Paulus v Nestle (PNG) Ltd [2021] PGNC 342; N9186 (21 September 2021)

N9186

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1432 OF 2019

BETWEEN
LUCY PAULUS
Plaintiff

AND:
NESTLE (PNG) LIMITED
Defendant

Lae: Dowa J
2021: 9^th August & 21^st September

EMPLOYMENT LAW – claim for unlawful termination – plaintiff alleges defendant mishandled her redundancy resulting in loss of employment - plaintiff alleges the defendant did not follow earlier practices of termination by making provision for alternative employment in the company - Company failed to pay six months’ notice pay and accommodation allowances- plaintiff claims her forced redundancy amounted to unlawful termination – issues are whether the plaintiff’s redundancy amounted to unlawful termination and whether the plaintiff is entitled to any damages

Held:

Plaintiff has not established that the redundancy amounted to unlawful termination –found defendant’s decision has not breached plaintiff’ contract of employment and is consistent with the Employment Act. Plaintiff has already been paid her entitlements including redundancy (severance) pay –claim dismissed.

Cases Cited:

Kolta Development -v- Independent State of PNG (2013) N5954
Ruhuwamo v PNG Ports Corporation (2019) N8021
Saki -v- Kangleon (2019) N7860
Tawa -v- Mainland Holdings (2020) N8727

Counsel:

K. Kevere, for the Plaintiff
J. Langah, for the Defendants

DECISION

21^st September, 2021

1. DOWA J: This is a decision on both issues of liability and damages. The Plaintiff claims she was unlawfully terminated from employment by the Defendant and seeks damages for unlawful termination.
   

Brief Facts

2. The Plaintiff is a former employee, of the Defendant. She was employed by the Defendant for 13 years. She held various positions, the last being the Operations Performance Specialist.
   
3. On 16^th January 2019, the Plaintiff was made redundant due to a company restructure initiated by the Defendant to be effective from 28^th February 2019. The Plaintiff was paid a redundancy (severance) pay.
   
4. The Plaintiff alleges the decision by the Defendant to make her redundant was not properly administered and therefore amounted to unlawful termination of employment. The Plaintiff alleges that the Defendant failed to pay the Plaintiff the following:
   

1. Pay in lieu of six (6) months’ notice
2. Ex gratia payments

100. Housing allowance

4. General damages
   

5. The Defendant filed a defence, denying the claim. The Defendant states, the Plaintiff had a written contract which prescribed a one (1) months’ notice for termination which was subsequently extended. The Plaintiff was made redundant, and sufficient notice was given to the Plaintiff. The Plaintiff was sufficiently paid redundancy severance pay which was over and above the one month’s entitlement due to the Plaintiff.
   

Issues

6. The issues for consideration are:
   
   1. Whether the Defendant breached the contract of employment with the Plaintiff
   2. Whether the Plaintiff is entitled to any damages.
      

Plaintiff’s Evidence

7. The Parties agree to tender their respective affidavits as evidence without cross-examination. The Plaintiff relies on the following affidavits:
   
1. Affidavit of Lucy Paulus sworn 6/11/2020 and filed 6/11/2020 – Exhibit P1
2. Affidavit of Lucy Paulus sworn 6/11/2020 and filed 6/11/2020 – Exhibit P2
3. Affidavit of Lucy Paulus sworn 14/04/2021 and filed 14/04/2021 – Exhibit P3
4. Affidavit of Lucy Paulus sworn 18/06/2021 and filed 18/06/2021 – Exhibit P
   
8. The summary of the Plaintiff’s evidence is this. The Plaintiff commenced her employment with the Defendant in September 2006. The Plaintiff’s employment contract dated 22^nd September 2011 had fixed notice period for termination under clause 16. She has held various positions until 16^th January 2019. On 24^th February 2015, the Plaintiff was given a position as Operations Performance Specialist under a subsequent written Contract of Employment. The Plaintiff says, on 16^th January 2019, the Defendant terminated her employment on grounds that the position she held was made redundant. She says the Defendant’s handling of the redundancy exercise was wrong, which resulted in her in losing her job and suffering loss in income. The Plaintiff says she was given only six (6) weeks’ notice, when she was entitled to six (6) months. The Plaintiff says, her contract of employment dated 24^th February 2015 was open handed with no notice period. She says the reasonable notice period should have been six (6) months, and not six (6) weeks.
   
9. She deposes further that she was not given sufficient counselling for a life without a job and regular income. She alleges further that she was not paid ex gratia payments for the thirteen (13) years she served. Finally, she was not paid housing allowance for the thirteen (13) months period for which she is entitled.

Defendant’s Evidence

10. The Defendant relies on the affidavit evidence of Joseph Moses. Mr Moses is the Human Resources Business Partner PNG. The summary of his evidence is this. On 1^st October 2011, the Plaintiff signed a Contract of Employment. Under clause 16 of the Contract, the Plaintiff is entitled to one (1) months’ Notice of Termination. Due to a company restructure, the position held by the Plaintiff was made redundant. On 16^th January 2019, the Plaintiff was notified in writing that she was made redundant, to take effect as of 28^th February 2019.
    
11. The redundancy letter clearly stated that the Plaintiff was a good worker, that she was made redundant due to the restructure, and that the Defendant would pay a redundancy (severance) package and assist her to get a new job by giving her details to Airswift recruitment company.
    
12. The Defendant then proceeded to calculate and pay a redundancy (severance) package of K117,695.13, gross. The Plaintiff was paid a net pay of K70,568.35 after deduction for tax and NASFund. This amount is calculated for thirteen (13) months’ pay. In keeping with their word, the Defendant sent the Plaintiff’s details to Airswift, a requitement/placement company requesting her placement on 4^th February 2019. Mr. Moses deposes further that, in accordance with their strong business principles and social economic ethics, the defendant attended to the Plaintiff’s grievances between January and February 2019. They provided ongoing counselling services and explained reasons for the redundancy. They advised the Plaintiff in person and through email correspondence that the redundancy package they provided was generous, over and above the minimum requirement of one month’s notice. Mr Moses deposed that the redundancy package comprises of one (1) month salary and one (1) month housing allowance for every year of service rendered by the Plaintiff to the Defendant company for the last thirteen (13) years. Mr Moses deposed that the Plaintiff’s case was carefully assessed in consultation with all Senior Managers of the Defendant company, and the redundancy package offered was the most sensible and appropriate offer made to a dedicated officer.
    

Submissions of Counsel

13. Mr Kevere, Counsel for the Plaintiff, submits that the Defendant mishandled the Plaintiff’s redundancy. She was not properly counselled and reinstated into an alternative position with the defendant. She was not given six (6) months’ notice as was the practice adopted by the Defendant in respect of other employees who went through similar redundancy exercise. Mr Kevere submits that the Plaintiff’s later contract of employment dated 24^th February 2015 superseded the first contract of 1^st October 2011 in so far as notice is concerned. He submits that there was no notice period fixed for termination under the 2015 contract of employment and therefore, it was open to the Defendant to give the six (6) months’ notice to be consistent with similar period given to other employees. Mr Kevere submitted further that the Plaintiff was entitled to ex gratia payments, as well as housing allowances which were not included.
    
14. Mr Langah, Counsel for the Defendant submits that the Defendant handled the Plaintiff’s termination on grounds of redundancy well and in accordance with the employment law. Mr Langah submits that the Defendant was generous and fairly compensated the Plaintiff in paying out thirteen (13) months’ salary and housing allowances, which is over and above the minimum requirements of the Employment Act. The Plaintiff has been paid in full all her entitlements.
    

Reasons for Decision

15. I have considered the evidence and submissions of counsel for the parties. Here are my reasons for decision.
    
16. The relevant law is the Employment Act that governs employment relations in Papua New Guinea. The Act provides the minimum requirements for contract for service. In the present case, the Plaintiff had a written contract of service. Sections 19 (a), 22, 33 and 34 of the Employment Act are relevant and applicable.
    
17. These sections read:
    

“19. WRITTEN CONTRACT OF EMPLOYMENT.

A written contract of service is of no force or effect unless and until–

(a) in the case of a literate employee–

(i) he has signed the instrument of agreement and has certified under his hand on the agreement that he has read, understood and agreed to abide by the terms and conditions endorsed on the agreement; and
(ii) the employer has endorsed on the agreement a note that he believes and is satisfied that–
(A) the employee is literate; and
(B) before signing the agreement, the employee read and understood it; and
(b) in the case of an illiterate employee, he has–
(i) signed; or
(ii) affixed his mark or an impression of his thumb on,
the instrument of agreement in the presence of a labour officer and the labour officer certifies that Section 23 has been complied with.
............

22. CONTRACT PERIOD.

(1) A contract of service made under Section 19(a), may be for a specified or for an unspecified period.
(2) Where an employee under a contract of service made under Section 19(a) is permitted by an employer to continue his employment after the expiry of the period specified in the contract of service, the contract shall be deemed to be extended, on the same terms and conditions, for an unspecified period.
(3) The period of a contract of service shall commence–
(a) in the case of a contract made under Section 19(a)–on the date on which it is signed by the employee or, if another date is specified in the contract, on that date; or
(b) in the case of an attested contract–on the date that it is attested by a labour officer under Section 23,
but in no case shall it be deemed to have commenced on a date later than the date the employee commenced duty.
(4) Subject to this Act, the period of an attested contract shall not exceed–
(a) in the case of an employee who is not accompanied by any of his dependants–two years; and
(b) in the case of an employee who is accompanied by all or any of his dependants–three years.
(5) Where an employee under an attested contract enters into a contract for a period less than the maximum specified in Subsection (4), he may, at the expiration of the contract enter into a further attested contract with the same employer for a period that, when added to the period of the original contract, does not exceed the maximum period specified in that subsection.
..........

33. TERMINATION OF CONTRACTS.
    

(1) A contract of service for a specified time or for specified work shall, unless terminated otherwise under this Division, terminate when the period of time for which the contract was made expires, or the work specified in the contract is completed.
(2) A contract of service for an unspecified period of time shall be deemed to continue until terminated by either party under this Division.

34. NOTICE OF TERMINATION.
    

(1) This section does not apply to a written contract of service for the first two years of operation of the contract unless the parties to the contract agree otherwise.
(2) Subject to this Act, a party to a contract of service may, at any time, give notice to the other party of his intention to terminate the contract.
(3) The length of notice of intention required to terminate a contract of service shall be the same for both parties and–
(a) shall be as specified in the contract; or
(b) shall be not less than the periods specified in Subsection (4).

(4) Where there is no provision in a contract of service for notice of intention to terminate, the length of the notice shall be not less than–
(a) one day’s notice if the employee has been employed for less than four weeks; or
(b) one week’s notice if the employee has been employed for not less than four weeks and for less than one year; or
(c) two weeks’ notice if the employee has been employed for not less than one year and for less than five years; or
(d) four weeks’ notice if the employee has been employed for five years or more.

(5) Notice of termination shall be given–
(a) in the case of a contract of service referred to in Section 19(a)– in writing; and
(b) in the case of any other contract of service–either orally or in writing, and the day on which the notice is given shall be included in the period of notice.”

18. The law on termination of simple employment contract is settled in this jurisdiction. In Ruhuwamo v PNG Ports Corporation (2019) N8021, Thompson J said this at paragraph 17-19 of her Judgement:
    

“17. It is well settled by a long line of case authorities in PNG, that an employer has the right to hire and fire his employees and does not have to give reasons for his decision. If this is done in breach of the terms of a contract, the measure of damages is what the employee would have received for his salary and other entitlements if the contract had been lawfully terminated. (see Jimmy Malai v PNG Teachers Association (1992) PNG LR 568, Paddy Fagon v Negiso Distributors Pty Ltd (1999) N 1900, New Britain Palm Oil Ltd v Vitus Sukuramu (2008) SC 946, and Porgera Joint Venture Manager Placer (PNG) Ltd v Robin Kami (2010) PGSC 11).

18. This is consistent with the provisions of the Employment Act. Under S 34, a contract of employment may be terminated at any time, with the length of notice being either as specified in the contract, or dependent on the length of the employment. If an employee has been employed for over five years, the length of notice shall be not less than four weeks. Under S 35, the termination may be by notice, or by payment in lieu of notice.
    
19. Under S 36, the employer may terminate without notice or payment in lieu, if the employee, inter alia, willfully disobeys a lawful and reasonable order or misconducts himself by an act of omission or commission that is inconsistent with the due and faithful discharge of his duties.”
    
19. Even where the termination is unlawful, the only remedy available is for the Plaintiff to receive entitlements for the notice period. See: Saki -v- Kangleon (2019) N7860 and Tawa -v- Mainland Holdings (2020) N8727. In Saki v Kangleon, Her Honour, Thompson J said this at paragraph 26 of her judgment.

“The law on unlawful termination is well settled. An employee who is unlawfully terminated, will receive as damages the amount which she would have been entitled to receive if she had been lawfully terminated. (See Pama Anio v Aho Baliki (2004) N2719, The Central Bank of PNG v Gabriel Tugiau (2009) SC 1013 and William Maninga v Ramu Sugar Ltd (2010) N4118). In order to receive damages, any actual loss and damage must be clearly pleaded with particularity, and then established by proper evidence at the hearing. If there is no proper foundation in the pleadings or no proper evidence to support the pleadings, no damages can be awarded. (See PNGBC v Jeff Tole (2002) SC 694 and Central Bank of PNG v Gabriel Tugiau (supra).”

20. The Plaintiff commenced employment with the Defendant on 1^st September 2006. After working for thirteen (13) years, she was made redundant effective 28^th February 2019. Her last position with the Defendant was Operations Performance Specialist. She was paid a redundancy (severance) package of K117,000.00 with a net pay of K79,981.54. The payment accounts for thirteen (13) month’s salary and housing allowances. Although, the Plaintiff alleges that the Defendant has not properly handled her redundancy, the evidence shows otherwise. The Plaintiff’s redundancy came about because of an inception and implementation of a new global software in the Defendant Company’s Operations worldwide known as Systems Application and Products (SAP) in data processing management which resulted in the Plaintiff’s position made redundant. The Plaintiff was advised and counselled of the business decision the Defendant was taking. I note the Defendant attended to the Plaintiff’s grievances in person as well as through email correspondence. I note the Defendant took steps to assist the Plaintiff to find alternative employment by sending the Plaintiff’s details to a Recruitment Company, Airswift. In my view, the Defendant’s actions are not unreasonable. There is no evidence that the Defendant’s actions or decision amounted to any unlawful termination of employment. Under Section 34 of the Employment Act, the Plaintiff is entitled to terminate a contract of employment, with due notice.
    
21. The Plaintiff alleges, she was entitled to six (6) months’ notice but was given only six (6) week’s notice. The Defendant denies the Plaintiff’s claim and maintains that the Plaintiff is only entitled to one month’s notice. The Plaintiff signed a written Contract of Employment on 1^st October 2011. Clause 16 of the contract provides one month’s notice of termination. The Plaintiff signed a second contract of employment on 24^th February 2015, which appear to be an extension of the previous contract. The 2015 contract does not provide for period for notice of termination. The Plaintiff argues that the absence of period of notice in the new contract entitles the Plaintiffs to claim the six (6) months based on a conventional practice by the Defendant who has given six (6) months redundancy notice to other employees in the past. I reject this argument for two reasons. Firstly, the Defendant has denied this, and maintained that the Plaintiff is entitled to only one (1) month’s Notice consistent with her contract of employment and the Employment Act. It is my view that, where a period of notice is not expressly provided, section 34 of the Employment Act applies, and that is, where an employee who has served an employer for five (5) years or more is entitled to four (4) weeks’ notice. Secondly, under Section 22 (2) of the Employment Act, the terms of the Contract of Employment of 1^st October 2011 apply in so far as notice period is concerned. That contract fixed one month notice of termination which is applicable in the absence of any other express period to the contrary. I, therefore, find the Plaintiff is entitled to only one-month notice, which was sufficiently given.
    
22. The Plaintiff alleges that she is entitled to housing and ex-gratia payments, which has not been paid. I have considered the evidence and submissions given by the parties. I am not satisfied that the Plaintiff is entitled to any more allowances than that which has been paid. The evidence shows, the Defendant calculated a redundancy (severance) package of salaries and housing allowances for thirteen (13) years of dedicated service by the Plaintiff to the Defendant. Apart from the thirteen (13) months redundancy pay, the Plaintiff was also paid all her annual and long service leave pay. It is clear to me the calculations were professionally done. The Plaintiff was advised of the same. In respect of the ex-gratia payments, it is a free will payment an employer makes to an employee for his dedicated service. It is not due as an entitlement nor is it to be demanded. The Plaintiff’s claim is misconceived. (See: Kolta Development -v- Independent State of PNG (2013) N5954). His Honor Kandakasi J (as he then was) said this at paragraph 51:
    

“51. Finally, the Court after having dismissed the Plaintiffs claim, initiated the idea of an ex gratia payment. Decisions to make ex gratia payments is a right the person who decides to make an ex gratia payment has. After all the nature of ex gratia payments is such that, the payer out of his or her own free choice and or volition and out of grace or favour decides to make such payments. Given that, the payer needs no compulsion or even a suggestion from any other person or authority, unless their views and inputs are sought on the question whether any ex gratia payment should be made or they are specifically empowered by legislation to make such inputs or suggestions. Here with the greatest respect, Salika J (as he then was), had the power to hear and determine the claim that was before him according to law applying legal principles considering wrongs and remedies according to law. Once he came to the decision to dismiss the claim, the whole claim as a matter of law came to an end, subject only to the plaintiffs right of appeal.”

23. Besides, the redundancy package offered by the Defendant in this case is more than sufficient and can be treated as such.
    

Conclusion

24. For reasons given in my findings, I am not satisfied that the Plaintiff has proved her allegations on the balance of probability. I will therefore dismiss the Plaintiff’s claim.
    

Cost

25. The Defendant has submitted that the Plaintiff pay the cost on indemnity basis. The Defendant has warned the lawyers for the Plaintiff that there was no reasonable cause of action and that, in the event if, the case is dismissed, they would seek cost on Solicitor-client basis. Whilst I agree with the Defendant’s submission, it remains a discretion for the Court. In the exercise of my discretion, I will award cost on party/party cost only.
    

ORDERS

26. The Court orders that:
    
    1. The Plaintiffs proceeding is dismissed.
    2. The Plaintiff shall pay the Defendant’s cost to be taxed, if not agreed.
    3. Time be abridged.

__________________________________________________________________
Public Solicitor: Lawyer for the Plaintiff
Warner Shand Lawyers: Lawyer for the Defendant