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Mayer v Lutz and Elu Pty Ltd [1996] PNGLR 163 (17 July 1996)

PNG Law Reports 1996

[1996] PNGLR 163 - Franz Mayer v Erwin Lutz and Elu Pty Ltd

[1996] PNGLR 163

N1444

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

FRANZ MAYER

V

ERWIN LUTZ; AND

ELU PTY LTD

Waigani

Doherty J

17 July 1996

MASTER AND SERVANT – Employment of non-citizens – Employment Act - Application to non-citizens - Conflicting decisions of the National Court.

Facts

The plaintiff claimed entitlements under a contract of employment entered into with the defendants some of which arose under the Employment Act. There were conflicting decisions of the National Court as to the application of the Act to non-citizens.

Held

In Brendel v Golden Square Pty Limited  [1983] PNGLR 257 the National Court had held that the Employment Act applied to all persons in employment including non-citizens and in Atlas Plant Hire v Beck [1984] PNGLR 158 a contrary view had been expressed. The decision in Beck was made per incuriam of s 88(1)(g) of the Employment Act which refers specifically to repatriation when the employee is a non-citizen. The legislature would not have made such a clear reference to employment of non-citizens if it had not been the intent to apply the Act to non-citizens. Further, the preamble to the Act make no distinction between citizens and non-citizens.

The plaintiff as a non-citizen is entitled to be paid according to the terms of the contract.

Cases Cited

Atlas Plant Hire v Beck [1984] PNGLR 158

Brendel v Golden Square Pty Ltd [1983] PNGLR 257

Counsel

R Nonggorr for the plaintiff

No appearance for the defendants

17 July 1996

DOHERTY J: The plaintiff sues on a writ of summons for unpaid entitlements under an oral contract of employment entered into by the second defendant company through the first defendant its managing director on 8 December 1988.

The defendant did not appear for trial and his former lawyers have filed a notice that they have ceased to act (having given notice pursuant to O 2 of the National Court Rules). An affidavit in evidence on the file suggests that the first defendant has liquidated the assets of the second defendant and left the jurisdiction.

The first defendants did file a defence in which they conceded that there was an oral agreement to employ the plaintiff at the basic salary recited in the statement of claim but denied any other entitlements or benefits. They also said that the plaintiff did not properly perform various jobs he was assigned but do not state that he was summarily dismissed or give any detail of their allegations.

The plaintiff gave sworn evidence before the Court and stated that he had been in employment with a construction company for several years until it experienced a downturn in contracts, and staff were gradually being laid off. He was a building supervisor with the company and was one of the last people to be terminated.

Whilst he was still working a former colleague in the same building company approached him and asked if he would be willing to take up employment with the defendant company Elu Pty Ltd. The colleague was also a building supervisor who had since been laid off. The colleague was then working for the defendant but wished to go on holiday, there was no other available work supervisers and there were several urgent jobs requiring building supervision.

Another company had approached the plaintiff but he did go and see the first defendant who he knew personally taking with him a list of his terms and conditions and the benefits that he enjoyed with his first employers together with statement of his termination payments to show the first defendant. In evidence he said he showed the list to the first defendant and made it clear that the total package of basic pay plus superannuation, long service leave, housing allowance and such benefits would come to a total in excess of K48,000.00. He said in evidence several times that he showed the list and that the list “detailed the basic wage, gratuity leave, education allowance, superannuation and some other little things like the car. I supplied my own car but they paid K330.00 per month”.

In his evidence he said he did not himself prepare the list. It had been drawn up by the building manager of his previous employer “that was one of his ideas that every man know what he earns”.

The plaintiff says that the first defendant glanced through the list, saw the bottom figure and said that it was “no problem”. He repeated this particular statement on more than one occasion. The plaintiff started working for the defendant the following Monday, having seen them on the Thursday. The employment continued from 8 December 1988 to 27 August 1993.

During that period the defendants honoured the commitments as to the car, accommodation allowance, some leave pay, and the education expenses of the plaintiff’s two young children at Primary School for the three years up until 1993. The original entitlement the plaintiff had with his former employers was 25 working days leave per annum and this was agreed with the defendants but when he took up employment he said the defendants permitted him to have four weeks only which he had during the first year of employment. He did not have the full 4 weeks thereafter and did not pursue the extra five working days whilst in employment with the defendant and does not pursue these in this court.

Although he took the full entitlement in 1989 because he was obliged to go overseas to procure his work permit he was given only two weeks leave in the years 1990, 1991 and 1992. He said the first defendant “kept saying I’ll fix it up, fix it up”. “When he terminated me he was not going to pay me but the Accountant said pay up or we’ll get into trouble. That was my impression anyway”.

When he was terminated the full four weeks holidays for the year 1993 was paid to him. I find this a fact that it was the term of the employment of the plaintiff that he should receive 25 days leave but he acquiesced and accepted four weeks of which he was paid in full during the years 1989 and 1993 but only paid in part in the years 1990, 1991 and 1992.

During 1993 the plaintiff noticed that the defendant company seem to be experiencing a downturn in work and he was approached by another contractor who offered him employment and he spoke to the first defendant seeking release from his contract. He says in evidence that the first defendant asked him to stay on. After a period of 2-3 months the conditions were not improving and whilst other workmen were complaining about this downturn he remarked that he would also like to leave if he could get his entitlements that were due to him.

He noticed thereafter that the first defendant was very cross and in a bad mood and presumed that a fellow employee had reported his remarks. There is no evidence to substantiate this supposition other than the first defendant’s manners. The plaintiff collected his pay on Monday, 23rd August 1993 and when it was handed to him the first defendant said to him “the next cheque is going to be your last one”. The plaintiff interpreted this as a notice that his employment was to be terminated. He thought he would be working for the full fortnight but on the following Friday 27th August he was instructed to go to the office where the first defendant wished to see him. He was given a cheque for one week’s work.

He says in evidence this would have been the week that he had just completed. He asked the first defendant about his other entitlements which had accrued over the four years in which he was employed (viz) gratuity, superannuation, leave pay, long service pay and childrens education entitlements.

In response the first defendant said “I don’t owe you anything”. The plaintiff subsequently drew up a list based on his pay using his bank statements and terms and the statement used by his former employer and calculated and listed the entitlements that had not been made to him which he consider were due under the terms of the contract of employment with the defendant. He took this list to the first defendant and gave it to him and asked for his final entitlements. The first defendant merely instructed him to leave it on the desk and when asked if he was going to pay or the matter would “have to go to a lawyer” the first defendant replied “do what you want”. The plaintiff subsequently took advice from the Department of Labour, they wrote to the defendants and commenced action in the District Court.

The first defendant subsequently paid him four weeks holiday pay and his housing allowance for the month of August. The plaintiff consider that he has only earned three weeks leave up to August 1993 (for the year 1993) and has notionally set the extra week paid against the period of 4 weeks notice to which he considered he was entitled under the terms of his previous agreement which formed part of the terms on the list he presented and agreed orally with the defendants. Four weeks notice of termination of employment by either party had to be given.

The plaintiff in this Court claims gratuity of 25% per annum (which was on the list he presented to the first defendant and which was not paid at all during the period of employment), superannuation, the education fees for his two children for one year, the annual leave in the years 1990, 1991 and 1992 which was only partly paid, long service leave which was an entitlement which would accrue after three years continuous employment and balance of payment in lieu of notice. I am satisfied in the evidence before me that the contract of employment between the plaintiff and the defendant was an oral contract which had not been reduced to writing by other side other than the list given by the plaintiff to the defendants which the defendant retained.

The plaintiff’s evidence as to the terms of the contract were not rebutted by evidence or by allegations and pleadings other than the traverse I have quoted above. Counsel for the plaintiff submits that the provisions of s 15 of the Employment Act Ch 373 applies to the contract between the plaintiff and the defendant company. I pointed out to Counsel the ruling of the National Court in Atlas Plant Hire v Beck [1984] PNGLR 158. In Atlas Plant Hire v Beck (supra) Pratt J. did not follow the ruling of McDermott, J. in Brendel v Golden Square Pty Limited [1983] PNGLR 257. In reviewing the decision of Brendel v Golden Square Pty Limited Pratt J. held that s3(1)(b) of the Employment Act, providing that the Employment Act does not apply to employment of a person “under any other law in force in the country” should be interpreted to exclude non-citizens. In interpreting s 3(1)(b) his Honour concluded “it is difficult therefore to avoid coming to the conclusion that all non citizens are excluded from the ambit of the Employment Act because they are, and indeed, must be, employed under the provisions of the Employment of the Non-Citizens Act (or come within the exceptions therein stated). As I said, I cannot see how the comprehensiveness or otherwise of that Act can have any affect on those who are controlled and regulated by it”. He then ruled that the Employment Act does not have any application to non-citizens.

McDermott J. in Brendel v Golden Square Pty Limited [1983] PNGLR 257 held at p 258 that the Employment Act “on its face has a much wider application now and appears to me applicable to all contracts of employment except those employed under any other law” (s 3) or those “exempt from all or any of the provisions of this Act (s 4). The subject contract is not an exception”. The contract in question was a contract of a non citizen.

In considering this ratio in Atlas Plant Hire v Beck (supra) Pratt J. held that there was only one mention of the Employment of Non-citizen Act in the judgment and despite “the international flavour of the Employment Act (C.19(3))” went onto hold that the Employment Act did not apply to non citizens as quoted above. (I presume the reference to s 19(3) is intended to be a reference to s 11(3)). This has resulted in two conflicting precedents on the application of the Employment Act to non citizens, which the plaintiff here is. I note this despite the remark by His Honour in Atlas Plant Hire P/L v. Beck [supra] that “there is no clear and distinct ruling on the relationship between the two Acts by McDermott, J. There is no statement on the law made in deliberate judgement”.

Unfortunately counsel was unable to assist me as he not aware of the two precedents I have cited. I must respectfully disagree with Pratt J. when he concludes “there is no opposition” between his judgment to that in Brendel v Golden Square Pty Ltd [supra].

I consider with respect to His Honour Pratt, J. that his decision must have been per incuriam of s 88(1)(g) of the Employment Act Ch. 373 which speaks specifically and categorically of “repatriation when the employee is not a citizen”. This was not referred to in either judgment although there is reference to contracts of employment made outside the country (Section 11(3)) which Pratt J. distinguished. I consider that the legislature would not have made such clear and categorical reference to employment of non citizens and applied provisions to Section 88 to them if it had not been the intent of the legislature to apply the Act to them. There is nothing in the preamble of the Employment Act that makes it apparent that certain sections only apply to citizens and certain sections apply to non citizens.

I therefore consider the ratio and the conclusions in Brendel v Golden Square Pty Limited [supra] where statement of the law at that time and I consider that it was the intent of the legislature, as shown in s 88 that the Employment Act Ch. 373 apply to non citizens and I rule accordingly.

Having held that the Employment Act applies to non citizens and therefore to the plaintiff before me it follows that the provisions of s 15 of the Employment Act apply to the contract between him and the defendants. This provides a mandatory obligation of an employer to make a written record of the terms and conditions of the contract (s 15(1)) and where dispute arises as to the terms and conditions of an oral contract and the employer fails to produce the record under s 15(1) then a statement by the employee as to the terms and conditions of the contract shall be conclusive evidence of those terms and conditions.

I consider that is the law that applies to the oral contract of employment between the plaintiff and the second defendant. I find as a fact that prior to taking employment with the defendants the plaintiff went and showed the first defendant the list of entitlements and the contract under which he worked with his previous employer. He showed him the type of terms that were recorded in Exhibit 1 which clearly states a gross salary per annum of K20,714.00 and I consider that this evidence is corroborated by the defendants defence filed in the pleadings where he concedes that that exact figure was the salary. I find as a fact that the defendant employed the plaintiff with the entitlements shown in his list which included the further entitlements of gratuity at 25% per annum, superannuation at 15% per annum, long service leave in accordance with what appears to be an industrial award, holiday leave with pay of five weeks per annum (of which the plaintiff waives one week) out of a total of six weeks not paid for but, have accrued within the terms of the contract, education entitlements for two children at Primary School at an amount of K3,000.00 per annum. I consider that the defendant is estopped from denying this term by his previous payment. I note the pleadings claimed educational fees at a rate of K2,400.00 per child per year but the evidence before the court was that the fees had increased in 1993 to K3,000.00. Counsel submits, and I agree, that the Court Rules permit an amendment by the Court in the course of the proceedings and accordingly I permit that amendment to a claim of K3,000.00 per child per annum a total of K6,000.00 as proved in evidence.

The plaintiff has said that the contract provided for four weeks notice of termination and since this was a term of the contract I do not consider that the provisions of s 34 of the Employment Act Ch. 373 apply. I hold that the termination notice was four weeks. The pleadings in defence I have cited above allege failure to do work properly but there is no evidence of summary dismissal nor dismissal for cause nor a counter claim and accordingly I rule that the plaintiff is entitled to four weeks notice of which he was given one. The plaintiff says that he was paid one week extra for leave pay for the year 1993 and so has waived one week of the notice entitlements. I therefore rule that he is entitled to two weeks payment in lieu of notice. I consider also that the payment of 4 weeks leave in 1993 is a corroboration of the plaintiff’s evidence on this term.

I have noted and remarked upon the statutory and mandatory provisions of s 15 of the Employment of Non-citizens Act Ch. 374 which is implied by operation of law and have indicated the liability of the defendant to repatriate the plaintiff to his place of engagement which is interpreted under Section 6 to be the country to which he has a right of entry and residence. The plaintiff has indicated in Court that despite the operation of law and the mandatory wording of those provisions he is not pursuing any claim.

I accordingly find that the plaintiff is entitled to the following payments:

STATEMENT OF CLAIM

Lawyers for the plaintiff: Warner Shand Lawyers

Lawyers for the defendants: No Appearance