The Award of the Sole Arbitrator
This is the Award of the Sole Arbitrator in the Matter of the Termination of the Appointment of Mr. Ebo Bhavnani represented by the Union of Industry, Commerce and Finance (UNICOF) v. The Management of South African Airways.
Francis Kofi Davoh - General Secretary, UNICOF
Hafisata Amaleboba (Mrs) - Legal Counsel, South African Airways
Termination of Appointment of Ebo Bhavnani
South African Airways (hereinafter called the “Employer” ) and the Union of Industry, Commerce and Finance (hereinafter called the “Union”) are in dispute over the termination of appointment of Ebo Bhavnani (hereinafter called the “Employee”) .
The employee was the Marketing Supervisor of the Employer and his appointment was terminated on October 27, 2006.
The Union’s complaint is that the termination was unfair and it is seeking reinstatement but the Employer insists that the termination was according to the terms of the Contract of Employment between the Employer and the Employee.
The matter was referred to the National Labour Commission (NLC) for voluntary arbitration. Jerome Akafia was appointed as the sole arbitrator.
The pre-arbitration meeting was held at the Fiesta Royale Hotel on the 14th March, 2007 to agree ground rules and administrative arrangements – statements of issues were later exchanged. Due to unforeseen circumstances, the arbitration hearings were fixed for a later date.
The Arbitration hearing began on 4th April, 2007 at the Conference Room of the Fiesta Royale Hotel.
Opening presentations by the disputing parties
The Union’s submission (Exhibit U-1) is summarised as follows:
(a) The right of Management to terminate appointment was not in dispute
(b) They held the view that certain conditions must exist for that right to be exercised as stipulated in section 19 of the Employee’s Collective Bargaining Agreement/Conditions of service
(c) Section 19 of the CBA/Conditions of Service stated the following reasons for which the services of an employee may be terminated –
- on attaining the compulsory retirement age
- on death
- as a result of operational requirements
- as a result of misconduct
- for incapacity among others.
(d) Section 19.2 states on the termination of employment on grounds other than misconduct an employee shall be entitled to one month’s notice or to payment in lieu thereof.
(e) Subsection 19.4 states “where a person’s services are terminated for any reason other than attaining the normal retirement age, the appropriate procedure should be followed as provided for by legislation or any other cause recognized by law.
(f) That CBA/Conditions of Service in 19.2 stipulates the grounds on which Management can terminate without notice. The implication being that merely giving notice cannot be the basis for termination; the giving of notice is only part of the process (given that all other conditions have been met) to a fair termination.
(g) That the termination of the employee was arbitary, without basis and did not follow any known fair procedure under the current Labour Laws of Ghana.
(h) The employee should be reinstated.
The Employer’s submission is summarised as follows (Exhibit E1)
(i) An offer letter of May 12, 2005 to the employee stated the terms and conditions under which he was to be employed.
(ii) On May 24th 2005, the Employee duly accepted the offer together with the terms and conditions contained in the Offer Letter.
(iii) The combined effect of the Offer Letter and Letter and Acceptance of Offer was the creation of a Contract of Employment between the Employer and the Employee
(iv) By clause 4.2 of the Contract of Employment either party to the contract could terminate the appointment at any time by giving the other party one month notice in writing to that effect
(v) By a letter dated October 27, 2006, the Employer terminated the appointment of the Employee and paid him one month’s notice in lieu of notice in accordance with clause 4.2 of the Contract of Employment.
(vi) The parties of this contract conformably with equitable principles gave each other mutual rights. Both parties were entitled at all times to exercise rights once the stipulated obligations had been fulfilled.
After this, the Employer responded to the submission of the Union by stating that the Collective Bargaining Agreement (CBA) had not been fully executed by both parties and therefore that document could not be said to be governing the relationship between the Employer and Employee.
The Union admitted to this as much but went on to say that a Condition of Service document was given by the Employer to the Employee.
A Conditions of Service document was handed over to the Arbitrator but it was found to be an update of an earlier version and took effect from 1st November, 2006. Since the termination of the Employee took effect from 26th October, 2006 the Conditions of service document in question could not be a guide in interpreting the rules and regulations that governed the Employer-Employee relationship.
After some deliberation, it was agreed that the meeting be adjourned till the following day when the Employer would produce another document relevant to the period of the termination.
Proceedings of the meeting of 5th April, 2007
When the parties reconvened on the 5th April, 2007, the Arbitrator gave an outline of the previous day’s proceedings and requested the Employer to produce the relevant Conditions of Service document.
Employer was unable to do so; where upon the Union produced a document dated September, 2 2002. This document was given to the Employee by the Employer. The Arbitrator accepted the document as U-Exhibit -2.
The Employer reiterated the position that the only binding document was the Offer and Acceptance Letters.
Discussion of implications of relief sought by Union
The Arbitrator next led the parties to discuss the options that could serve as a basis for an award. This was to give the opportunity to the parties to appreciate the implications of any award and to explore the feasibility of each option with regard to its implementation.
The conclusions were that reinstatement was not feasible as that would mean imposing the Employee on the Employer and the vice-versa.
Transfer was not a possibility since the Employer was a one-site company.
The third option of compensation was the most acceptable.
The purpose of this discussion was not so much to give an inkling into what the Arbitrator was contemplating as to avoid a situation where the possibilities were not bounced off the parties and a situation was created for further litigation.
Both Employer and Union re-emphasised their respective positions in their concluding remarks.
The issue at stake here is whether the Offer and Acceptance Letters alone constitute a Contract of Employment between the Employer and Employee or whether the provision of the Conditions of Service document are also to be regarded as part of that Contract.
In my view, the Employer has, by giving each employee the handbook at the time of his employment (Exhibit U2), created the impression that the provisions of the document should be interpreted as part of the Contract of Employment especially as in this case where the document was given by the Employer, unsolicited by the Employee. The Employer, in giving out that document, was unwittingly complying with Section 106 of Act 651 by bringing the contents of the Conditions of Service to the notice of all workers.
That the Offer Letter alone is not meant to be the only binding document of contract is shown in Section 2 – “13th salary” under which reference was made to another document
GENERAL INFORMATION AND SERVICE BENEFITS: ANNEXURE A. (Exhibit E-1)
Indeed the Offer Letter in section 5 – “Service Conditions”- again refers to an unnamed document “Please see document attached” – This document is undoubtedly the Conditions of Service.
From this it can be inferred that the practice of the Employer is to give out an Offer Letter which is largely extracts from other documents – which documents should therefore be read to offer wider guidance and interpretation to the provisions sparsely expressed in the Offer letter.
This view is further confirmed by the fact that the CA which is currently being negotiated by the Employer and the Union draws largely from the Conditions of Service document. In fact, the Articles have similar numberings. Article 19 which is relevant to this case has the same wording and numbering in both documents.
Section 19 of Act 651 suspends the provisions of Section 15, 16, 17 & 18 which deal with terms and conditions for termination where the CA contains provisions which are more beneficial to the worker. The framers of the Act are thereby suggesting that when it comes to termination of Contract of employment any provision in the CA – by extension (spirit of the law) Conditions of Service – that is beneficial to the worker should be upheld. Similar provisions are expressed in Section 105 (4) of the Act.
It is my view that the Conditions of Service document was meant to govern the relationship between Employer and employees and that if any of the employees ran foul of the provisions in the document he/she was sanctioned as if he/she had breached the provisions of any CA.
From the foregoing, I reject the position of the Employer that the Offer Letter and Acceptance letter alone constitute a Contract of Employment.
If the Offer Letter refers the Employee to a document in which he is expected to see details of his Conditions of Service, how can the Employer maintain that other documents are irrelevant to the Contract of Employment? Is it because the Offer Letter contains Clause 4.2 on termination of Employment which is favourable to the Employer?
I reject this position of the Employer and a search in the Conditions of Service document reveals Section 19 which in addition to giving the reasons for which a termination of employment may be effected also indicated in 19.4 “where a person’s services are terminated for any reason other than attaining the normal retirement age the appropriate procedure should be followed as provided for by Legislation or any other cause recognized by law.
In HR administration practice, disciplinary procedure is the appropriate procedure to be followed in ensuring fairness of termination of employment. Indeed Section 9 (e) of Act 651 makes it a duty of the Employer to provide and ensure the operation of an adequate procedure for discipline of the workers.
Act 651 in section 63(4a & b) shifts the onus of proof of fairness termination of contract of employment by stating that “A termination may be unfair if the employer fails to prove that:
(a) the reason for the termination is fair
(b) the termination was made in accordance with a fair procedure or this Act
The reading of section 9(e) and 63(4a & b) suggest to me that a disciplinary procedure in which the accused worker is given the opportunity to appear before a committee to state his case, cross examine his accusers would constitute a fair procedure. It is the same appropriate procedure which section 19.4 of the Employer’s Conditions of Service is alluding to and which it is enjoined by section 9(e) of Act 651 to establish.
The curious aspect of this particular case is that there is nothing on the personal file of the Employee to indicate the reason for which his appointment was terminated. It would appear that one day the Employer decided that it did not like the face of the Employee and decided that his appointment should be terminated safe in the knowledge that section 4.2 of the Offer Letter allowed him to act with such impunity.
The Wider Implications of this Case
Before I give my award, I wish to offer my views on the wider implications of this case. This issue is whether the common law position on termination of contract of employment should continue to prevail in this country. The laws of the Western world are grounded in the Judeo- Christian heritage. The elements of these laws were enunciated in the Pentateuch especially in its last book – Deuteronomy in which Moses made his Discourses. A well known example of such laws which have found their way into modern laws of most countries is this “A single witness will not suffice to convict anyone of a crime or offence of any kind; whatever the misdemeanour, the evidence of two witnesses or three is required to sustain the charge.”
Some of these laws given to those who were wandering in the deserts around Mount Sinai, were to be perpetual injunctions – breached on the pain of the curses outlined in Deuteronomy. Examples were the sacrifices at feasts such as Passover, Shelter and others at which prescribed animals were to be slaughtered and burnt as smell pleasing to the Supreme Being.
The question is how come heirs of the Judeo- Christian heritage are no longer obeying these divine perpetual injunctions requiring them to sacrifice animals? - The answer, as we all know, is that in fullness of time the Creator himself accepted a once-for-all-time sacrifice of His only begotten Son – in effect rolling back what was virtually a perpetual injunction.
The point being made is that laws need not be suspended in time, cast in stone, unchangeable under any circumstances. Even the Supreme Being – the initiator of the Judeo – Christian heritage – can change perpetual injunctions to suit circumstances. Can one imagine the number of animals all those who subscribe to the heritage would have been sacrificing in modern times – with all its economic and environmental implications?
Yes, laws must change to reflect the needs of the society. It is therefore interesting to note that the Employer’s exhibit quoted the case of Wood v Leadbitter (1845) to support its position. Does the fact that a judge or even a panel of judges sitting on case and giving a ruling mean that judgment should be a reference for all times irrespective of changing circumstance? Where is the guarantee that that ruling or judgment of the judge(s) was free of any consideration other than that of the law? The Deuteronomic code laid down for the judges of the desert people is instructive. “You must not pervert the law; you must be impartial; you will take no bribes, for a bribe blinds the eyes of the wise and ruins the cause of the upright. Strict justice must be your ideal”.
It is generally accepted that the Law at Sinai was given around 1250 BC. It means that as far back as that time the omniscience Supreme Being knowing the Archilles heel of judges had to impose a code of discipline on them. The Deuteronomic Code has had an uncanny ring of truth about it throughtout history till today.
The point is what was the disposition of the judge(s) that determined the Wood v Leadbitter and such cases in the climate of 1845? Most of the judges were in cahoots with the owners of the industries in which the workers were employed. That is why Charles Dickens could write that the one great principle of English Law was to make business for itself.
At the time of the Industrial Revolution, owners of the industries and their workers had a Master – Servant relationship. Most of the court rulings at the time were delivered with this relationship in view. The owners of the industries – and later their agents as managers – could dispense of the services of worker at any time. The fact that at common law notice can be served by either party or that the worker also has the right to leave services of the employer, only provided a comestic effect. It is the worker who lost the most when his contract of employment was terminated.
At the time of cases like of Wood v Leadbitter in 1845, Karl Marx’s view was that the forces of production had been controlled by a minority who had used their economic power to exploit the mass of the population by appropriating the economic surplus for their own benefit. This inherently conflict situation would give rise to a class struggle which centred around the ownership and control of the means of production. Marx’s postulation that the proletariat was the future agent of revolutionary change in society and that a dictatorship of the proletariat would be established because the capitalist society was inherently unstable, frightened the most privileged members of western societies at the time. Judges sitting on cases like Wood and Leadbitter and similar cases were bound to be influenced to judge in favour of owners of industries (and by implication themselves).
The common law position on the termination of contract has its roots in the ideological conflicts of that period. The argument so far is that laws must change to reflect the charging circumstances of the society, that the common law position on the termination of the contract was determined by the judges whose sympathy laid more with employers rather than the workers and this was so because ideologies like Marxism which was predicting gloom and doom for the capitalist societies of the time were frightening the privileged in those societies- including judges. The master-servant relationship which characterized industrialized relations at the time was also a factor in shaping the common law position.
Let us now examine whether the common law position is in the line with current modern management theory and practice. The answer is no. Let us start with the Marxist theory mentioned above. The demise of communist and socialist states around the world epitomized by the fall of the Berlin Wall in 1986 is an indication that Karl Marx was wrong in his analysis of society. As Margaret Thatcher famously put it – Karl Marx made a mistake and Lenin should be blamed for putting that mistake into practice. Of course, it was Lenin who put communism into practice after the Bolshevik revolution in Russia.
Karl Marx’s view of Labour and Capital was that both were adversaries in a marriage of convenience. That Capital and Labour were in bed fighting for space; suspicion of each other and each had to resort to power to maintain its place in that bed.
Modern management view of the relationship between Labour and Capital is that both are partners in bed, with a philosophy that espouses mutuality of interest in the operation of an organization in accordance with the values of the democratic society. Labour and Capital have a new attitude that values and nurtures an open climate conducive to mutual sharing of information and the building of new behaviours and trust. Labour and Capital are in a process that provided a vehicle for participation in problem solving, brainstorming and consensus decision making to improve the effectiveness of an organization and to enhance the finality of work life.
What has been the effect of such changing views of the relationship between Labour and Capital or the world? The example of China and India would suffice. The stories will be that of the two individuals. In China Den Xiao Ping was ranked number three in the Chinese Communist Party hierarchy after Mao and Chou En-lai. He was purged during the Cultural Revolution as a leading revisionist but was rehabilitated in 1973.
His revisionist ideas were about the role of Capital and Labour, specifically, the Marxist view mentioned earlier. Deng’s new views and beliefs were expressed in two comments that have been widely quoted – “it does not matter whether the cat is black or white as long as it can catch mice”. “China should practice socialism with Chinese characters.” When Deng regained full power he made sure that those who believe in his changing views were pushed to positions of leadership. The implementation of Deng’s pragmatic approach to economic development is what has now propelled China into the economic giant that it is becoming.
In India, the Congress Party of Pandit Nehru, his daughter Indira Ghandi and her son, Rajiv practiced socialism until the Manhohan Singh took over as Finance Minister. The socialist ideas were discarded in favour of market forces. It is the cooperation between Labour and Capital that produces goods and services in the right quantity, at the right quantity and price for market forces to perform their magic of rapid economic growth. Mr. Singh is now the Prime Minister and he is pursuing the development goals he initiated earlier.
This century is being touted as the century of China and India largely because two individuals were pivotal in changing those nations’ views about the right relationship between Labour and Capital. Does the common law position on termination of contract promote the current and acceptable view of the relationship that should exist between Labour and Capital to promote economic growth and progress? No, it does not. Indeed, the common law position makes Labour, a frightened partner in that bed. If Capital can push it out of that bed without any provocation – as was the case of the Employee in question – then Labour will not be willing to contribute its quota to ensure the development of the organisation.
The common law position makes Capital play god. It is only the Creator who can ask the prophet Jeremiah to go to a potter’s house for Him to ask the prophet the rhetorical question “can I not do to you (Israel) what this potter does? Yes, like clay in the potter’s hand, so you are in mine” – to determine Israel’s fate as He deems fit. Even with that, the Almighty is not arbitrary. He is bound by His own laws. The relationship that should exist between Capital and Labour was pronounced on one of the hills near Capernaum – Sermon on the Mount; the golden rule of do unto others as you would like others to do unto you.
It is only when Labour and Capital realize that, whilst they are in that bed, if the roof over their heads should cave in, they are both goners can they achieve the goals of the organisation.
What then should the role of lawyers and judges in ensuring that laws and their interpretation reflect the changing circumstances of society? It is up to them, really. It is likely that this vexed issue of the common law interpretation of the termination of contract of employment will come up to the highest court of the land for the interpretation. This is because a reading section 17 of Labour Act, 2003 (Act 651) would suggest that that section could stand on its own and so uphold the common law position. On the other hand, Section 17 could be made contingent on Section 15 and so give a position that will be at variance with that of the common law.
The law is in bosom of the judge but the hope is that the influence on him will always be the Deuteroromic Code – its observance rather than its breach. That way judges and lawyers can become agents of positive change in the society; otherwise they make themselves villains of the piece.
Laws should serve the society’s interest. The Sabbath is made for man and not man for the Sabbath. That statement was made in frustration at the incessant question and heckling of Jesus of Nazareth by those whose lack of understanding of Mosaic laws (never mind their own non-observance of those laws.) made it impossible for them to see the epoch-making, earth-shattering events that were that were taking place in those three non-Hidden Years.
In the same way, those who want us to be boxed in by cases like Wood v Leadbitter (1845) are in the danger of making the great events of our time pass us by. Events like how China and India, the most populous countries on earth, which( not too long ago) could not feed themselves and for which dire consequences of social upheaval brought about by poverty were being predicted could within one generation change course to progress and growth. A change of course, brought about by a few individuals who decided to break the mould of doctrinaire socialism and think outside the box. A change of course that is propelling those two ancient civilizations to heights economic of development that is causing consternation in the West. The West is being frightened out of its wits.
What Ghana needs are Dengs and Singhs not those who are waving Wood v Leadbitter (1845) at us. The law is an ass and will make an ass of us all if we follow it blindly. Social commentators at the time of Wood v Leadbitter (1845) like Charles Dickens said the lawyers and judges acted in self-interest. As has been argued above, the decisions could have been influenced by the now discredited ideology of Karl Marx. The judges could have been in breach of the Deuteronomic code. Why should Ghana’s affairs in 2007 be guided by Wood v Leadbitter (1845)?
Let us leave cases like Wood v Leadbitter (1845) they belong – the dustbin of history.
This country must be emulating China and India by attaining second world status within a generation. To do so Labour and Capital must be in partnership – they should not be set at each other’s throat by lawyers and judges forcing Wood v Leadbitter (1845) on the rest of the society.
Continuation of the Substantive Case
To summarise so far- The Contract of Employment between Employer and Employee includes conditions of service document referred to in Section 5 of that Offer Letter. Section 19 of the document outlines the reasons for termination of employment and 19.4 asserts that a procedure must be followed in the case of the termination at issue here. The Labour Act, 2003 (Act 651) in Section 9(e) mandates the Employer to institute and operate a disciplinary procedure. There is no evidence that the Employer has complied with this provision of Act 651. Section 63(4a & b)of the Act puts the onus on the Employer to prove a reason for termination is fair or that the termination was made in accordance with a fair procedure or the Act.
A fair procedure would have involved an opportunity for the Employee to be given a hearing. The Employer admitted that there is nothing on the records to give an indication of what led to the termination of contract. It is only the common law position that he could be fired at any time with notice or payment in lieu that informed the Employer’s decision to terminate the contract.
In my view the Employer is in breach of Section 19.4 of the Conditions of Service which he voluntarily gave to the Employee and which the Employer referred to as part of the Offer Letter. The termination of contract of the Employer is unfair according to section 63(4a & b) of the Labour Act, 2003 (Act 651)
As already indicated, compensation is the best option of the three mentioned as possible relief in Section 64 Act 651. In that light, the award to the Employee is as follows
(a) Payment of all salaries and benefits due the Employee from October 27, 2006 to the date of determination of this case – 11th April, 2007.
(b) A severance payment equivalent to 12 (twelve) weeks pay for each completed year of service or part thereof.
(c) A lump sum payment equivalent to 18 (eighteen) months basic salary for wrongful termination
11th April, 2007