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Dismissing Employees on Account of Being Union Members: Habuka Lawyers v. Higaturu Oil Palm Pty Ltd (1997) D/C 5/97 [1997] MLJ 7; [1997] 25 MLJ 125 (1 January 1997)

Dismissing Employees On Account Of Being Union Members: Habuka Lawyers v Higaturu Oil Palm Pty Ltd (1997) D/C 5/97

Lawrence Kalinoe[*]


It is interesting to note that in the last few years the Magisterial Service has been circulating a numbered judgment series which features various District Court judgments. Most of these judgments have been of the highest standard of judicial reasoning, including excellent analysis of the law. The decision by Manuhu SPM reviewed here is without doubt one of such judgments. Manuhu SPM exhibits great intellectual ability and courage by challenging a decision of a senior judge, and admirably exposes the inadequacy of Hinchliffe J’s earlier decision in Atlas Steel Pty Ltd v August and Others (unreported, 5 October 1994). Unfortunately, because of the principles of stare decisis and judicial precedence, Manuhu SPM conceded that his “hands [were] tied” and, very reluctantly but in accordance with the law of the land, applied Hinchliffe J’s decision in the Atlas Steel case.
The main reason for writing a case note on this District Court decision is to share with a wider audience the excellent judicial reasoning of the magistrate, with the hope that perhaps a judge of the National or Supreme Court will one day be persuaded by the decision and consequently restate the law in the manner in which Manuhu SPM saw it.
Section 63(1) of the Industrial Relations Act (Ch 174) makes it an offence for employers to dismiss an employee on account of the latter being a member of an industrial organisation. The relevant provisions of s 63 states:

“(1) An employer who:-

(a) dismisses an employee; or

(b) injures him in his employment; or

(c) alters his position to his prejudice;
because the employee -

(d) is entitled to the benefit of an award; or

(e) has appeared as a witness or has given evidence in any proceedings under this Act; or

(f) being a member of an organisation that is seeking better industrial conditions - is dissatisfied with his conditions,
is guilty of an offence.

Penalty: A fine not exceeding K100.00.”

If we consider the constituent elements of this offence, the following emerges:
(a) First element: The employer must dismiss an employee or cause the employee such other loss of entitlement or do other acts prejudicial to the interest of the employee;
(b) Second element: The employer’s action must be due to the fact that the employee is entitled to the benefits of an award; or has appeared as a witness or given evidence in any of the industrial conciliation and arbitration processes established under the Industrial Relations Act (Ch 174); or the employee is a member of an industrial organisation and is seeking improved terms and conditions of employment.
Section 63(3) goes on to state that:

“In a prosecution for an offence against this section, if all the facts and circumstances constituting the offence, other than the reason for the defendant’s action, are proved, proof that he was not actuated by the reason alleged in the charge is on the defendant.”

In other words, s 63(3) firstly requires the prosecution to prove the above stated elements of the offence under s 63(1) to the required criminal standard of proof. Once that is done, the burden is then shifted onto the defence to prove, on the balance of probabilities, that the employer did not dismiss the employee on account of any of the reasons stated under s 63(1) of the Act. This interpretation is in accordance with Los J’s statement of the law in Steamships Trading Company Ltd v Ruba Leva [1988-89] PNGLR 248.

Background to the Decision in Habuka Lawyers v Higaturu Oil Palm Pty Ltd (1997)

The defendant company was charged under s 63(1)(a) and (f) of the Industrial Relations Act (Ch 174), after dismissing from employment 97 employees who were also members of the Higaturu Oil Palm Processing Workers Union (the Union). It was alleged that the defendant had dismissed the 97 employees because they as members of their union had pursued improved terms and conditions of employment, and had gone on strike after the defendant’s management had not positively responded to a log of claims seeking a 40% pay increase and long service entitlements. About three months after the log of claims was served on the defendant, the Union then notified the defendant that their members would not do maintenance and other works on weekends, and the particular employees proceeded to withdraw their labour on three subsequent weekends. As a result, 13 union members who were employed at the mill were served with retrenchment notices for non-attendance at their weekend duties. This prompted the rest of the mill employees to stop work. The Union then conducted a secret ballot to determine the question of a strike action. Two days after the conduct of the secret ballot, while the result was awaited, the Department of Labour and Employment convened a meeting through its conciliation process in an effort to resolve the dispute. The defendant company through its management attended this meeting, but the Union did not attend. Following this meeting, the defendant issued notices to all its employees (including the members of the Union) requiring them to return to work, and stating that:

“Failure to do so will result in their being considered to have terminated their employment with the company and the vacant positions will be filled.”

On the same day as this notice was issued, the result of the secret ballot was also declared; the great majority (211 for and only 4 against) had voted for a strike action. The Union therefore advised the defendant that “our members and your employees” would not return to work as instructed and would proceed to a strike action in accordance with the result of the declared secret ballot.
Consequently there was a general strike action. During the second day of the strike, the defendant sent out very general “To Whom It May Concern” letters of dismissal and served the same on the striking employees. The letters stated that:

“Company employees who failed to report to work as directed ... are advised that their employment with the company has been terminated.”

Following the service of these notices, the Department of Labour and Employment officials then convened a meeting in Port Moresby with representatives of the disputing parties. At that meeting a Memorandum of Understanding was executed between the parties (ie the Union and the defendant company), and the dispute was effectively ended. The issue of termination letters was also discussed at this meeting, but the defendant was adamant that the decision to terminate those employees who had not abided by its earlier return to work notice would stand. Despite representations from the Union officials, the defendant proceeded to terminate those employees. Those terminations then became the basis of the charge against the defendant under s 63(1) (a) and (f) of the Industrial Relations Act (Ch 174).
At the close of the prosecution case, the defendant company conceded and the court accepted that the prosecution had proved its case beyond reasonable doubt. The defendant was therefore called upon to prove, on the balance of probabilities, that its actions had not been actuated by the reasons alleged in the charge against it. The company argued and tried to adduce evidence that the reason for the dismissal of the particular employees (who were members of the Union) was not because of their union membership, but rather their failure to observe the previous return to work notice. In its submission denying liability, the defendant relied on an earlier unreported 1994 decision by Hinchliffe J in Atlas Steel v August and Others, where the factual circumstances were very similar.

Atlas Steel v August and Others (1994)

The decision by Hinchliffe J was delivered on 5 October 1994. The facts of the case are almost identical to the Higaturu Oil Palm case just outlined. In the Atlas Steel case, when the respondent employees were actually on strike, the appellant company Atlas Steel wrote to them in these terms:

“Atlas Steel - Lae wish to advise all workers on strike that as of June 23 twelve midday workers who do not return to work will be considered to have abandoned their jobs.

The company will then make any of the positions available for new employees.”

Following this notice, only two workers turned up. The rest did not and were subsequently dismissed. In the District Court, the appellant company was convicted, and an appeal was then lodged in the National Court. On the appeal before Hinchliffe J, the appellant relied on s 36(1) (a) (i) of the Employment Act (Ch 373). This provision entitles an employer to dismiss an employee without notice or payment in lieu of notice where an employee “willfully disobeys a lawful and reasonable order” from the employer. Of course, in relying on this provision the appellant company argued that the employees’ failure to return to work, as required by the company’s notice served upon them, was an act of wilful disobedience of a lawful and reasonable order from the employer, and thus constituted a ground for summary dismissal.
This argument was accepted by Hinchliffe J, who held that by virtue of s 36(1) (a) (i) of the Employment Act (Ch 373), the company had been entitled to dismiss any employee who fails to comply with a reasonable direction to return to work. Accordingly, the company’s appeal against conviction was upheld.
In my view, Hinchliffe J’s decision is clearly wrong because it fails to take into consideration the background under which the “return to work orders” were issued. If the “return to work orders” were issued outside of the lawfully constituted strike period, then Hinchliffe J’s decision can be accepted. That was however not the case at all. The “return to work orders” were issued during the currency of a lawfully constituted strike action, and therefore the protection accorded to workers who collectively organise and disagree with existing conditions of employment in pursuit of improved terms and conditions under s 63 of the Industrial Relations Act (Ch 174) should come into play. The unambiguous purpose of this provision is to offer protection to unionised workers from harassment, intimidation, and victimisation by their employers on account of the workers taking part in the collective bargaining process which is the cornerstone of the industrial relations system that Papua New Guinea has adopted and now practises. As well, there is also the powerful constitutional law argument alluded to by Los J in Steamships Trading Co Ltd v Ruba Leva [1988-89] PNGLR 248, to the effect that workers have a “right to assemble, associate and belong to an industrial organisation [as] guaranteed by s 47 of the Constitution”.[1] It therefore follows that the use by an employer of s 36(1) of the Employment Act (Ch 373) during a lawfully constituted strike period is to negative the constitutional right of the workers given under s 47 of the Constitution.

The Decision in Habuka Lawyers v Higaturu Oil Palm Pty Ltd (1997)

Manuhu SPM first referred to Hinchliffe J’s decision in the Atlas Steel case and began his analysis of the law and facts. So as not to lose the intellectual rigour of his excellent judgment, it will be helpful to quote the main points in full:

“His Honour Hinchliffe, J. on appeal from the decision of the District Court accepted the appellant’s only reason that dismissal was because the workers did not comply with the “order” of 21 June. His Honour went on to say that it is not an offence under Section 63(1) to terminate an employee who fails to comply with a reasonable direction to return to work. Under Section 36(1) of the Employment Act, Ch No 373, his Honour continued, an employer is entitled to terminate an employee without notice if the employee does not comply with a lawful and reasonable direction.

I would be dishonest to myself if I do not express dissent with his Honour’s conclusion in the cited case. As a matter of law, the appellant was perfectly free to terminate the workers’ employment for any reason or reasons which seem good to it, provided that, the reason or one of the reasons was not that the workers were officers, delegate or members of their union. In my respectful view, therefore, in restricting himself to the order to return to work and the consequential dismissal, his Honour failed to consider the purpose of the order, which gave rise to the dismissal, in the light of the industrial climate at the relevant time: Bowling v General Motors-Holden Pty Ltd [1975] 8 ALR 197.

The order speaks for itself. It specifically made reference to workers “on strike”. In my humble view, the order was nothing more than a perfectly prejudicial act to circumvent a strike action which was not found to be unlawful. Hence, for the two workers who returned to work as ordered they just had to abandon their right to meaningfully assemble, associate and belong to an industrial organization as guaranteed under Section 47 of the Constitution and regulated by various Acts of Parliament.

... A proper and practical analysis of the evidence in the Atlas Steel case should have led to the conclusion that the order to return to work was an anti-union action and the consequential dismissal a contravention of Section 63(1).

Secondly, as the strike action and the right to assemble, associate and belong to an industrial organization are guaranteed by the Constitution, reliance on Section 36(1) of the Employment Act was, in my respectful view, inappropriate and irrelevant.”

After making reference to other related matters, Manuhu SPM continued:

“In my respectful view, therefore, for an employer to succeed it must point to a reason or reasons that, in normal circumstances, is either unlawful, or which, according to past practices or rules, warrants dismissal. For instance, in Bowling v General Motors–Holden (supra) the informant was dismissed owing to his unsatisfactory attitude towards his job and to supervision. (The defendant was still convicted due to its inability to show that dismissal was not actuated by the informant’s union activities.)

In the case before me, there is evidence that the defendant was entitled to dismiss those members and employees who caused damage to company property. Similarly, if the members had resorted to violent tactics the defendant would be entitled to have them dismissed. On the other hand, as in the Atlas Steel case, an employer cannot dismiss an employee following ‘disobedience’ to an order to stop a strike action and to return to work.”

Unfortunately, but quite properly, the magistrate realised that he was bound by the National Court decision and so conceded:

“In the end, if I have to consider this case my way, the defendant should be convicted. However, I remind myself that justice means justice according to law. My hands are, therefore, tied. According to law, decisions of the National Court are binding on the lower courts. The relevant facts in the Atlas Steel case are practically identical to the present case. I have no choice but to adopt his Honour’s interpretation of the order to return to work and his views on the resultant dismissal.”


In recent times, a trend has developed whereby employers, both in the private and public sector, have been demonstrating an anti-union attitude, particularly in instances where trade unions or other workers’ organisations have been involved in the collective bargaining process seeking improved terms and conditions of employment for their members.
The actions and approach of the employers in the Atlas Plant case (1994) and the Higaturu Oil Palm Case (1997) are clear examples of this deliberately negative attitude. The employers seem to forget the basic purpose for which trade unions are established: to engage in the collective bargaining process in the interests of their members. Acceptance of the decision by Hinchliffe J in the Atlas Steel case is tantamount to displaying support for this anti-union sentiment and behaviour.
To this end, I applaud this excellent judgment by Manuhu SPM and hope that it will lead judges in future to reconsider the issue, and to restate and apply the law in the manner set out so convincingly in the District Court judgment.

[*] Lecturer in Law, University of Papua New Guinea (on study leave at the University of Wollongong).

[1] Steamships Trading Co Ltd v Ruba Leva [1988-89] PNGLR 248, at 252.

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