IN THE MATTER OF

GHANA AIRWAYS LTD. (GH) (IN OFFICIAL LIQUIDATION)

VRS

UNION OF INDUSTRY, COMMERCE AND FINANCE WORKERS (UNICOF) OF TUC

By letter Ref.NLC/34/05^E dated 1^st June 2006, the National Labour Commission (NLC), appointed me as Sole Arbitrator in the unresolved dispute between Ghana Airways Ltd. (GH) (In Official Liquidation) and the Union of Industry, Commerce and Finance Workers (UNICOF) representing the former Pilots of Ghana Airways Ltd. (In Official Liquidation).

It was not until 1^st August 2006 that I was able to obtain written statements of issues from all the parties involved in the dispute.

By this date, time stipulated under the Labour Act 2003, ACT 651, for the conclusion of the arbitration process had elapsed.

As a result, I informed the NLC, which acting in accordance with Section 23 of L.I. 1822, by letter Ref.NLC/34/05 dated 10^th August, authorized that the arbitration proceedings should commence from 10^th August, 2006 and be concluded within fourteen working days.

THE DISPUTES

The statements of issues that I received from both parties, as well as from the Report of Ing. Nick K. Opoku, who had earlier attempted to mediate in resolving the disputes, listed the following as the unresolved matters:

Ø      Levels of Severance Pay

Ø      Outstanding salaries

Ø      Outstanding Leave

Ø      Salary in lieu of notice, and

Ø      Occupancy of Ghana Airways Accommodation.

The positions taken by the parties at the end of the inconclusive Mediation process are indicated below

(Source: Report of Ing. Nick K. Opoku – NLC Appointed Mediator)

THE HEARINGS

A pre-hearing meeting was held in the Conference Room of the National Labour Commission on Thursday 10^th August 2006.

Present were:

UNICOF/GALPA

Mr. Francis K. Davor                           General Secretary, UNICOF (Spokesperson)

Mr. Edwin Aggrey                                UNICOF

Mr. Freddie Wulff, Jnr.             GALPA (Ghana Airlines Pilots Association)

Mr. E.C.K. Dargbe                              GALPA

Mr. J.M.M. Agyekum                          GALPA

OFFICIAL LIQUIDATOR

Mr. Felix Addo                                    Pricewaterhouse Coopers (Spokesperson)

Mr. Jacob Saah                                    Pricewaterhouse Coopers

ARBITRATOR

Mr. Dennis K.Y. Vormawor                 NLC Appointed Arbitrator

IN ATTENDANCE

Ms. Bridget Dzifa Hanyabui                  Recorder

During the pre hearing session, the issue as to whether the arbitration process was being held under the Labour Law, 2003 ACT 651 or the Bodies Corporate (Official Liquidations) ACT 1963, ACT 180 was raised by both parties.

The Arbitrator drew the parties’ attention to the fact that his appointment was derived from Section 157 of the Labour ACT, 2003, ACT 651.

Having settled this matter, the parties agreed on procedures to be followed during the formal hearings and fixed dates for the hearings.

1^ST HEARING

The formal hearing commenced in the Board Room of Ghana Airways (In Official Liquidation) on Monday, 14^th August 2006.

PRESENT

UNICOF/GALPA

Mr. Francis K. Davor                           General Secretary, UNICOF (Spokesperson)

Mr. Edwin Aggrey                                UNICOF

Mr. Kofi Ohene Obeng                        UNICOF

Mr. Freddie Wulff, Jnr.             GALPA

Mr. E.C.K. Dargbe                              GALPA

OFFICIAL LIQUIDATOR

Mr. Felix Addo                                    Pricewaterhouse Coopers (Spokesperson)

Mr. Jacob Saah                                    Pricewaterhouse Coopers

Mr. George Wem                                 Pricewaterhouse Coopers

ARBITRATOR

Mr. Dennis K.Y. Vormawor                 NLC Appointed Arbitrator

IN ATTENDANCE

Ms. Bridget Dzifa Hanyabui                  Recorder

PRESENTATION BY UNICOF

The Union stated that, before it would make any submission, it would require assurance that the award of the arbitrator would be paid in full to the Pilots whom it represents. The Union recounted the problems it had faced during negotiations on the matter on hand and regretted that Government had not acted in good faith when it decided to put Ghana Airways Ltd. on Official Liquidation midstream of the negotiations on the entitlements of employees.

RESPONSE BY THE OFFICIAL LIQUIDATOR

Mr. Felix Addo, representing the Official Liquidator, stated that, as far as the Liquidator was concerned, the Arbitrator’s award would be binding. However, the award would be placed along side other unsecured creditors of Ghana Airways Ltd. (In Official Liquidation) and treated as such in the payment of dividends to the unsecured creditors.

CAUCUS BY UNICOF

The Union then requested to hold a private meeting to react to the Official Liquidator’s initial statement. After the caucus meeting, the Union stated that unless they had written assurance that the award of the arbitrator would be paid unconditionally and in full, they did not feel comfortable going through a process, which in their view, would not be conclusive.

They proposed that the process should be put on hold until they have received written assurance of full payment of the arbitrator’s award.

REACTION OF THE OFFICIAL LIQUIDATOR

Mr. Felix Addo, representing the Official Liquidator, expressed regret at the turn of events and assured the Union that his team would be available whenever the Union was ready for the process to resume.

In the circumstances, I had no option than to declare that the process had been aborted.

I reported accordingly to the National Labour Commission by my letter dated 16^th August, 2006 and sent copies of my report to the parties.

DIRECTIVES FROM THE NATIONAL LABOUR COMMISSION

Following my report on the abortive arbitration process, the Commission by letter Ref: NLC/34/05/91^J dated 21^st August 2006 gave the following directives to the parties and the arbitrator:

1)      “ That the arbitration process be re-opened and dealt with in accordance with the procedures established in L.I. 1822

2)      That, upon re-opening of the process any party who does not submit to the process should be treated under Sections 21 and 22 of the L.I.

3)      That, the process should be concluded within fourteen working days’ of the date of this letter.”

I produce below Section 22 of L.I. 1822 which supports the directive from the NLC on the re-opening of the process:

“Failure to appear before an arbitrator

22. If a party fails to appear before the arbitrator or arbitration panel after the expiration of seven working days after being notified, the arbitrator or arbitration panel shall proceed to hear and determine the dispute.”

It is pertinent to note also that Section 22 of L.I. 1822 is further reinforced by Section 157 (4) of the Labour Act, 2003, ACT 651.

In the light of the above directives from the NLC, I invited the parties by my letter dated 28^th August 2006, to appear for the resumption of hearings on 31^st August 2006, in the Board Room of Ghana Airways Ltd (In Official Liquidation) at 3.00 pm.

RESUMPTION OF HEARINGS ON 31^ST  AUGUST, 2006

When the hearing resumed, only Mr. Jacob Saah was present to represent the Official Liquidator.

After waiting for one hour, I telephoned Mr. Francis K. Davor, General Secretary of UNICOF, who told me that he had sent a letter to the NLC, to the effect that the Union would not participate in the process until they received the written assurances they have requested.

This was later confirmed the next day, when I received a copy of UNICOF’s letter Ref: Adm/v003/06 dated 31^st August 2006 addressed to the NLC and copied to me and the Official Liquidator.

 It is unfortunate that the Union should take this stand, as it appears to me that the Union had overlooked Section 65 (4) of ACT 651 which, I believe, could have been invoked to determine the terms and conditions of payment after the arbitrator’s award had been made.

To buttress this point, I reproduce Section 65 (4) of ACT 651 below:

Section 65 (4) “The amount of redundancy pay and the terms and conditions of payment are matters which are subject to negotiation between the employer or a representative of the employer on the one hand and the worker or the trade union concerned on the other.”

It is my view that after the level of redundancy pay had been decided through arbitration; both parties could then engage in “negotiations on the terms and conditions of payment” of the award.

In the light of the position taken by the Union, I contacted the Ag.Executive Secretary of the NLC to seek advice/directives on the way forward.

He asked me to proceed with the hearing since it is not in the power of the Commission to vary the provisions of the Labour Act, 2003, ACT 651 or those of L.I. 1822.

Accordingly, by letter dated 1^st September, 2006, I invited the parties to the resumed hearings from Tuesday 5^th September 2006 through Thursday 7^th September 2006 in the Board Room of Ghana Airways Ltd. (In Official Liquidation) at 15.00 hours each day.

2^ND RESUMPTION OF HEARINGS

5^TH SEPTEMBER 2006

Mr. Jacob Saah came to apologize on behalf of the team representing the Official Liquidator and assured the arbitrator that they would be present the next day as scheduled.

No Union representative appeared before the arbitrator.

6^TH SEPTEMBER 2006

PRESENT

OFFICIAL LIQUIDATOR

Mr. Vish Ashiagbor                                          Pricewaterhouse Coopers (Spokesperson)

Mr. Jacob Saah                                                Pricewaterhouse Coopers

Mr. George Wem                                             Pricewaterhouse Coopers

ARBITRATOR

Mr. Dennis K.Y. Vormawor                             NLC Appointed Arbitrator

IN ATTENDANCE

Bridget Dzifa Hanyabui                         Recorder

ABSENT

Representatives of UNICOF and GALPA.

DATA AVAILABLE TO THE ARBITRATOR

In the absence of the Union, I opted to rely on the following documents which were among others sent to me by UNICOF under cover of letter Ref. IRD/V2/176/06 dated 11^th July 2006 when they were submitting the statement of issues to me:

Ø      An Agreement between Ghana Airways Limited and Ghana Airways Senior Staff Association (unsigned and undated).

Ø      Report on the Mediation Process Between Ghana Airways Limited (In Official Liquidation) and representatives of the Ghana Airline Pilots Association and Union – UNICOF on Severance Package Settlement dated 24^th February 2006, by Ing. Nick K. Opoku, NLC Appointed Mediator.

Ø      Minutes of the Standing Joint Negotiating Committee Meeting held on 25^th November 2004.

Ø      Minutes of Standing Joint Negotiating Committee Meeting held on 1^st December 2004.

Ø      Minutes of Standing Joint Negotiating Committee Meeting held on 8^th December 2004.

Ø      Minutes of Meeting on Severance Award for Ghana Airways Workers between Government Negotiating Team and representatives of General Transport, Petroleum and Chemical Workers Union (GTPCWU) held on 28^th January, 2005.

Ø      Minutes of the Meeting on Severance Award for Ghana Airways Workers between Government Negotiating Team and General Transport, Petroleum and Chemical Workers Union (GTPCWU) held on 3^rd February 2005, and

Ø      Minutes of Meeting on Severance Award for Ghana Airways Workers between Government Negotiating Team and representatives of General Transport, Petroleum and Chemical Workers Union (GTPCWU) held on 17^th February 2005.

Representatives of the Official Liquidator also provided the following documents:

Ø      Bodies Corporate (Official Liquidations) Act, 1963, ACT 180

Ø      Letter Ref.GTF/28/322 dated 11^th November, 2004 from the Chairman of the Government Task Force on Ghana Airways to the Unions giving notification of redundancy.

Ø       Sale Memorandum of Landed Properties of Ghana Airways (In Official Liquidation) dated 19^th October 2005.

In addition to these, I was guided in the hearings by the Provisions of the Labour Act 2003, ACT 651 and L.I. 1822.

PRESENTATION OF POSITION BY THE OFFICIAL LIQUIDATOR

1. LEVELS  OF SEVERANCE PAY

            The Official Liquidator indicated that Ghana Airways Ltd. (In Official     Liquidation), owes an estimated $ 200 million (two hundred million dollars) to   creditors while it is estimated that $ 20 million (twenty million dollars) may be             realized from the sale of assets of Ghana Airways Ltd.  (In Official Liquidation).

            In the circumstances, the Liquidator said it may not be able to pay more than the 3         weeks pay for every completed year, capped at 8 years, which it had proposed to    pay. In the estimation of the Official Liquidator, this offer to the Pilots alone             would amount to $ 666,000 (six hundred and sixty-six thousand dollars).

ARBITRATOR’S OBSERVATIONS

In the absence of the Union to make any representations on this matter, I was obliged to examine the conditions of service document. I must state that the Official Liquidator objected to reference being made to the conditions of service document.

To them, discussions on the Severance/Redundancy Award are being held under the Labour Act, 2003, ACT 651.

Nonetheless, I considered it important, and for my own guidance, to make reference to the section of the conditions of service document that relates to the payment of Severance/Redundancy Award.

 I wish to quote below Section 18 (iv) of the conditions of service of senior staff of Ghana Airways Ltd. which is the relevant clause in this matter:

Section 18 (iv) “In addition to any terminal benefits accruing to the staff, payment of Redundancy Award shall be negotiated at the time of the event in accordance with the Government’s provision. Only staff who have completed a year’s service with the Company and are laid off as redundant through no fault of theirs shall benefit from this payment.”

I considered the operative words in this clause to be: “in accordance with the Government’s provision”

I therefore set myself to find out what that “Government’s Provision” is, if one existed at all.

Unfortunately, my search drew a blank. However, I realized that in the late 1980s when Government embarked upon down-sizing of staff of the Education and Health Sectors, it paid staff declared redundant, 2 months pay for every completed year of service or pro rata without any cap. This was done on the basis of provisions in the 1986 Programme of Actions to Mitigate the Social Costs of Adjustments (PAMSCAD).

Even though I am persuaded by this precedent, I realized that this was a one time event which cannot be said to fall neatly into a definition of “Government’s Provision.”

More so, PAMSCAD was an initiative supported by donor funds.

I realized also that the Union group shifted drastically from their initial position which they presented at the Standing Joint Negotiation Committee meeting held on 1^st December, 2004.

At that meeting, the Union group put up the following proposals for the payment of Severance/Redundancy:

 (a) 1-5 years - 4 months pay for each completed year of service

(b) above 5 years – 6 months pay for each completed year of service and

 (c) above 10 years – 8 months pay for each completed year of service

At the time that the mediation exercise was called off, the position of the Union on the payment of severance/redundancy was:

(a)   5-10 years – 2 month’s pay for 8 years

(b)   11-15 years – 2 month’s pay for 12 years

(c)    16-20 years – 2 month’s pay for 16 years, and

(d)   21 years and above – 2 month’s pay for 20 years

With this major shift of position, and by accepting the principle of capping, it appears to me that the Union may have been influenced by the dire financial situation of Ghana Airways Ltd. (In Official Liquidation) and therefore showed such level of flexibility.

I have no doubt in my mind that, had the mediation exercise not been called off, both parties would have further shifted their positions.

THE AWARD

Taking all the issues raised above into consideration, and in the absence of any further representation from the Union on the matter, it is my decision that the Pilots of Ghana Airways Ltd. (In Official Liquidation) should be paid Severance /Redundancy at the rate of  4 (four) weeks pay for each completed year or pro rata, capped at 10 years.

(2) OUTSTANDING SALARIES

            The Official Liquidator reiterated his earlier position that no salaries were           outstanding.

            According to the Official Liquidator, the only salary outstanding when he took    over was the earned salaries for February 2005, which the Official Liquidator     settled in December 2005.

            The Official Liquidator insisted that contracts of employment for the staff were   terminated by Ghana Airways Management on 12^th February 2005 long before the      Company went into liquidation on 22^nd June 2006, and that relevant notice was        given.

            Even though I requested for a copy of one of the letters of termination issued to             the staff, what I had was letter Ref: GTF/28/322 dated 11^th November 2004 from           the Chairman of the Government Task Force on Ghana Airways addressed to the          Unions, namely General Transport, Petroleum and Chemical Workers and Union           of Industry, Finance and Commerce Workers; portions of which I quote below:

            “As a result of the foregoing, the Government Task Force (GTF) is serving an      official notice of closure with effect from 12^th February 2005 to all concerned.           This meets the 3 months notice  required of the employer as stated in Article 18 of         the Ghana Airways Senior Staff Conditions of Service and Article 28 of the Junior             Staff Collective Agreement as well as Article 65 of the Labour Act, 2003 (Act        651).”

THE DECISION

In the absence of any evidence to disprove what the Official Liquidator maintains as the true position, coupled with the letter cited above, it is my view that there are no outstanding salaries to be paid.

(3)        OUTSTANDING LEAVE

            The Official Liquidator accepted liability for any proven outstanding leave not     beyond two (2) years. The Official Liquidator places the onus on staff with any       such claim to prove that Management had properly deferred his leave.

            According to the Official Liquidator, by its computation, 2 years leave when      commuted to cash for only the Pilots would amount to $ 323,000 (three hundred       and twenty-three thousand dollars).

            Once more, no representation was made by the Union. However, from their      position statement as per the Mediator’s report, I realized that the Union is    demanding the payment of all outstanding leave; placing the onus on             Management to provide information on all outstanding leave.

THE DECISION

I am aware that Public Policy on commuting deferred leave to cash payment may not exceed two years.

It is my decision therefore, that any Pilot whose leave have been properly deferred by Management of Ghana Airways Ltd.(in Official Liquidation), should have such deferred leave as not exceeding two (2) years commuted to cash and paid. The calculation of the leave entitlement should be in accordance with Section 20 (2) of the Labour Act, 2003, ACT 651.

The Official Liquidator, who has access to the Personal Files of the Pilots, may assist each applicant to determine the actual leave deferred before payment as decided above are computed.

In addition, Pilots who did not take their leave for 2005 before their appointments were terminated should have their leave entitlements for 2005 calculated pro rata and paid in accordance with Section 30 of the Labour Act. 2003, ACT 651.

(4)               SALARY IN LIEU OF NOTICE

            The Union’s position as I gathered from the Report of the Mediator is that, the   Pilots are entitled to three (3) month’s pay in lieu of notice. The Official           Liquidator claims that appropriate notice was served before the letters of             termination were issued to the Pilots.

            The Official Liquidator made reference to letter Ref: GTF/28/322 from the         Chairman of the Government Task Force that I referred to earlier.

            Since it has not been proved to me, that the letter under reference was not issued           and brought to the notice of staff, I am inclined to accept the version of the   Official Liquidator.

THE DECISION

Nothing has been brought to my notice to contradict or challenge the contents of the letter cited by the Official Liquidator. If indeed the letter under reference has been served on staff before their appointments were terminated on 12^th February, 2005 as alleged, then it is my view that appropriate notice was given prior to the termination of staff appointments.

(5)               OCCUPAMNCY OF GHANA AIRWAYS ACCOMMODATION

From the Report of the Mediator, I gathered that the Union’s position is that until           the entitlements of the Pilots are calculated and paid, they should be allowed to         continue to occupy the GH Premises.

            In his submission, the Official Liquidator intimated that the accommodations are             meant to be duty post accommodation, and as the Pilots no more work for the            employer, it is only fair and logical that he is granted access to the properties           which he needs, in order to sell, to realize monies with which to settle claims of   creditors; including staff. He averred to the fact that a section of the former employees of Ghana Airways Ltd. (In Official Liquidation) in a case; Ghana             Airways Employees Vrs. Official Liquidator and Government of Ghana, had          unsuccessfully sought a Tema High Court injunction in August 2006, to restrain            the Official Liquidator from ejecting the staff from GH accommodation and           disposing off the premises.

THE DECISION

Even though I have not cited the ruling of the Tema High Court referred to by the Official Liquidator, it is my view that the Pilots, as sitting tenants, should be given the first option of refusal to acquire the accommodation, failing which the Liquidator may use due process to secure recovery of the accommodation.

Submitted:

Dennis K.Y. Vormawor

NLC Appointed Arbitrator

Dated in Accra this 12^th day of September 2006.