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Labour
- Termination of emploment - Re-organisation
(down-sizing of its staff) -
Collective Bargaining Agreement
-Redundancy - Whether or not the
whether the members of SSA were
to benefit from the joint
negotiations - Whether or not
whether by statute law or some
form of contract or usage of
trade the appellant was bound to
negotiate a severance benefits
package with the respondents
before embarking upon the
process of laying off staff -
Whether or not amounts paid and
received by the respondents
cwere unilaterally imposed on
them by the appellant - Whether
or not so-called voluntary
separation benefits packages was
wrongful and unlawful being
inconsistent with and in
contravention of the Labour
Decree 1967 (NLCD 157 - Whether
or not the that the termination
of employment of Defendants was
a wrongful.
HEADNOTES
The
plaintiffs/respondents/respondents,
hereafter called the
respondents, were employees of
the
defendant/appellant/appellant
bank, hereafter called the
appellant. The relationship of
employer-employees was
terminated when the appellant
decided to embark upon a re-organisation
exercise which entailed the
down-sizing of its staff.To this
end the appellant issued a
notice to the Chairman of the
Local Union and copied to the
Chairman of the Senior Staff
Association(SSA). It is apparent
that the meeting could not
convene on 21 December 2001;
there is nothing on the record
to indicate that the meeting was
held. What is undisputed is that
the appellant had decided to
embark upon a re-organisation
exercise which necessitated a
reduction in staff hence the
decision to invoke the
redundancy provision under the
Collective Bargaining Agreement
(CBA). It is to be noted from
the onset that the CBA was
applicable to only the junior
staff, otherwise known as the
unionized staff. gave no
indication as to which members
of staff were to be affected by
the exercise. Thus subsequently
the appellant issued a circular,
on 11 January 2002 addressed to
all members of staff in which it
reiterated the subject-matter
of re-organisation and
redundancy. It stated further
‘In order to ensure a smooth and
uninterrupted staff
rationalization exercise,
members of staff who wish to be
considered for separation
benefits packages are invited to
forward their letters of intent
to Head, Human Resources
Management Department The
separation is planned to be in
two phases. The first batch will
leave at the end of January 2002
and the final batch 28 February
2002’ A number of staff
volunteered to accept the offer
to go home. But what remained
unresolved was the severance
benefits package, which
according to the respondents was
to be negotiated by the Standing
Joint Negotiation Committee The
undisputed evidence on record is
that the joint committee met a
couple of times but did not
reach any conclusion before the
appellant began implementing the
programme, According to the
appellant they negotiated
personal benefits with each
affected member of the SSA which
they all accepted. Thus the bone
of contention between the
parties was whether the members
of SSA were to benefit from the
joint negotiations. The trial
High Court entered judgment for
the respondents herein having
accepted their claim that the
appellant failed to negotiate
the severance award package with
them before terminating their
appointments
HELD :-
It was
the duty of the respondents to
have led evidence to the effect
that they were entitled to be
paid so much but the appellant
paid them less than what they
were entitled to be paid. In the
absence of that kind of claim in
the first place, and worse still
evidence to that effect, the
respondents could not be heard
to say that the respondents
failed to pay them their
severance award when in fact
they admitted having been paid
what they claimed the appellant
had determined unilaterally.
They were not bound to accept
the award that they signed for
if they believed the appellant
was obliged to negotiate with
them before payment. And if they
believed that what they were
paid was not sufficient to
satisfy their expectations they
should have made that their case
at the trial court, in which
case the court would have
determined the quantum. But as
earlier on pointed out, that was
not their claim in both the
reliefs endorsed on the writ as
well as in the statement of
claim. Thus there was no basis
for the award of damages to the
respondents by the courts below.
Ground 2 therefore succeeds. In
conclusion we find merit in the
appeal and we do uphold same
accordingly.We hereby set aside
the decision of both the High
Court and the Court of Appeal.
STATUTES REFERRED TO IN JUDGMENT
Labour Act, 2003, (Act 651)
Labour Decree 1967
(NLCD 157
Labour (Amendment)
Decree, 1969 (NLCD 342
Companies Act, 1963
(Act 179),
CASES REFERRED TO IN JUDGMENT
Lt. Col. S. B.
Eshun (Rtd.) vs. Accra Brewery
Ltd. Civil Appeal No. J4/18/2007
12th November 2008
BOOKS REFERRED TO IN JUDGMENT
DELIVERING THE LEADING JUDGMENT
BENIN,
JSC: -
COUNSEL
P. KWAMINA BAIDEN ESQ. FOR
THE DEFENDANT/APPELLANT/
APPELLANT.
AKOTO AMPAW ESQ. WITH HIM
ALEX OSEI MANTEYFOR THE
PLAINTIFFS/RESPONDENTS/RESPONDENTS.
---------------------------------------------------------------------------------------------------------------------
JUDGMENT
--------------------------------------------------------------------------------------------------------------------
BENIN, JSC:
-
The
plaintiffs/respondents/respondents,
hereafter called the
respondents, were employees of
the
defendant/appellant/appellant
bank, hereafter called the
appellant. The relationship of
employer-employees was
terminated when the appellant
decided to embark upon a
re-organisation exercise which
entailed the down-sizing of its
staff. To this end the appellant
issued a notice dated 13
December 2001, tendered in
evidence as Exhibit A addressed
to the Chairman of the Local
Union and copied to the Chairman
of the Senior Staff
Association(SSA). For its full
force and effect, we quote
exhibit A here:
‘BANK RE-ORGANISATION
Owing to full scale
implementation of the Flexcube
programme and other
Transformation initiatives it
has now become necessary for the
bank to re-organise its core
structure for competitive
advantage.
The need therefore has arisen
for the rightsizing of staff by
28th February 2002.
In line with the requirements of
our Collective Bargaining
Agreement (Item 11.3 under
redundancy) we have to schedule
a meeting between the Local
Union and Management
Representatives to negotiate on
the benefits package that will
be paid to the affected staff.
In this regard we are proposing
that the Standing Joint
Negotiation Committee should
meet on the 21 December 2001 for
the above purpose’.
It is
apparent that the meeting could
not convene on 21 December 2001;
there is nothing on the record
to indicate that the meeting was
held. What is undisputed is that
the appellant had decided to
embark upon a re-organisation
exercise which necessitated a
reduction in staff hence the
decision to invoke the
redundancy provision under the
Collective Bargaining Agreement
(CBA). It is to be noted from
the onset that the CBA was
applicable to only the junior
staff, otherwise known as the
unionized staff. Exhibit A gave
no indication as to which
members of staff were to be
affected by the exercise. Thus
subsequent to exhibit A the
appellant issued a circular,
exhibit B, on 11 January 2002
addressed to all members of
staff in which it reiterated the
subject-matter of
re-organisation and redundancy.
It stated further that:
‘In order to ensure a smooth and
uninterrupted staff
rationalization exercise,
members of staff who wish to be
considered for separation
benefits packages are invited to
forward their letters of intent
to Head, Human Resources
Management Department by 25th
January 2002.
The separation is planned to be
in two phases. The first batch
will leave at the end of January
2002 and the final batch 28
February 2002’
By
exhibit B the appellant was
inviting the staff to volunteer
for the redundancy exercise. The
appellant later explained that
if enough staff did not
volunteer for separation then
they would embark upon
compulsory lay-off. A number of
staff volunteered to accept the
offer to go home. But what
remained unresolved was the
severance benefits package,
which according to the
respondents was to be negotiated
by the Standing Joint
Negotiation Committee (SJNC)
comprising the appellant, the
Local Union, the SSA and the
Industrial and Commercial
Workers Union (ICU). The
undisputed evidence on record is
that the joint committee met a
couple of times but did not
reach any conclusion before the
appellant began implementing the
programme and started laying off
some staff who had volunteered
to go. According to the
appellant, the negotiations by
the SJNC were to benefit only
members of the local union who
belonged to the ICU, and not
members of the SSA to which the
respondents belonged. According
to the appellant they negotiated
personal benefits with each
affected member of the SSA which
they all accepted. Thus the bone
of contention between the
parties was whether the members
of SSA were to benefit from the
joint negotiations. It was also
in contention whether by statute
law or some form of contract or
usage of trade the appellant was
bound to negotiate a severance
benefits package with the
respondents before embarking
upon the process of laying off
staff volunteers or otherwise.
According to the respondents
whilst these competing positions
were going back and forth, the
appellant nevertheless began to
lay off staff, beginning from
the end of January 2002 and
ending some three months later.
Each of the respondents signed
two documents, first a notice to
the effect that the affected
staff had voluntarily decided to
leave, and second that he/she
had accepted the severance
package award.
Notwithstanding these two
notices which no doubt are
standard form documents except
in respect of names and amounts
paid and received, the
respondents claim they were
unilaterally imposed on them by
the appellant, since nothing was
negotiated. They engaged a
solicitor to talk to the
appellant but to no avail. They
therefore decided to take action
in the High Court on 1st
June 2004 claiming the following
reliefs:
a.
“A declaration that Defendant’s
so-called voluntary separation
benefits packages under its
reorganization exercise was
wrongful and unlawful being
inconsistent with and in
contravention of the Labour
Decree 1967 (NLCD 157)
particularly sections 34 and 35
thereof.
b.
A declaration that the standard
form letter titled RE: VOLUNTARY
PHASE OF REORGANISATION prepared
by Defendants for Plaintiffs to
sign is null void and of no
legal effect.
c.
A declaration that the
termination of employment of
Defendants was accordingly
wrongful.
d.
Damages for wrongful termination
of employment.
e.
Damages for refusal by Defendant
to pay plaintiffs severance
award in accordance with law or
in the alternative an order of
the court directed at defendant
to negotiate severance award
with plaintiffs within a
specified time.
f.
Interest on severance award from
the date of purported
termination to the date of final
payment”.
The trial
High Court entered judgment for
the respondents herein having
accepted their claim that the
appellant failed to negotiate
the severance award package with
them before terminating their
appointments, contrary to the
provisions of sections 34 and 35
of NLCD 157 as amended by the
Labour (Amendment) Decree, 1969
(NLCD 342). The appellant
appealed to the Court of Appeal,
which held that the respondents
were laid off as a result of
amalgamation within the meaning
of section 34 of NLCD 157 as
amended. The Court of Appeal did
not accept that the respondents’
appointments were wrongfully
terminated but on the contrary
it held that the termination was
lawful. But having accepted that
they were terminated as a result
of amalgamation and consequently
the severance pay was to have
been negotiated, and holding
that with the present legal
status of the appellant it was
not possible to ask the parties
to go and renegotiate the
severance package, it affirmed
the award of damages by the
trial court.
The
appellant was not satisfied with
the decisions by the Court of
Appeal therefore it brought an
appeal to this court on these
grounds:
a)
That the holding that the
termination of the appointment
of the
Plaintiffs/Respondents/Respondents
herein was the result of an
amalgamation of SSB Bank Ltd and
not a redundancy exercise is
unwarranted by the evidence.
b)
The Court of Appeal erred in law
when it affirmed the award of
damages to the
Plaintiffs/Respondents/Respondents
when there was no basis to
support same.
c)
The Court of Appeal erred in law
when it held that sections 34
and 35 of the repealed Labour
Decree, 1967 (NLCD 157) as
amended by NLCD 342 imposed a
duty on SSB Bank Ltd to
negotiate severance award with
the
Plaintiffs/Respondents/Respondents
when it carried out the
reorganization exercise under
which their appointments were
terminated.
Ground
(a) Counsel for the respondents
conceded this ground in his
statement of case. We agree that
the court below erred for there
was no evidence from which the
conclusion could be reached that
there was amalgamation by the
appellant which resulted in the
termination of the appointments.
On a more serious note, the
respondent did not even plead
amalgamation as the reason for
the redundancy exercise. The
Court of Appeal was thus
substituting for a party a case
it did not set up and this is
seriously deprecated. This
ground of appeal succeeds.
We shall
deal with ground (c) before
ground (b), because unless a
finding is made that there was
liability on the part of the
appellant the question of
damages would not arise. Both
courts below relied on sections
34 and 35 of NLCD 157. This
statute was pleaded by the
respondents as the basis for
their claim that the appellant
was duty bound to negotiate the
severance award with them, and
having failed to do that they
were in breach of the law
thereby entitling them to
damages. The relevant provisions
of NLCD 157 as amended provide
that:
34(1)
Where an organization is closed
down or where an organization
undergoes an arrangement or
amalgamation and the close down,
arrangement or amalgamation
causes a severance of legal
relationship of the employee and
employer between any person and
the organization as it existed
immediately before the close
down, arrangement or
amalgamation, then, if as a
result of and in addition to
such severance the person
becomes unemployed or suffers a
diminution in his terms and
conditions of employment, he
shall be entitled to be paid by
the organization in whose
employment he was immediately
prior to the close down,
arrangement or amalgamation,
compensation, in this Decree
referred to as “severance pay”.
34(2) In
determining whether a person has
suffered any diminution in his
terms and conditions of
employment under sub-paragraph
(1) of this paragraph account
shall be taken of the past
services and the accumulated
benefits (if any) of such person
in or in respect of his
employment with the organization
before it was closed down, or
before the occurrence of the
arrangement and amalgamation.
35. The
amount of any severance pay to
be paid under paragraph 34 of
this Decree as well as the terms
under which payment is to be
made shall be matters for
negotiation between the employer
or his representative and the
employee or his representative.
Both
parties agree that the words
‘close-down’ and ‘amalgamation’
do not apply to this case. The
bone of contention is with
regard to the expression
‘arrangement’. Whereas the
appellant says that it is not
applicable to this case, the
respondents maintain the
position that it does apply. It
thus appears that the
determination of this appeal has
come down to the meaning and
application of the word
‘arrangement’ in the context of
sections 34 and 35 of NLCD 157,
which has no definition of that
word or expression, and whether
it is applicable to this case.
Arguments by counsel for
appellant
Counsel
relied on three points. To start
with, whilst arguing the first
ground of appeal, counsel for
the appellant argued that in
reference to the definition of
‘arrangement’ in section 229 of
the Companies Act, 1963 (Act
179), the facts of this case do
not support the lower Courts’
decisions. Section 229 of Act
179 defines ‘arrangement’ to
mean any change in the rights or
liabilities of members, or
debenture holders or creditors
of a company or any class of
them or in the Regulations of a
company, other than a change
effected under a provision of
this Act or by the unanimous
agreement of all parties
affected by the arrangement.
Counsel’s view was that the
redundancy exercise embarked
upon by the appellant did not
come within this definition. By
what authority did counsel think
that he could just import the
definition of a particular word
specifically defined in one
statute and apply same in
another? We would address this
question if it becomes
necessary.
Secondly
counsel made reference to the
Labour Act, 2003, (Act 651)
wherein, in addition to ‘close
down’, ‘arrangement’ and
‘amalgamation’, the expression
‘reorganization’ was introduced
as one of the grounds for
termination of appointment of
staff which should compel an
employer to negotiate severance
award with the employee affected
by the exercise. In counsel’s
view this goes to confirm that
the expression‘ arrangement’ as
applied in sections 34 and 35 of
NLCD 157 did not include
‘reorganization’. Here too,
counsel failed to tell us the
authority for interpreting an
earlier enactment by reference
to a later one. Here again we
would address the question when
the need arises.
Finally,
counsel said the Court of Appeal
was bound to follow its earlier
decision which was endorsed by
the Supreme Court. That was the
unreported case of Lt. Col.
S. B. Eshun (Rtd.) vs. Accra
Brewery Ltd. Civil Appeal No.
J4/18/2007 delivered by this
Court on 12th
November 2008, described
hereafter as the Accra Brewery
case, wherein the court held
that sections 34 and 35 of NLCD
157, as amended, did not apply
in cases of redundancy.
Arguments by respondents’
counsel
On the
applicability of the Accra
Brewery case, Counsel sought to
distinguish the facts of the two
cases. Counsel said in the Accra
Brewery case, the employee
accepted the severance pay that
was offered by the employer
without any protest. But in the
present case the respondents
have insisted on negotiating the
severance package all through.
And the trial court found there
were no negotiations.
Secondly
counsel stated that “while it is
true that in both the Accra
Brewery case and the instant
case, there was no provision in
the senior staff association
concerning redundancy following
re-organisation. The significant
difference between the two cases
is, in the instant case, there
was an established corporate
practice and usage, which set
out how the redundancy pay of
senior staff was to be
determined, namely by applying
mutatis mutandi, the decision
arrived at the standing joint
negotiating committee…….to the
affected members of the senior
staff. Exhibit MM, in that
regard, puts the matter to rest,
as it confirmed indisputably the
existence of this established
practice and usage in Defendant
bank. On the other hand, in the
Accra Brewery case, no such
practice existed.”
Thirdly,
counsel stated that “the Supreme
Court having found in the Accra
Brewery case that the plaintiff
did not protest the offer but
accepted same wholehearted,
there was absolutely no need,
with respect, to decide the case
on the question whether or not
sections 34 and 35 of the Labour
Decree, 1967, as amended,
applied to a case of redundancy
simpliciter. Any comment by this
Honourable Court on that issue
would therefore, with respect,
be obiter dicta, and not really
part of the ratio decidendi of
the Court. This Honourable Court
in our respectful view, is thus,
free to look at this question
without the constraint of the
strictures of judicial
precedent.”
Counsel
seemed to have responded to the
first two arguments of counsel
for the appellant together under
the sub-heading: ‘whether or not
sections 34 and 35 of NLCD 157
apply to a situation of
redundancy following
re-organisation or
restructuring’. Counsel said
that where the legislator found
it necessary, it defined
particular words and expressions
in the interpretation section of
NLCD 157. However, it failed to
define any word or expression
used in sections 34 and 35.
Counsel submitted that “the
correct judicial approach to
interpreting words found in that
section ought therefore to be
the general ordinary meaning of
the words, unless there is a
compelling reason otherwise. In
other words, the legislator did
not intend to use the words
‘close-down’, ‘arrangement’ and
‘amalgamation’ in a technical
manner or as a term of art. To
import the very specialized and
technical meaning of
‘arrangement’ and ‘amalgamation’
of section 299 (we believe this
should read 229) of the
Companies Act, 1963 (.Act 179),
into the Labour Decree, is,
therefore, with respect,
grievously wrong. Had the law
makers intended to give those
words a technical meaning what
better means would they have
employed than to have given
these words their specific
interpretation, as has been done
in the case of other words in
the Decree.”
Counsel
then proceeded to provide
several meanings of the word,
‘arrangement’ as defined in some
dictionaries, both ordinary and
legal. We do not propose to set
out these definitions at this
stage, let alone to consider
their influence in defining the
word or expression under
consideration. We intend first
of all to take a look at the
decision in the Accra Brewery
case and consider if this court
should follow it, as urged on us
by the appellant, or to
distinguish it or depart from it
as urged by the respondents.
Consideration by the court
Contrary
to the submissions by counsel
for the respondents, the
question relating to sections 34
and 35 of NLCD 157 was an issue
in the Accra Brewery case, the
same having been pleaded and
relied on by the plaintiff
therein. Indeed the trial court
made reference to it and
interpreted same. The Supreme
Court rejected the trial court’s
conclusion that these provisions
applied to cases of redundancy.
This was not obiter, but the
ratio decidendi. The court
having made a definitive
pronouncement on the very
provisions which are in issue
herein, it is obliged to follow
it unless it finds good and
compelling reason to depart from
it. In this case the wording of
sections 34 and 35 of NLCD 157
as amended is clear that where
termination results from
‘close-down, arrangement or
amalgamation’, then the
severance pay should be
negotiated between employer and
employee. It does not include
termination that results from
declaration of redundancy or any
other ground. We hold therefore
that sections 34 and 35 as
amended by NLCD 342 do not apply
in this case. We therefore do
not consider it necessary to
discuss the other points argued
by counsel.
We take
note of the reliefs endorsed on
the writ, whereby the
respondents pleaded these
provisions as the basis for
their claim, relief 1, which
they claimed was breached by the
appellant, relief 2, as a result
of which their termination was
wrongful, relief 3. Since the
provisions under reference do
not apply, it follows that going
by the reliefs sought, the
termination was not wrongful. Be
that as it may, as the
undisputed evidence was that the
respondents voluntarily opted to
take advantage of the redundancy
exercise without making the
negotiations for severance award
a precondition, the Court of
Appeal was right in concluding
that the termination was lawful.
And it is significant that
neither party is challenging
that decision in this appeal.
Since the
termination was lawful all that
the respondents could ask for is
a severance package either under
statute or under their agreed
conditions of service or under
any acceptable legal contract
agreed between them. As held
earlier the statute they relied
upon is not applicable in that
the appellant was not enjoined
by that law to negotiate with
them. And their service
conditions do not contain any
provision for severance pay upon
redundancy. The respondents
therefore sought to rely on
corporate usage. Even though
they pleaded this fact, it was
denied by the appellant. It was
thus the duty of the respondents
to lead evidence to establish
the custom and usage. The trial
court did not decide the case
for the respondents on this
question. From a careful reading
of the record, we are inclined
to believe that the evidence
proffered was scanty and
unsatisfactory, for contrary to
what Counsel for the respondents
stated in his address Exhibit
MM, the instance relied upon,
was a one-time event and was not
conclusive proof of the alleged
custom and usage. Be that as it
may, the respondents did not
make this a ground of appeal at
the Court of Appeal and it is
not the subject of appeal before
this court either. In the result
we allow ground 3 also.
The
second ground relates to the
award of damages. Reliefs 4, 5
and 6 endorsed on the writ
relate to the claim for damages.
Relief 4 seeks damages for
wrongful termination of
employment. This fails in view
of our holding that the
termination was lawful. Relief 5
seeks damages for refusal by the
appellant to pay respondents
severance award in accordance
with law or for the court to
order the parties to the
negotiating table. It is certain
there was no law which entitled
the respondents to severance
award. And there is no law or
contract which specified how the
quantum of the severance pay was
to be calculated in case of
redundancy. The respondents
admitted signing for severance
awards but they claimed they
were imposed on them by the
appellant. But exactly how much
was each of them entitled to be
paid in their own estimation?
The evidence is completely
silent on it. It was the duty of
the respondents to have led
evidence to the effect that they
were entitled to be paid so much
but the appellant paid them less
than what they were entitled to
be paid. In the absence of that
kind of claim in the first
place, and worse still evidence
to that effect, the respondents
could not be heard to say that
the respondents failed to pay
them their severance award when
in fact they admitted having
been paid what they claimed the
appellant had determined
unilaterally. They were not
bound to accept the award that
they signed for if they believed
the appellant was obliged to
negotiate with them before
payment. And if they believed
that what they were paid was not
sufficient to satisfy their
expectations they should have
made that their case at the
trial court, in which case the
court would have determined the
quantum. But as earlier on
pointed out, that was not their
claim in both the reliefs
endorsed on the writ as well as
in the statement of claim. Thus
there was no basis for the award
of damages to the respondents by
the courts below. Ground 2
therefore succeeds.
In
conclusion we find merit in the
appeal and we do uphold same
accordingly.
We hereby
set aside the decision of both
the High Court and the Court of
Appeal.
(SGD) A. A. BENIN
JUSTICE OF THE
SUPREME COURT
(SGD) S. A. B. AKUFFO
(MS)
JUSTICE OF THE SUPREME
COURT
(SGD) N.
S. GBADEGBE
JUSTICE OF THE
SUPREME COURT
(SGD) V. AKOTO BAMFO (MRS)
JUSTICE OF THE
SUPREME COURT
(SGD) J.
B. AKAMBA
JUSTICE OF THE
SUPREME
COURT
COUNSEL
P. KWAMINA BAIDEN ESQ. FOR
THE DEFENDANT/APPELLANT/
APPELLANT.
AKOTO AMPAW ESQ. WITH HIM
ALEX OSEI MANTEYFOR THE
PLAINTIFFS/RESPONDENTS/RESPONDENTS.
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