Salter v Air Niugini Ltd [2000] PGNC 83; N2088 (11 October 2000)

N2088

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 973 OF 1999

BETWEEN

DENNIS SALTER

Plaintiff

AND

AIR NIUGINI LTD

Defendant

Waigani : Los, J

2000 : 18 August
11 October

EMPLOYMENT Common Rule Award applies to an expatriate the Award applicable to pilot whose employment not solely undertaken in Port Moresby.

Counsel:

P Young for Plaintiff

G Pool for Defendant

Until terminated on 25th June, 1999 the Plaintiff was engaged by the Defendant on a contract as a commercial aircraft pilot commencing on 1 April 1989. The Plaintiff says that following the termination of his employment the Defendant paid him only part of his entitlements in respect of pay in lieu of notice and annual leave. But no payment at all was made in respect of long service leave. In relation to the former his counsel argued that the payments had been wrongly calculated hence it is a matter of mathematics where as in relation to the latter, it is one of legal principle.

The Plaintiff has done a detailed calculation as to what was paid and the shortfall which had little or no dispute at all on the part of the Defendant. The Plaintiff was paid a sum of K28,620.11 for annual leave and pay in lieu of notice inclusive of gratuity and exchange rate stabilization. The Plaintiff on the other hand calculated the entitlements to annual leave and notice inclusive of exchange rate stabilization and gratuity to be K14,709.88 and K43,244.42 respectively giving a total of K57,945.30 leaving a shortfall of K29,334.19. I accept the Plaintiff’s calculation given that it was a term of the Plaintiff’s employment that he would accumulate annual leave entitlements at the rate of 49 working days per annum to be taken as paid leave or paid in lieu of leave upon termination of his employment. It was term of his contract that he was entitled to gratuity at the rate of 24% of his salary per annum payable on all entitlements in the nature of salary or in lieu of salary upon termination. It was also a term of the contract that the Plaintiff was entitled to an exchange rate adjustment whereby 67% of all remuneration and 100% of gratuity would be adjusted to the AUD/K exchange rate of AUD1.45= K1.00.

The next question is whether the Plaintiff is entitled to long service leave. The question arises because in the written contract there is no mention of any long service leave. It is argued that the Plaintiff is entitled to long service leave under the Port Moresby General Employment award which is a Common Rule Award. Immediately there arise three issues – first whether the award applies to the Plaintiff who is an expatriate, secondly whether by agreement the Plaintiff has agreed to receive gratuity in lieu of long service leave entitlements; and thirdly whether the Plaintiff is excluded from the Port Moresby award because his employment was not undertaken solely in Port Moresby.

Long service leave entitlements arise under clause 7 of the Port Moresby General Employment (Amending) 1975. Clause 7 provides –

"(a) An employee shall be entitled to six months long service leave after completion of fifteen years continuous service with the same employer.

(b) Pro-rata entitlements shall apply after three years’ continuous service.

(c) Employees whose services have been terminated with a previous employer, prior to the coming into force of this Award, cannot claim entitlement under this provision from that employer."

By declaration dated 31 May 1977 (National Gazette No G 43 on 9th June 1977), Port Moresby General Employment (Amending) award was declared to be a common rule award in relation to the employees specified in schedule 2 of the declaration. That is to say all persons employed in the area defined in schedule 1 of the declaration except–

"(1) employees engaged:

(a) directly in primary production; or

(b) in domestic duties; or

(c) under any other Act in force in Papua New Guinea other than those employees classified as General Labourers and Class 1, 2 and 3 occupations as determined by the Minimum Wages Board Determination No 4 of 1974.

(2) employees (other than those excepted in Item 1 above) normally employed in that area but who are transferred by their employers from the area in the course of employment providing that such employment does not exceed six months or the period of a specific contract, whichever is the greater."

It is clear that the Common Rule award aside from the exceptions, does not make any distinction between the citizens and non-citizens. Evidence was called to show that long service leave entitlement had never been part of the employment contracts for expatriates employed by the Defendant. This historical non application of Common Rule Award was extended to a connection between the common Rule award and Employment Act which provides for long service leave entitlement. The Defendant submitted that the Employment Act is a reinstatement of Native Employment Act which was intended to regulate employment of ‘natives’ in different categories of employment like the plantation labourers or persons engaged in domestic services. It could not have meant to apply to a non-citizen. I consider it a matter of legal interpretation. The Act does not make any specific exclusion of non-citizens. On the contrary section 88(1) 9 of the Act makes the Act specific inclusion of non-citizens when it speaks of "repatriation when the employee is "not a citizen". Mr G Poole suggested the non-citizen in that Act limits to some persons from neighbouring islands who might be involved in manual jobs. With a flexible mind I can understand the logic of the suggestion. However taking the word "non-citizen" as equivalent to non Papua New Guinean, it does not make sense. Anybody who is not a Papua New Guinean whether by origin or by naturalization, is a "non-citizen" regardless of his or her origin. The only difficulty is the exclusion in Schedule 1(c) that is, the common rule award does not apply to the employees who are employed "under any other Act" in force in Papua New Guinea. There is a specific legislation on employment of non-citizens in Papua New Guinea. That is the Employment of Non-citizens Act. The question is whether because the Plaintiff was employed under that Act he was excluded from the application of the Employment Act and hence he would not be entitled to receive long service benefit under that Act. The counsel has referred to various conflicting decisions on this aspect. These are appropriately referred to and discussed by Doherty, J (as she then was) in Mayer v. Lutz (1996) PNGLR 163. The views in Brendel v. Golden Square Pty Limited (1983) PNGLR 257 and Atlas Plant Hire v. Beck (1984) PNGLR 158 are that Employment Act did not apply to Non-citizens. Her Honour concluded "I consider that it was the intent of the legislature, as shown in section 88 of the Employment Act Ch 373 that the Act applies to non-citizens and I rule accordingly". With respect I agree with her Honour because in both Brendel and Atlas Plant Hire the courts did not consider the application of section 88 of the Act.

The next issue is whether by an agreement the Plaintiff has agreed to receive gratuity in lieu of long service leave. First as a matter of evidence there is nothing in the contract that waived the right to long service leave. There was some discussion between the expatriate pilots association and the Defendant on the matter but no agreement was reached. The question remained open. Mr Young submits that even if there was an agreement that the combined effect of sections 44 and 47 of the Industrial Relations Act is that an agreement cannot vary an award. I accept that submission.

The last issue is whether the Plaintiff is excluded by an exception in Schedule 2 of the Common Rule Award. That is to say whether the Plaintiff as a pilot had spent more time working i.e. flying, outside the Common Rule Award boundary that he cannot benefit from the award. I consider that the nature of work got him out from Port Moresby but he had commenced work at Jackson Airport and ended at Jackson airport. He lived in Port Moresby that means he was required to spend for all the necessities of living in Port Moresby. If the award was to assist with living and working in Port Moresby, the Plaintiff was qualified in that regard. I therefore hold that the Plaintiff was not excluded from the application of Common Rule award.

Taking into account that the Plaintiff had completed 10 years of service, long service leave entitlement accrued at the rate of 1.733 weeks per year of service, that he is entitled to gratuity in respect of his accrued long service leave, that he is entitled to exchange rate stabilization in respect of accrued long service leave entitlement, I award a sum of K85,999.58. He is also entitled to an additional long service leave entitlement two months notice. He would have accumulated a further two days long service leave entitlement which including gratuity and exchange rate stabilization, he would be entitled to K1,417.82.

I also award a sum of K43,244.42 unpaid notice entitlement comprising salary in lieu of notice K12,780.99, gratuity on notice payment (24%) K3,067.43; gratuity stabilization on notice (100%) K5,166.13 stabilization on notice entitlement (67%) K22,229.87.

All these amounts add up to K145,371.70 and I subtract the amount paid up to 20 July 1999 which is K28,620.11. This leaves the balance of K116,751.59. I award this sum to the Plaintiff. I also award the costs and interest at 8% to be calculated to the date of this decision.
__________________________________________________________
Lawyers for Plaintiff : Allens Arthur Robinson
Lawyers for Plaintiff : Pato Lawyers