final situation caused by the employee leading to a loss of $26,000 to the employer which circumstances were grave for any employer to accord summary dismissal to avoid any further damage to the business.
    
27. Ms. Narayan argued that the employee's action warranted summary dismissal and he was in fact summarily dismissed. His actions caused the company loss of $26,000. The employee was not entitled to any remedy in light of the fact that the reason for which he was justified was proper and that he had caused financial loss to the employer.
    
28. Mr. Subaramani argued that there was no evidence that the loss caused was deliberate so the employee cannot be blamed for the loss.
    
29. In the last ground of appeal, it is asserted that the ERT erred in law and in fact in awarding 19 months' wages in favour of the employee without considering that the said award was significantly unreasonable and prejudicial to the employer in light of the circumstances that led to the employee's termination.
    
30. Ms. Narayan argued that the 19 months' wages is far too exorbitant even if the employee was entitled to any remedies. If he was entitled to anything, 2 months' wages would be sufficient. He deserved the outcome. He was warned of the severity of his behavior and he did not pay heed. He caused loss to the employer and was treated with respect still. He did not give evidence that he mitigated his loss and why he could not if he did not. On that basis the award should be reversed to 2 months' if any.
    
31. Mr. Subaramani repeated his argument that if the dismissal is unlawful and unfair as properly found by the ERT, the employee is entitled to the lost wages and he in fact was correctly awarded the 19 months' wages for his loss.
    

Law and Analysis

32. There is no dispute by any party that the causes for which the employee was dismissed was established by the employer and justified. I therefore need not re-examine whether the termination was justified substantially.
    
33. What the employer states is that the ERT wrongly found that the employer did not invoke the correct procedure in terminating the employee.
    
34. The first reason that was provided by the ERT was that the dismissal letter of 6 December 2010 does not specify why the employee was terminated. Indeed this finding of the ERT is correct. S. 33 pursuant to which the employer terminated the contract requires that written reasons for dismissal be given to the employee at the time of the dismissal.
    
35. The examination of the termination letter reveals procedural non-compliance as there is no reason provided in the letter why the employee was dismissed.
    
36. Ms. Narayan says that the employee was well aware of these reasons. Ms. Narayan cannot speculate this and substitute her own speculation in lieu of the requirement of the law.
    
37. The employee may have been warned on matters but that does not mean that he ought to know specifically why he is being dismissed. He may have also been told orally but that is not good enough procedure in law. Written reasons for dismissal were required and that did not eventuate. In that way, the dismissal was procedurally wrong which makes it unlawful.
    
38. I do not find that the ERT was correct in stating that the dismissal was unlawful in that the employee was entitled to representation. There was no contractual obligation on the employer to provide the employee with legal representation. There is also no statutory requirement that when the employee is asked to respond to any allegation, the employer provides or advices the employee to seek representation.
    
39. The ERT also stated that there was no disciplinary or grievance procedure established by the management which could have been followed. This was a case for summary dismissal. There is no requirement for any grievance or disciplinary procedure. Even the law recognizes that the employee can be dismissed on spot without notice. I do not know the basis on which the ERT made this finding but certainly it is not supported by the provisions of the ERP and thus cannot be upheld.
    
40. I am surprised that the ERT made a finding that the employer should have taken the employee to one side and whispered in his ears that he did not have the right to swear at the workers. It said that that would be full of passion instead of giving verbal and written warnings which did not come about as a result of any established system of disciplinary and grievance procedure.
    
41. The evidence was that the employer did orally address these issues with the employee but he did not correct his ways and behavior. That led to the written warnings. The employer was generous in giving warnings to the employee. Such abusive and discourteous behavior at work is not tolerated by most employers and regarded as gross misconduct because it has the tendency of affecting productive employment relationship.
    
42. Although, s. 33 of the ERP does not require that warnings be given, the employer went a step further and informed the employee that what he did was not correct and that he was given a chance to rehabilitate but that opportunity was not utilized positively.
    
43. I find that the ERT's findings in the regard that the employer should have whispered in the employee's ears about his bad conduct naïve. It has no legal basis.
    
44. The ERT also found that what the employer did would not be done by any other reasonable employer. I find that the ERT meant that any other employer would not dismiss the employee if such behavior is noticed. I do not know the basis on which this finding is made but if that is what is meant than the finding is definitely incorrect.
    
45. I do not think that any employer in the whole world would like the employees to create an environment where other staff feel unwanted and cannot give their optimal performance to the employer. No employer will tolerate deliberate losses caused to it. The findings of the ERT are plucked from thin air.
    
46. The ERT also found that the employer should not have advertised in the papers about the employee being no longer employed by it. This, according to the ERT, was humiliating.
    
47. It is a common practice all over the world that most employers who have their employees to deal with customers, put a notice in the paper when the employee leaves work. This is to avoid the employee from undertaking any further dealings as an agent of the employer and thereby incurring legal responsibility on the employer.
    
48. These kinds of notices are not published to cause any humiliation to the employer. It is only for the employer's protection. Even in this case there was no evidence that the notice was published with bad faith.
    
49. The employer did not state in the notice that the employee was terminated. The notice just read that the employee is no longer in employ with Pacific Coatings Limited. I thus do not find that this notice was one that shows malice on the part of the employer or constitutes unfair treatment to the worker.
    
50. The finding therefore that the notice caused the employee humiliation making the dismissal unfair is not supported by the facts.
    
51. Since I have found that the dismissal was only unlawful for want of reasons for dismissal being noted in the termination letter, the employee is entitled to some remedy. It was the duty of the employee to have mitigated his loss and found work. He did not give evidence of mitigation of his loss. He has also caused the employer substantial loss which he will not pay back.
    
52. I therefore award him only part of the wages lost as a result of the dismissal. I find it proper that he be paid only 6 months wages. Within the 6 months, he was expected to have found work for himself.
    

Final Orders

53. In the final analysis, I find that the dismissal of the employee was only unlawful in that proper procedure of giving written reasons for the dismissal at the time of the dismissal did not eventuate.
    
54. I find that the dismissal although unlawful for the above reasons, was fair.
    
55. For the unlawful dismissal, the employee is awarded remedies for 6 months wages'.
    
56. Each party shall bear their own costs of the appeal proceedings.
    

Anjala Wati
Judge

08.01.2016
____________________
To:

1. Ms. S. Narayan for the Appellant.
2. Mr. J. Subarmani for the Respondent.
3. File: Suva ERCA08 of 2014.