N3268

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1647 OF 2004

BETWEEN:

JOHN MANAU
Plaintiff

AND:

TELIKOM (PNG) LIMITED
Defendant

Waigani: Davani .J
2007:	 8 October
2008:	 20 February

INDUSTRIAL LAW – employee retrenched – retrenchment governed by terms of agreement.

INDUSTRIAL LAW – Agreement between Union and employer – Not a Contract of Employment – Industrial Relations Act 1962 Part III.

Facts
The plaintiff was retrenched by the defendant employer after several years in its employ. The plaintiff relies on Enterprise Agreement signed by the employers union, the employer and the Department of Industrial Relations as his Contract of Employment with the defendant, in alleging breach of contract and damages arising therefrom.

Held

The Enterprise Agreement is not a Contract of Employment. It is a collective agreement made by a trade union on one side and the employer association on the other. This procedure of collective bargaining is governed by practice not strict law. The agreement is not personal to the plaintiff so is not a Contract of Employment.

Cases cited:
Condon v National Airlines Commission [1978] PNGLR 1 (Distinguished)

Texts cited:
J.G. Starke PFP Higgins Cheshire and Fifoot, Law of Contract (1974) 3rd Australian Edition; 29 A.L.J. 

Counsel:
V. Narokobi, for the plaintiff
A. Wape, for the defendant

DECISION

20 February, 2008

1. DAVANI .J:	This is a claim by the plaintiff seeking damages for breach of employment contract, a claim commenced by way of writ of summons and statement of claim filed on 29 November, 2004.

2.     The plaintiff’s application is opposed by the defendant.

Background facts

3.     Although both counsel consented to a Statement of Agreed and Disputed Facts and Issues which was filed on 17 July, 2007 their attitude to this at trial as demonstrated by the evidence and submissions, were that facts contained therein were disputed. I set out below what I consider to be non-contentious and undisputed facts. These are;

i.	On or about 2 December, 1998, the plaintiff was in the defendant’s employ when he was terminated for continuously being absent from work.
ii.	At that time, the plaintiff was a member of the Communications Workers Union.
iii.	The plaintiff was later reinstated and worked for several months before he was retrenched, on or about 5 January, 1999.
iv.	By letter of 4 January, 1999, the plaintiff advised the defendants then General Manager, Network Services, a Mr Veisame, that he will accept the retrenchment and the full benefits that come with it.
v.	The plaintiff was paid retrenchment benefits of K10,091.50 on or about 17 February, 1999, when he also signed the defendants 
Clearance Certificate.
vi.	By writ of summons and statement of claim filed on 29 November, 2004, the plaintiff filed these proceeding claiming damages against the defendant for breach of the Telikom PNG Limited Enterprise Agreement 1997, comprising of the Enterprise Consolidated Agreement and Enterprise Redundancy Agreement (Enterprise Agreement) which he submits is his Contract of Employment with the defendant.

Evidence

4.     The plaintiff relies on the following affidavits which were tendered through various witnesses and marked as exhibits. These are;

i. 	John Manau’s affidavit sworn on 31 March, 2005 and filed on 7 April, 2005;
ii.	John Manau’s supplementary affidavit sworn and filed on 26 May, 2005;
iii.	Vergil Los Narokobi’s affidavit sworn on 31 March, 2005 and filed on 11 April, 2005, to be relied on for the purposes of costs;
iv.	Emmanuel Kairu’s affidavit sworn on 21 April, 2005 and filed on 19 May, 2005.

5.     The defendant relies on the affidavit of Kila Rava sworn and filed on 9 August, 2007.

Issues

6.     The facts and issues relate to whether the plaintiff was properly retrenched or not and if not properly retrenched, whether he is entitled to damages? Although there is mention of and reliance on the Enterprise Agreement, the document the plaintiff claims to be his contract of employment, whether it is a contract of employment or not is not raised as an issue, either in the Statement or in submissions by plaintiffs counsel. Defendants counsel however, made submissions on this aspect, submitting that the Enterprise Agreement is not a Contract of Employment. I consider that to be a very crucial issue which must first be addressed before the court proceeds any further. This is because upon the court finding that the Enterprise Agreement is a contract, can the court go the next step to address whether the contract was breached and whether there was wrongful dismissal. The damages the plaintiff claims arises from the alleged breach of the Enterprise Agreement as set out in paragraphs 27 to 24 of the writ of summons and statement of claim. Therefore, the overall issue in this claim is;

-	whether the Telikom PNG Limited enterprise agreement 1997 made up of part A 2.1 Enterprise Consolidated Agreement and part A 2.2 Enterprise Redundancy Agreement is a Contract of Employment, personal to the plaintiff?

Analysis of evidence and the law

7.     The alleged "forced retrenchment" referred to by the plaintiff is a matter that is secondary to the issue of whether the Enterprise Agreement is a Contract of Employment. 

8.     I will firstly have to determine what the Enterprise Agreement is.

9.     The Enterprise Agreement in evidence before me is described as "The Telikom Enterprise Agreement 1997", which is made up of the Enterprise Consolidated Agreement Part A2.1 and the Enterprise Redundancy Agreement Part A2.2. 

10.    The Papua New Guinea Communication Workers Union (‘the Union’) entered into the Enterprise Agreement with Telikom (PNG) Ltd (‘the defendant’) on or about 19 December, 1997. This agreement was entered into pursuant to the Industrial Relations Act, chapter 174. The Industrial Relations Act is an act that relates to the better development of Industrial Relations and the prevention and settlement of industrial disputes, to be incorporated and read as one with the Industrial Organizations Act 1962.

11.    The Enterprise Agreement applies to all employees of the defendant who are financial members of the Union and the defendant, excluding apprentices, employed cadets, contract workers and casual and temporary employees. The Enterprise Agreement provides amongst others, for when an employee can be made redundant or terminated and the payments to be made and when. 

12.    The plaintiff’s contentions are that when he was retrenched, the position he was holding of Manager, Data Network Operations, was not made redundant. That this position was subsequently offered to another person who accepted it. He submits that because the position was still in existence, that a redundancy situation was not created, therefore breaching the terms of the Enterprise Agreement. Which then takes me back to the issue of whether the Enterprise Agreement is a Contract of Employment. Firstly, the first part of the Enterprise Agreement described as the Enterprise Consolidated Agreement, provides at section 5.0(b) that "this agreement supersedes the Union Consolidated Award of 1994". An "Award" is defined in s. 1 of the Industrial Relations Act 1962 as;

"(a)	an award made by a Tribunal in respect of an industrial dispute referred to it under Section 29 or 30; or
(b)	an agreement deemed to be an award by virtue of Section 33".

13.    Section 29 of the Industrial Relations Act provides for "reference of disputes to tribunals" which falls under Part III of that act, on "Settlement of Industrial Disputes".

14.    Section 33 of the Industrial Relations Act states;

"33.	Filing and registration of agreements.
(1)	Subject to Sections 35 and 39, an agreement made under this Act between employers and employees and registered organizations, or any of them, shall be filed with the Registrar for registration and, on being registered, shall be deemed to be an award as between the parties to the agreement."

15.    The Enterprise Agreement does not provide for recourse to Part III of the Industrial Relations Act in the event of an industrial dispute. It provides only for "Mutual Consultation" (Section 6.0 of Enterprise consolidated Agreement). It could be that the plaintiff’s avenue for redress was under the Industrial Relations Act. But I cannot confirm that because that is not properly before me as was done in Condon v National Airlines Commission [1978] PNGLR 1. His counsel did not address on that nor is it pleaded in the Statement of Claim. The only claim that is properly before me is the claim for breach of contract, which I am now addressing.

16.    The second part of the Enterprise Agreement being the "Enterprise Redundancy Agreement" provides for a redundancy situation within the defendant company. It sets out the processes leading to the declaration of such a scenario and payments to be made. If the employee or employees is or are aggrieved by the lack of compliance with its process, then they have a right of appeal under s. 34 of the Enterprise Redundancy Agreement. The evidence is that the plaintiff did not exercise this procedure, but received his retrenchment benefits in good faith. 

17.    The evidence is that upon retrenchment, the plaintiff was paid the following;

-	pro rata recreational leave pay;
-	pro rata leave pay;
-	pro rata furlough leave pay;
-	Ex gratia payment based on the number of years;
-	Money in lieu of notice;
-	Repatriation costs for him and his family to your home province;
-	Refund of his contribution and the employer’s contribution by NPF;
-	Settlement allowance;
-	Flight costs for personal effects for up to 300 kilograms;

18.    The plaintiff signed the defendants Clearance Certificate on 17 February, 1999, showing his receipt of K10,091.50 as retrenchment entitlements/benefits.

19.    To assist me determine whether the Enterprise Agreement is a Contract of Employment or not, I have had recourse to the Law of Contracts. The general principles of the law of contract apply to contracts of employment. There are three (3) basic essentials to the creation of a contract –

i.	that there must be agreement;
ii.	that there must be contractual intention;
iii.	and consideration.

20.    The normal test for determining whether the parties have reached agreement is to ask whether an offer has been made by one party and accepted by the other. An offer, capable of being converted into an agreement by acceptance, must consist of a definite promise to be bound provided that certain specified terms are accepted. The offeror must have completed his share in the formation of a contract by finally declaring his readiness to undertake an obligation upon certain conditions, leaving to the offeree the option of acceptance or refusal. (see Cheshire and Fifoot, Law of Contract, pg 25). This did not occur here. I say this because the Enterprise Agreement was signed by two of the defendants representatives, two representatives of the PNG Communication Workers Union in the presence of the Secretary of the Department of Industrial Relations (on 17 December, 1997). The plaintiff was not a signatory to this document. Therefore, the Enterprise Agreement could not be a contract of employment because neither the plaintiff nor the defendant are parties to that document.

21.    The intention must be to create legal relations and there must be consideration. Consideration has been defined as the act or promise offered by the one party and accepted by the other as the price of that others promise. The promisor must have consented to the performance of the act and objectively, must be taken to have agreed that the performance is to be the price for his promise. As the late Sir Owen Dixon said in an address at Yale;

"The analysis shows that offer and acceptance must consist either of a promise in exchange for an act, or the offer of an act in exchange for a promise or the offer of a promise in exchange for a promise… Now I think that reflection on these three cases will show that each of them explicitly involves the giving of consideration for the promise" (see 29 A.L.J at pg. 474).

22.    Consideration almost always is monetary as in an employment contract where not only are there monetary conditions e.g Allowances or normal salary but non-monetary conditions as well.

23.    In this case, no such scenario unique and personal to the plaintiff, is portrayed.

24.    The undisputed evidence is that the Enterprise Agreement is a collective agreement made by a trade union on one side and the employers association on the other. The agreement has created a joint negotiating body (see s. 6.0 of Enterprise Consolidated Agreement) to settle terms and conditions of employment. This procedure of collective bargaining is governed by practice, not strict law. These agreements are not intended to create legal relations (see Kahn-Freund in Flanders and Clegg (Editors) The System of Industrial Relations in Great Britain (1954) pg. 57). 

25.    The Enterprise Agreement is structured in such a way that it is not personal to individual employees as a Contract of Employment. As far as I can tell, the agreement applies to all employees of the defendant. 

26.    The Enterprise Agreement also provides that it does not apply to contract workers (s. 3 of Enterprise Consolidated Agreement). No doubt, the defendant has made separate provision for its contracted employees. The Enterprise Agreement demonstrates this at s. 3.

Conclusion 

27.    I find that the Enterprise Agreement is not a Contract of Employment but is a document to be relied on by the defendants Union and employees when there is an industrial dispute.

28.    If the plaintiff was aggrieved by the process under the Enterprise Agreement, he could have sought a review of that process or filed an appeal. But he did neither. He waited for 5 years and then filed this action. 

29.    With respect, this action is based on a clear misconception of the law and must fail.

Formal orders

1.	The plaintiffs claim is dismissed in its entirety;
2.	The plaintiff shall pay the defendant’s costs of the proceedings, to be taxed if not agreed.

Narokobi Lawyers: Lawyer for the plaintiff
In house lawyer for the defendant