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Supreme Court of Tonga |
IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU'ALOFA REGISTRY
CV 32 of 2014
BETWEEN:
'ISILELI FIU
Plaintiff
AND:
GENERAL MANAGER
First Defendant
AND:
TONGA BROADCASTING COMMISSION
Second Defendant
Mr. 'O. Pouono for the plaintiff
Mrs. P. Tupou for the defendants
Hearing: 26 and 27 August 2015
Ruling: 7 October 2015.
RULING
[1] The issue in this case is whether the plaintiff (Mr. Fiu) was wrongfully dismissed from his employment as an Accounting Officer with the second defendant on 29 May 2013. The defendants deny that the dismissal was wrongful and say that the Mr. Fiu was dismissed summarily for serious misconduct in accordance with the procedures set out in his employment contract.
Procedural matters
[2] I was asked to deal with this case on an agreed statement of facts but was also provided with bundles of documents to which Counsel referred and written and oral legal submissions.
[3] Although the General Manager of the Tonga Broadcasting Commission (TBC) was named as the first defendant no relief is sought against her.
The facts and Mr. Fiu's employment terms
[4] TBC is a public enterprise. Mr. Fiu was employed by TBC as an Accounting Officer from 1 September 2005, initially for a probationary period. He did not sign a written employment agreement until 10 July 2008. At that time he entered into a written employment agreement with TBC for three years commencing 1 July 2008. Upon the expiration of that agreement in 2011 he was presented with a new written employment agreement which he never signed. TBC argues that Mr. Fiu worked under the 2011 agreement and was bound by its terms. No objection was taken to that position by Mr. Fiu and I therefore proceed on the basis that it was the case.
[5] The 2011 agreement contained the following relevant clauses:
1.5 The Employee is bound by the terms of this Contract and the Staff Employment Regulations Manual, Administrative Instructions and Code of Ethics and Practice.
Termination of Your Employment
7.1 Either party may terminate this Contract on two (2) months notice in writing. Both parties agree that this is reasonable notice.
7.2 The Employer reserves the right to terminate this Employment Contract without notice if the Employee commits an act of Serious Misconduct as set out in Part B of Schedule 2.
7.3 The things listed in Part A of Schedule 2 are Misconduct. Such conduct may result in a warning, either verbal or written. If a written warning is issued it shall state:
- (a) the thing complained of;
- (b) the improvement required and the time frame for such improvement;
- (c) the consequences of failure to improve within the time stated.
[6] Schedule 2 to the agreement defined 'misconduct' (Part A) and 'serious misconduct' (Part B). For present purposes it will suffice to note that misconduct is behaviour that could lead to a warning that the employee's employment was at risk and included failure to perform work to the required standard and failing to follow instructions. Serious misconduct is behaviour that may lead to dismissal or to instant dismissal in particularly serious cases and included frequent occurrences of misconduct. Schedule 2 also states:
The TBC Rules and Regulations in the document Tonga Broadcasting Commission, Staff Employment Regulations Manual will be part of this schedule.
[7] To make sense of what follows I must now describe and set out portions of the TBC Staff Employment Regulations Manual. The TBC Staff Employment Regulations Manual is dated January 2008. It contains an example of the TBC individual employment agreement for employees as at 2008 (which varies in certain respects from the agreement provided to Mr. Fiu in 2011) and addresses in some detail and complexity the responsibilities, rights and powers of TBC and its employees, including the rights of TBC to dismiss employees and the procedures that must be followed to do so. To quote from Leiola Group Ltd v Moengangongo (AC26/2009, 14 July 2010 CA) at [31]; "The Manual has the appearance of a comprehensive employment code".
[8] Section 1.13 of the TBC Staff Employment Regulations Manual is headed 'Discipline'. There are three parts to this section with the subheadings 'Queries', 'Warning Letters' and 'Suspension'. This section relates to the disciplinary responses that are available to TBC in respect of employees' 'offences' which are not so serious that they may lead to dismissal. 'Queries' are written enquiries issued to employees requiring an explanation in writing for what are minor offences. For more serious offences, TBC might choose to issue to employees written warnings. For even more serious offences, TBC might temporarily suspend employees from their employment. The section contains examples of the offences that might justify the issue of a query or written warning or the suspension of an employee. For present purposes the provisions relating to suspension are most relevant and I set them out in full below.
Suspension
[9] The next section is 1.14 which provides for a procedure by which employees who consider that an injustice has been done to them may request that the matter be referred to the General Manager and the Staff Sub-committee with rights of appeal to the TBC Board. It provides:
Section 1.14 – Grievances and Disputes
(Additional approved by the Hoard in December 2002)
That every complaint lodged by any staff member shall abide to the following procedures:-
[10] The next relevant section is 1.16 which deals with procedures that are to apply when serious charges are brought against an employee. It would appear that the term 'serious charge' is synonymous with 'serious misconduct' as in respect of these offences the employee may be subject to dismissal. Relevantly, under section 1.16(2) the General Manager in liaison with other Heads of Departments may recommend the suspension of an employee 'while further investigation takes place'. There is a process by which the employee charged with a serious offence is given an opportunity to respond to the charge and the facts (including any documents) relied upon by TBC. The General Manager is required to refer the case to the Staff Sub-committee for consideration and submission to the Board. Ultimately the Board must approve the penalty to be imposed if the serious charge is made out and these are listed in section 1.17(i) to (v) and range from a formal reprimand to dismissal. I set out sections 1.16 and 1.17 below.
Section 1.16 – Procedures for Serious Charges (Approved by the Board in Sept 2004)
When a serious charge is brought against an officer, the following procedures be adopted:
Section 1.17 – Penalties
(Approved by the Board in Sept 2004)
PENALTIES: The disciplinary penalties which are available for serious breaches of discipline or the repetition of minor breaches of discipline are listed below. In each case, one or more of these penalties may be imposed after consideration of the full facts by Board Sub-Committee, and with the subsequent approval of the Board.
(i) formal reprimand;
(ii) stoppage of pay, by way of restitution (in whole or in part) of loss or damage caused by the offender;
(iii) stoppage of a future increment or increments, drop of an increment or increments already granted as from the date of Board's Decision.
(iv) Demoting including removal from a post attracting pay or allowances;
(v) Dismissal.
[11] The final section I should mention is 1.20(3) which contains a statement of employees' rights as follows:
[12] Mr. Fiu took leave from his employment between 17 April 2013 and 26 April 2013 and then extended that leave from 29 April 2013 to 10 May 2013. He applied for a further extension of his leave from 15 May 2013 to 21 May 2013 but that request was refused by the Finance Manager due to short staffing. Despite the refusal Mr. Fiu left the workplace and took leave. The Finance Manager reported this to the Acting General Manager who in an email to the Finance Manager of 15 May 2013 wrote:
This is a clear case of an insubordination which I cannot tolerate coming from a very senior member of the staff to his own Line Manager, the Manager of Finance & Marketing .....
Please refer to the TBC Staff Employment Regulations Manual and Administration Instructions Section 1.13 on Discipline – Suspension on page 11.
I shall make a submission for his immediate suspension to this afternoon Sub-committee meeting.
[13] A letter dated 15 May 2013 signed by the General Manager was then delivered to Mr. Fiu (which he received and acknowledged on 16 May 2013) suspending him from his employment. The letter referred not only to Mr. Fiu's conduct in leaving work without approval to take leave but also to his unsatisfactory employment history which included insubordination to the present and former Finance Managers, failure to carry out work required of him, frequent unauthorised absences from work, unauthorised and wrongful use of the Commission's vehicles whilst under the influence of alcohol, drunkenness, use of foul language and frequent lateness for which he had previously received warnings. Importantly for present purposes the final paragraph of the letter reads as follows:
Therefore, as a result of the issues at numbers, 1, 2, 3 and 4 above, I hereby exercise my powers under the Employment Regulations Clause 1.13 regarding temporary suspension and Clause 1.20 (2) "the General Manager shall made the final decision on work related matters involving Junior and Senior Level, to issue this decision:
[14] Mr. Fiu promptly responded to the letter of suspension. In a letter dated 16 May 2013 he tendered explanations for his behaviour which included that the leave was required for his grandmother's funeral and for his preparation of a pola for a Church conference which was to start on 20 May 2015. He also said, in response to the decision to suspend him, that it was too severe. For reasons that were not explained, it appears that the General Manager did not receive Mr. Fiu's letter until it was tabled at a meeting of the TBC Staff Sub-committee on 28 May 2013.
[15] There was a meeting of the TBC Staff Sub-committee on Tuesday, 28 May 2013. The General Manager prepared a comprehensive report concerning Mr. Fiu and tabled it at the meeting. The opening paragraph states:
The General Managers suspended 'Isileli Fiu, Accounting Officer, Finance Division on Wednesday 15/05/2013 for insubordination. The decision was made based on Section 1.13 of TBC Staff Employment Regulation Manual – Discipline,
[16] The report also noted:
A summary of Mr. Fiu's history with TBC is attached in Appendix 1. This summary [is] plagued [with] queries and warnings for absences from duty, unauthorized use of TBC's vehicles to poor and unsatisfactory performance.
Based on the severity of this case and Mr. Fiu's poor performance and history, Management proposes that the Sub-committee considers and recommend[s] to the Board that this Officer be dismissed from the service of TBC, effective from Wednesday 15/05/2013.
[17] The Appendix 1 referred to in the General Manager's report detailed Mr. Fiu's employment history with TBC. This included a large number of recorded instances of misconduct or poor performance on the part of Mr. Fiu. This was a far more comprehensive account of his failings as an employee than the rather generalised summary that the General Manager had included in her letter to Mr. Fiu of 15 May 2013 and to which he had responded.
[18] The minutes of the Staff Sub-committee meeting of 28 May 2013 recorded that:
The General Manager briefly presented the case relating to Mr. 'Isileli Fiu, commencing with the list of issues queried to him and his warnings.
[19] The Staff Sub-committee resolved to recommend to the Board that Mr. Fiu be dismissed from the service of the TBC effective as from 15 May 2013. It was proposed that the decision be circulated to the Board of Directors for endorsement the following day.
[20] The TBC Board of Directors issued a Decision by Circular dated 29 May 2013. It noted, under the heading 'Suspension of Mr. Fiu':
Due to Mr. Fiu's insubordination, he was suspended for 14 days from 15 – 29 May 2013 under the TBC Staff Employment Regulations Manual and Administrative Instructions, Section 1.13 on Discipline – Suspension (2) page 11."...For Senior and Management Staff, suspension shall be authorized by the General Manager
[21] The Board approved the Sub-committee's recommendation to dismiss Mr. Fiu, which was stated in these terms:
Based on the above explanation on the insubordination, poor attitude, employment and performance record – among others - which sum up to Serious Misconduct of Mr. Isileli Fiu, Accounting Officer, the Management of TBC hereby seeks final approval of the TBC Board of Directors on the following recommendations:
[22] The General Manager wrote to Mr. Fiu advising him of his dismissal by letter dated 29 May 2013. The letter said that the decision was based on a number of factors of poor performance including insubordination in taking leave without permission and concluded:
As mentioned above, all of the above grounds were taken from your work records with the Commission. Relevant clauses of the Commission Polices are Clause 1 – (Employment Contracts and General Regulations, Schedule 2(B) Serious Misconduct page 6) which include instant dismissal especially extremely serious cases. Including but limited to; (1) Repeated committing of insubordination, (3) taking of Commission's property without prior approval (5) unauthorized or [w]reckless use of Commission's vehicle.
Discussion
[23] A wrongful dismissal in breach of contract arises where an employee is not given sufficient notice to lawfully terminate the contract or has been summarily dismissed for misconduct in circumstances that do not warrant it or is constructively dismissed or where the employer fails to follow contractual procedures required prior to dismissal. Gunton v Richmond-upon-Thames LBC [1981] Ch 448. Dietmann v Brent London Borough Council [1988] IRLR 299 (CA). It is generally recognised that for an employee to be entitled to damages for wrongful dismissal the following conditions must be fulfilled namely:
[23.1] The employee must be dismissed before the expiration of the term of employment or without the requisite period of notice, as the case may be; and
[23.2] The dismissal is wrongful in the sense that it is without sufficient cause or is in breach of a contractual condition of observing a particular procedure.
[24] TBC's case is that Mr. Fiu's contract of employment entitled TBC to terminate without notice for serious misconduct. Mrs Tupou referred to section 7.2 of his employment agreement and to Mr. Fiu's employment history and to the fact that serious misconduct included 'Frequent occurrences of misconduct'. She submitted that in cases of repeated poor performance even a minor act of insubordination may be the last straw justifying dismissal. Pepper v Webb [1969] 2 All ER 216. [1969] 1 WLR 514 (CA). Although a number of arguments were advanced for Mr. Fiu as to why his dismissal was wrongful the one that is particularly relevant, given what follows, is that having chosen to suspend Mr. Fiu it was not open to TBC to then dismiss him without notice because he was not told that TBC was considering dismissal and he had no opportunity to respond to an allegation that he was guilty of serious misconduct.
[25] In my analysis of this case it is convenient to start with the decision to suspend Mr. Fiu. There is no common law power to suspend an employee for misconduct. The powers of TBC to suspend Mr. Fiu arise as express terms of his contract of employment.
[26] In her submissions for TBC, Mrs Tupou submitted that the General Manager had used her powers under sections 1.13 (paragraph 4(g) under heading 'Suspension') and 1.16 to suspend Mr. Fiu and that the process adopted by TBC to deal with, and ultimately dismiss, Mr. Fiu was in accordance with the requirements of section 1.16 of the TBC Staff Employment Regulation Manual. I disagree with that submission. Specifically, I do not accept that the General Manager suspended Mr. Fiu under both sections 1.13 and 1.16.
[27] The letter suspending Mr. Fiu stated "I hereby exercise my powers under the Employment Regulations Clause 1.13 regarding Temporary Suspension...". The General Manager's report tabled to the TBC Staff Sub-committee stated "The General Manager suspended 'Isileli Fiu... The decision was made based on Section 1.13 of TBC Staff Employment Regulation Manual – Discipline". The Staff Sub-committee recommendation to dismiss Mr. Fiu, that was approved by the Board, noted; "Due to Mr. Fiu's insubordination, he was suspended for 14 days from 15 – 29 May 2013 under the TBC Staff Employment Regulations Manual and Administrative Instructions, Section 1.13 on Discipline – Suspension (2) page 11." It is therefore quite clear that the General Manager expressly suspended Mr. Fiu under section 1.13 and not section 1.16 and that this fact was communicated to Mr. Fiu.
[28] I should note that if the General Manager had intended to rely on section 1.16 then her letter of 15 May 2013 suspending Mr. Fiu was misleading. It made no mention of section 1.16 or that the suspension was part of an on-going investigation that might result in his dismissal. It is a reasonable inference from the content of his letter of 16 May 2013 that Mr. Fiu did not contemplate the possibility of dismissal. The letter did not even put Mr. Fiu on notice that TBC considered his behaviour to be serious misconduct but did state that Mr. Fiu was 'at liberty' to respond under section 1.20(3) thereby obfuscating further the jeopardy that Mr. Fiu actually faced. Importantly the General Manager quoted from section 1.20(2) that "the General Manager shall make the final decision on work related matters.." implying that the suspension was her final decision on the matter. Furthermore, as the letter contained no more than a general description of the matters that TBC was relying upon, and not the detailed information presented by the General Manager as an Appendix to her report to the TBC Staff Sub-committee, I consider the letter failed to comply with the requirements of clause 3 (ii) of section 1.16.
[29] TBC's powers to suspend an employee in a disciplinary context under sections 1.13 and 1.16 of the TBC Staff Employment Regulation Manual are not co-extensive. Under section 1.13 suspension is imposed as a penalty for misconduct. It is also an election to affirm the employment contract between TBC and the employee because it conveys to the employee that the offence has been resolved and that any right of dismissal that the employer may have will not be exercised. The power under section 1.16 is of quite a different nature. Under section 1.16 the suspension allows for the removal of the employee from the workplace pending further investigation of a serious charge but it is not in the nature of an election and operates to reserve the employer's right to terminate pending the completion of that investigation. This all reflects that misconduct warranting dismissal gives the employer an election whether to treat the employment contract as continuing (and claim damages for breach or impose some other penalty that may be provided for by the contract) or terminate the contract by dismissal. Hanley v Pease & Partners Ltd [1915] 1 KB 698. Once a decision to affirm the employment contract has been communicated to an employee the employer's right to terminate a contract of employment is lost irrevocably and both the employer and employee are bound by its terms.
[30] Applying these principles to this case, TBC could not suspend Mr. Fiu under both section 1.13 and 1.16 as those powers are not co-extensive. Immer (No 145) Pty Ltd v The Uniting Church of Australia Property Trust (NSW) (1992) 182 CLR 6. When the General Manager advised Mr. Fiu that he was being suspended under section 1.13 of the TBC Staff Employment Regulations and Manual she imposed a penalty for his offence. She also conveyed to him that the offence had been resolved and affirmed Mr. Fiu's employment contract. It follows that when TBC then purported to dismiss Mr. Fiu it made a substantive error and the dismissal was unlawful. I say that the error was substantive because it was more than a mere error of procedure and denied Mr. Fiu of his right to continuing employment.
[31] It is clear that Mr. Fiu was not an ideal employee. The agreed statement of facts contains Mr. Fiu's recorded misconduct as an employee of TBC and details a lengthy history of misconduct and poor performance including seven warnings. His decision to take leave when it had been refused to him was simply insubordination. Against the background of his employment history I consider that TBC was entitled to regard Mr. Fiu as having been guilty of serious misconduct and, once it followed the procedures in section 1.16, one of the possible outcomes was dismissal. It is also clear to me, for the reasons I have given, that TBC did not deal with that matter that way. It follows that the decision of TBC to dismiss Mr. Fiu was not one that was open to it and was unlawful.
Damages
[32] The general rule is that an employee whose employment is wrongfully terminated can recover as damages the pecuniary loss resulting from the failure to terminate his employment in accordance with its terms. In the usual case, where the employment is terminable on reasonable notice the damages will include the remuneration lost during the period of notice. In this case Mr. Pouono advised me that Mr. Fiu seeks no more than recovery of his remuneration for the contractual period of notice, which was two months. I consider he is entitled to that but as the exact amount of his salary is not known to me the parties must calculate what is owing under this ruling.
The Result
[33] I find that Mr. Fiu was wrongfully dismissed from his employment with TBC. Mr. Fiu is award damages equivalent to two months' salary. In the event that the parties are unable to agree on the amount payable under this ruling I reserve them leave to refer back to me within 21 days.
[34] Mr. Fiu is entitled to costs. As the amount Mr. Fiu will recover under this ruling is within the jurisdiction of the Magistrate's Court, costs are awarded to him but at the rates applicable in that Court. If the parties cannot agree on the quantum of costs they will be taxed in the usual way.
LORD CHIEF JUSTICE
NUKU'ALOFA: 7 October 2015
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URL: http://www.paclii.org/to/cases/TOSC/2015/42.html