LOVI AND OTHERS vs. STATE TRANSPORT CORPORATION [1997-98] 1 GLR 14

CASE REFERRED TO

Nartey-Tokoli v Volta Aluminium Co Ltd [1987-88] 2 GLR 532, CA.

NATURE OF PROCEEDINGS

APPEAL by the appellant-corporation to the court of Appeal against the decision of the High Court, Sekondi awarding the respondent-employees whose appointments had been terminated during a redundancy exercise, severance pay and long service awards under their collective agreement contrary to the terms of the agreement they had negotiated with the General Transport, Petroleum and Chemical Workers’ Union of the Trades Union Congress and which regulated the redundancy exercise. The facts are sufficiently stated in the judgment of Afreh JA.

COUNSEL

S K Ahenkorah for the appellant.

Emmanuel Gyamfi for the respondents.

JUDGMENT OF FORSTER JA.

The appellants are a statutory corporation established under the laws of Ghana. The respondents were fourteen employees of the corporation until 1991 when their employments were “terminated.” On 24 April 1995 the respondents jointly, sued out a writ against the appellants at the Circuit Court, Sekondi. They claimed that upon the termination of their employment by the appellant corporation, the appellants had failed or refused to pay them their entitlements. They accordingly claimed: three months’ salary in lieu of notice of termination, severance pay of six months’ salary and long service awards. They further claimed interest on the amounts. The appellants resisted the claims and contended that the respective employments of the respondents were terminated as a result of a redeployment exercise. They further pleaded that at a meeting of management and union officials held earlier, it had been decided to waive severance pay

[p.17] of [1997-98] 1 GLR 14 and long service entitlements of employees who might be affected by the redeployment exercise. They finally pleaded that the respondents were therefore not entitled to any of the reliefs sought.

In the summons for directions, the issues set down for trial were:

“(a) Whether or not the plaintiffs’ respective appointments were terminated.

(b) Whether there was any agreement to waive payment of severance award to the plaintiffs.

(c) Whether an agreement by the union for the waiver by the defendants was lawful.

(d) Whether or not the plaintiffs are entitled to their claim.

(e) Any other issue arising out of the pleadings.”

On 28 July 1995, the trial judge entered judgment for the respondents and granted the reliefs as prayed. It is from this judgment that the appellant corporation appealed to this court.

The respondents were employees of the appellant corporation in various positions, and they had respectively been so employed for some fourteen years to twenty-six years. On various dates in 1991 the corporation terminated the employment of the respondents. As was admitted by the appellants, it became necessary in 1991 for the corporation to embark on a redeployment exercise, which was the implementation of a policy of the government. In the course of that exercise there was a meeting on 25 July 1989 at which the management and the workers’ union were represented. There were also two representatives of the committee for the defence of the revolution (CDR). The record of proceedings of the meeting was tendered in evidence as exhibit LI. I deem it relevant to quote the following excerpts from exhibit LI:

“The chairman adequately briefed members of an intention to embark on a special redeployment exercise. He added that the corporation had been facing very severe liquidity problem and therefore requested the meeting to review certain portions dealing with relevant article; vis-à-vis article 51 (sic), ie payment of end of service benefits, severance

[p.18] of [1997-98] 1 GLR 14 award, redundancy benefits. After the introductory remarks members from both sides made their contributions.”

Of the several issues that were agreed upon, I think the most significant one which is relevant in this case was:

“3 That since this was a special exercise authorised and approved by the government certain articles in both the collective bargaining agreement and the conditions of service were revoked and therefore not applicable. These include payment of severance pay.”

The import of this meeting was to give effect to the redeployment exercise mounted by the government, and for that purpose the meeting purported to revoke and thus waive the payment of severance pay. For the purpose of the appeal, I think that the question that must be answered is whether, even assuming the meeting was properly constituted, it was competent to disadvantage the then unidentified employees by the purported waiver of their redundancy pay.

It would seem, however, and as canvassed by counsel for the appellants, that the variation of the agreement by waiver of the redundancy pay was covered by article 63 of the collective agreement. That article deals with “modification” and provides that: “the corporation or the union shall not have the unilateral right to waive any provision of this agreement. Modification of this agreement shall be with the consent and approval of both parties.” But if in fact the waiver of the redundancy pay by revocation of the relevant articles, was assumed to be authorised by article 63, then it is manifestly clear that article 63 was ultra vires the enabling Industrial Relations Act, 1965 (Act 299). For section 10(4) of Act 299 provides that:

“(4) The rights conferred on an employee by a collective agreement under this Act shall be rights which cannot be waived by the employee and, if there is any conflict between a term of a collective agreement under this Act and the terms of any contract not contained in such a collective agreement, then the collective agreement shall prevail, whether or not the contract was concluded before the collective agreement.”

[p.19] of [1997-98] 1 GLR 14

The enlightened common sense of the legislature was to protect the rights of workers and the courts must recognise this policy objective as manifested in section 10(4) of Act 299, and, in the instant case declare the decision to waive the redundancy pay as incompetent and of no legal effect. For policy objectives, unless transmuted by the legislative process into enforceable legal norms, cannot override the imperative provisions of the substantive law. It is therefore the terms of the collective agreement alone that must determine the merits of the claim of the respondents in this case.

Article 49 of the collective agreement deals with lay-offs or redundancy and provides in paragraph (d) as follows:

“In accordance with the Labour Decree, 1967 (NLCD 157) and its subsequent amendments, every employee who has completed a year’s service with the corporation prior to being laid-off through no fault or action of his, shall receive severance pay based on basic salary at date of termination as follows: …

(iii) Employees with 10 years service and above: 6 months’ pay.”

These are evidently rights of the employee under the collective agreement which as expressly provided under section 34 of NLCD 157, cannot be waived even by the employee. The law ensures that it cannot be varied or waived to the disadvantage of the employee.

The appellants seem further to justify the revocation or waiver of the severance pay on the grounds that it became necessary to embark on a redeployment exercise in view of the financial difficulties then confronting the corporation. The appellants seem to lay much store on the fact that the termination of the employment was the result of a redeployment exercise and not a redundancy one. I find no provision in either Act 299, NLCD 157 or in the collective agreement that has redeployment as one of the modes of termination of employment of an employee. In section 34(1) of NLCD 157, as subsequently amended by the Labour (Amendment) Decree, 1969 (NLCD 342), it is provided that severance pay shall be paid where “an organisation undergoes an arrangement … [that] causes a severance of the legal relationship

[p.20] of [1997-98] 1 GLR 14 of employee and employer. . .” In my view, the question whether the exercise for the revocation was one of redeployment, or suspension or arrangement, or restructuring, does not rest on semantics. The logic of words must yield to the logic of realities, and the realities are plainly that the exercise was one of redundancy or lay-off and nothing else. Indeed, in his evidence for the appellants, the first defendant witness, a workshop supervisor testified that:

“Management’s explanation was that because it was government policy forced on them and the collective agreement had no provision for redeployment which (sic) we referred them to the redundancy and lay-off clause, we have to agree with management for the exercise.”

Thus, the members who attended the meeting were clearly aware that the exercise though masqueraded as redeployment, was nothing else than a redundancy exercise. The termination of the employment of the respondents was therefore the result of a redundancy or lay-off, as correctly found by the trial judge.

As to damages, it was the case of the appellants that the respondents were entitled to one month pay in lieu of notice as was communicated to them in their letters of termination. An across the board payment of one month salary in lieu of notice is only appropriate under article 12 of the agreement, which provides that:

“… where it has been established by a disciplinary authority in accordance with article 15 of this agreement that an employee shall be given notice 1(1)[sic] termination or payment in lieu. Such notice shall be one (1) month for employee covered by this agreement.”

Thus, the purported one month pay in lieu of notice and in all cases irrespective of the length of service of the employee, was only appropriate when a disciplinary action had been taken against an employee in accordance with article 15 of the agreement for: “inefficiency or any act of misconduct, such as insubordination, negligence, absenteeism, stealing . . .” As rightly found by the judge, the required notice in the instant case was one arising upon a declaration of redundancy or lay-off.

[p.21] of [1997-98] 1 GLR 14

With respect to the damages awarded by the trial judge, the contention of the appellants that “the learned judge misdirected himself on the principles of award of damages” is woefully unmeritorious. The quantum of damages awarded by the trial court was entirely what has expressly been predetermined under the provisions of the collective agreement (exhibit B). The trial judge found that:

(a) the termination notice requirement was breached and accordingly each respondent was entitled to one month’s pay as expressly stipulated in article 49(c)(i) of the collective agreement;

(b) the appellant corporation was liable to each respondent a severance award of six months’ pay, in terms of article 49(d)(i) of the agreement; and

(c) the appellant corporation was liable to pay long service award to all the respondents, except the third and fourth, the amount being six months salary as stipulated in article 51(a) (iii) of the agreement.

I therefore hold that the damages awarded by the trial judge was quite right. No common law principles were relevant in the determination of damages in the instant case. Once it was established that the employment of the respondents was terminated as a result of a redundancy exercise, it was the terms of the collective agreement to which they and the corporation were parties that must determine the entitlement of the respondents as redundants. In this regard, the trial court did no more than award the several heads of damages as predetermined and prescribed under the relevant provisions of the collective agreement.

In the result, I would dismiss the appeal and affirm the judgment of the High Court.

JUDGMENT OF AFREH JA.

The respondents were all employees of the State Transport Corporation (STC) until they were declared redundant at various dates in 1990 and 1991. All of them had worked for long periods for the corporation. Eleven of them had worked for 26 years, one for 25 years and two for fourteen years. With such long continuous service, they must have expected that if there had to be redundancies they would be among the last to go. They could also justifiably expect to receive all their end-of-service benefits

[p.22] of [1997-98] 1 GLR 14

(ESB), severance award and redundancy benefits, in accordance with the collective agreement between their union, the General Transport, Petroleum and Chemical Workers Union of Trades’ Union Congress (GTPCWU) and the corporation.

Unfortunately, when redundancy came they went earlier than many people who were employed much later. And what must have been more galling, the State Transport Corporation refused to pay severance pay and long service awards, claiming that by an agreement between the corporation and the union those entitlements had been revoked. The plaintiffs successfully sued the State Transport Corporation in the Circuit Court, Sekondi for their entitlements. It is from this decision that the STC has appealed.

The grounds of appeal are:

“(a) The judgment is against the weight of the evidence;

(b) the trial judge erred in arriving at the decision solely and wholly relying on the challenged evidence of the plaintiff-respondent;

(c) the learned judge misdirected himself on the principles of award of damages; and (d) costs awarded was excessive and harsh.”

The trial judge based his judgment mainly on his conclusion that the agreement under which severance pay and long service awards were revoked (or suspended) was between the local union and the management. He therefore held that since the local union had no capacity to enter into the agreement it was null and void and could not waive any benefits of the workers under the collective agreement between the two parties. Mr Ahenkorah, counsel for the appellant (the State Transport Corporation), strongly attacked the judge’s conclusion because, he pointed out, the agreement was in fact between the STC and the national union.

I think the trial judge erred when he held that the meeting of 25 July 1989 under which the plaintiffs were declared redundant was between the employer (the management) and the local union and was therefore, on the authority of Nartey-Tokoli v Volta Aluminium Co Ltd [1987-88] 2 GLR 532, CA null and void. Even a cursory look at the composition of the delegation of the General Transport, Petroleum and Chemical Workers’ Union of the Trades

[p.23] of [1997-98] 1 GLR 14

Union Congress (GTPCWU) shows that it was made up of representatives from the national headquarters and divisional branches.

It was led by the general secretary of the union and included the national chairman and representatives from Accra, Takoradi, Ho, Bolga, Kumasi and Tamale. In fact, there was only one representative from Takoradi where the plaintiffs worked. The meeting was held at the State Transport Corporation boardroom, Accra.

The purpose of the meeting was to work out modalities on redeployment not only for employees at Takoradi but for all the State Transport Corporation workers in all parts of country who might be affected by the redeployment exercise that the State Transport Corporation had been compelled to embark upon. That this was a national exercise is clear from the minutes of the meeting. It was agreed that the number of employees to be redeployed should be 1,500; that the final decision on the persons to be redeployed should relate to the submissions of both the regional and the national committees; and that the leadership of the union and the management should go round the various branches to brief the workers on the decision of the meeting. If the decision was taken by the management and the local union and affected it alone, these provisions would have been unnecessary. In my opinion, the negotiations were undertaken by the national union and therefore the agreement reached between it and the employers or management was valid. There were some representatives of the CDR present at the meeting. But it is not clear from the minutes what role they played or whether they made any input that affected the decisions taken at the meeting. I do not think their presence should vitiate the meeting or its decision.

Having declared the agreement between the union and the employers null and void, the trial judge also invoked section 10(4) of the Industrial Relations Act, 1965 (Act 299) to throw out its terms. The subsection provides:

“(4) The rights conferred on an employee by a collective agreement under this Act shall be rights which cannot be waived by the employee and, if there is any conflict between a term of a collective agreement under this Act and the terms of any contract not contained in such a collective agreement,

[p.24] of [1997-98] 1 GLR 14 then the collective agreement shall prevail, whether or not the contract was concluded before the collective agreement.”

If the trial judge was right in holding that the agreement of 25 July 1989 was void or invalid, then no doubt it would not have affected the rights conferred by the collective agreement of 1985. But as I have said, that agreement was valid. The question is: is the prohibition against waiver absolute so that not even a valid agreement between the employer and the union can waive rights conferred by a prior collective agreement? In other words, can the union after valid negotiations agree to the suspension, revocation or abrogation of any right conferred on the employee by a collective agreement?

I think section 10(4) of Act 299 was intended to prevent individual employees agreeing to changes in the terms of a collective agreement and not to prohibit a certified union from agreeing to modify the terms of a collective agreement between it and an employer. The idea is that once a collective agreement has been signed, it should bind all employees in the class of workers covered by the agreement. If individual employees or groups of employees could agree to new terms with an employer inconsistent with the collective agreement, the solidarity of the employees could be broken; employers, using their superior bargaining powers, could whittle away or wipe out advantages the collective agreement might have gained for the employees; and the whole purpose of collective bargaining would be frustrated.

The same cannot be said about a new agreement between the union and the employer which varies the terms of a collective agreement. The parties negotiate on equal terms. It can be assumed that the union will not agree to terms that are not in the interest of the members. So in my opinion, the prohibition in section 10(4) of Act 299 against waiver and new agreements inconsistent with an old one in section 10(4) does not apply to a new collective agreement between the union and an employer. Just as a collective agreement confer rights on an employee, so can a later collective agreement modify or even abrogate those rights.

A collective agreement is a contract between (1) the employer or each employer in a group and the union; and (2) the employer or each employer in a group and each employee in the class

[p.25] of [1997-98] 1 GLR 14 covered by the agreement. The individual employee has no freedom of contract in so far as the terms of a collective agreement are concerned. They are imposed upon him by the employer and the union. If these two parties agree to take away what has been given, the employee cannot object, unless it is illegal. So what was agreed at the meeting of 25 July 1989 was binding upon the plaintiffs.

What was agreed? The minutes of the meeting say:

“Since this was a special exercise authorised/approved by the government, certain articles in both the collective bargaining agreement and the conditions of service were revoked. These include payment of severance pay.”

However, in a letter dated 28 July 1989 addressed to all regional depot or station managers the acting personnel manager wrote:

“SUSPENSION OF ARTICLE 51 (d)

At its meeting held on the 25 July 1989 at the board room in Accra, the Central Committee for Negotiation and Consultations (CCNC) decided to suspend the operation of the above article, ie 51(d) ‘Payment of Severance Pay.’ The rationale behind the move was to save the corporation from total collapse in terms of its finances. Until you hear otherwise from management, the above article would not be operative. Please bring the contents of this circular to the notice of the workers.”

Counsel on both sides agree that the article referred to should have been 49(d). Since it is not clear whether the intention was to revoke the severance pay or suspend it, the agreement should be interpreted contra proferentem against the employer who sent the circular. It must therefore be held that the payment of the severance pay was only suspended; it was rendered inoperative temporarily or action on it was only postponed. So as soon as the corporation recovered and was in a position to pay it, it should have done so. That the severance pay was only suspended and the corporation was later in a position to pay it, is clear from the new collective agreement which was concluded a few months after the plaintiffs were declared redundant. It included payment of the [p.26] of [1997-98] 1 GLR 14 entitlements the plaintiffs are claiming. The corporation should therefore be ordered to pay the entitlements claimed by the plaintiffs as per the schedule attached to their writ of summons. The appeal should be dismissed.

JUDGMENT OF BROBBEY JA.

I agree with the judgment read by my brother Afreh JA and have nothing useful to add. DECISION Appeal dismissed.

LSNA

Endnotes

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