09 Apr GENERAL TRANSPORT, PETROLEUM & CHEMICAL WORKERS’ UNION OF TRADES UNION CONGRESS (PETITIONERS) VS. HALLIBURTON INTERNATIONAL INCORPORATED GHANA BRANCH (RESPONDENT) [SUPREME COURT, ACCRA] CIVIL APPEAL NO. J4/19/2023 DATE: 27TH MARCH 2024
“We have noted with deep concern, the burgeoning trend of Courts and the Labour Commission to indiscriminately brand termination effected under Section 17 of the Labour Act or provisions in the contract of employment which have the same or similar import as Section 17, as being unfair. Evidently, such blanket characterization is unsupported by the law and consequently is legally untenable. The foregoing notwithstanding, we are not oblivious of the legal novation introduced into our Labour jurisprudence through the novel concept of unfair termination as captured under Section 62 and 63 of the Labour Act. Therefore, while we maintain that the terms of the Labour Act do not abolish the employer’s common law contractual right to terminate upon giving due notice and without a requirement to assign reason, we recognize that this right is qualified by the provisions of Section 62 and 63. In consequence, we are of the considered opinion that though an employer reserves the right to terminate the employment of an employee in the manner described above, such termination can and shall be deemed unfair where the animating motive or actuating reason for the exercise of the employer’s prerogative to terminate was any of the grounds enumerated under Section 63(2)”
In this case, the Appellant terminated the employment of a Field Service Representative (“the employee”) who had been with the company for about 6 years. The Respondent, a union representing the employee, requested details of the termination and later filed a complaint with the National Labour Commission (“NLC”), claiming the termination was unfair. The Appellant argued that the termination was lawful and duly followed the relevant Collective Bargaining Agreement (“CBA”) and Employment Contract. After a hearing, the NLC ruled that the termination was unfair and made orders against the Appellant.
The Appellant appealed the NLC’s decision to the Court of Appeal, arguing that the judgment was against the weight of the evidence. The Court of Appeal upheld the NLC’s decision, stating that the Appellant failed to follow the procedures outlined in the CBA for employee termination. The Court of Appeal explained that under Section 19 of the Labour Act, 2003 (Act 651), if the CBA provides more beneficial terms for termination than the Labour Act, the CBA provisions must be followed.
Dissatisfied with the Court of Appeal’s decision, the Appellant further appealed to the Supreme Court, citing several grounds of appeal, particularly, that the Court of Appeal erred when it held that the common law position on termination was inapplicable once there was a more beneficial provision in the CBA.
At the Supreme Court, the Appellant argued that the lower court misapplied the legal principles governing employment termination. He stated that it is not legally mandatory for an employer to provide reasons for terminating an employee’s employment, as long as the proper notice is given. The Appellant emphasized that the relationship between an employer and an employee is contractual, and the law of contract governs termination actions. Counsel for the Appellant cited the Kobea and ors v. Tema Oil Refinery case to support the argument that the Labour Act’s Section 17 aligns with common law on termination, and the Court of Appeal’s decision to disregard common law was incorrect.
Additionally, the Appellant argued that the Court of Appeal misinterpreted the relevant provisions of the CBA. The Appellant pointed out that Section 105 of the Labour Act allows the CBA to prevail over the employment contract where their provisions conflict, unless the contract offers more beneficial terms. The Appellant indicated however, that there was no conflict in this case. Counsel also emphasised that the CBA provided two methods of termination, and the Court of Appeal wrongly restricted the Appellant to one method. He argued further that Article 10 of the CBA, which does not require the employer to give reasons for termination, is a beneficial provision. Finally, the Appellant stated that since both the CBA and the employment contract allowed for termination with one month’s notice or payment in lieu, the employee was terminated according to the agreed terms.
The Respondent agreed with the Appellant’s position on common law termination but argued that the Labour Act has modified this position in Ghana. Specifically, the Labour Act mandates that where there is a conflict between the employment contract and the Collective Bargaining Agreement (CBA), the CBA prevails if it is more favourable to the worker. Counsel for the Appellant emphasised that Section 19 of the Labour Act applies, making the common law position inapplicable to the instant case.
Although the employment contract and Article 10 of the CBA allow termination with one month’s notice, the Respondent argued that Article 8 of the CBA provides more protection for employees and must be followed first. Article 8 ensures employment security and prevents arbitrary termination. Counsel refuted the Appellant’s claim of two modes of termination, asserting that the procedure in Article 8 must be followed before triggering Article 10.
The Respondent further argued that the Appellant failed to comply with the CBA’s due process for termination, including not providing reasons or following disciplinary procedures. Counsel contended that the Court of Appeal’s decision to apply Article 8 was justified, as it contains provisions more beneficial to the employee.
The primary issue determined by the Supreme Court was whether the Appellant could terminate the employment of its employees without assigning reasons, in the context of Articles 8 and 10 of the CBA, vis-à-vis the Labour Act. Upon a careful construction of Article 8, the Supreme Court found that the said clause pertains exclusively to disciplinary infractions which could warrant a warning, suspension, interdiction or ultimately culminate in dismissal of the employee; whereas Article 10 is a sheer repetition of the common law position on the termination of employment, which requires the giving of a number of days’ notice or the payment of salary in lieu of notice before the termination of employment. The Supreme Court found that the form of termination under Article 8, was premised on misconduct by the employee and was equivalent to dismissal, which rendered it substantially different from the technical sense in which the term “termination” was used in Article 10. In other words, the Supreme Court found that Article 8 outlines detailed processes and procedures for disciplining defaulting employees, while Article 10 simply reiterates the common law position on termination, which was also reflected in the contract of employment between the Appellant and its employees.
Accordingly, the Supreme Court found that the two Articles did not conflict, as they addressed different issues, negating the need for the application of Section 105(4) of the Labour Act. In conclusion, the Supreme Court set aside the NLC’s decision, which had been affirmed by the Court of Appeal, stating that the decision was neither supported by the evidence nor law.
Insight: The Supreme Court’s decision reaffirmed the position that the inclusion of provisions on unfair termination in the Labour Act does not abolish the employer’s common law right to terminate employment without cause or reason. Section 17 of the Labour Act acknowledges and upholds the employer’s right to terminate at any time, provided the employee is given the required notice or compensated with the equivalent remuneration in lieu of notice.
However, the aforementioned common law right of the employer as incorporated in the Labour Act, is not absolute. The right is qualified by the relevant provisions in the Labour Act which govern unfair termination. While an employer retains the right to terminate employment by giving due notice and without the obligation to provide a reason, such termination can be deemed unfair if it is motivated by any of the grounds outlined in Section 63(2) of the Labour Act. Thus, even though the employer may exercise this right, the termination may be considered unjust if the reasons for it fall within the prohibited categories listed in the Labour Act. However, it is important to note that the burden of proof rests on the employee to establish with credible evidence that the employer’s termination was actually motivated by a prohibited reason.
AUTHOR:
Peter Korsi Simpson.
Trainee Legal Associate.