VOLTA ALUMINIUM CO LTD V. AKUFFO AND OTHERS

JUDGEMENT

KPEGAH JSC.

I have had the advantage of reading beforehand, the judgment to be delivered by my learned brother Date-Bah JSC. I agree with his reasoning and conclusion. I have nothing useful to add.

AKUFFO JSC.

I have also had the advantage of reading beforehand, the judgment of my learned brother Date-Bah JSC. I also agree with his reasoning and conclusion.

DATE-BAH JSC.

This appeal turns on the interpretation to be given to certain provisions in a collective bargaining agreement between the employer of the plaintiffs-respondents and their trade union. The facts of the case are not in dispute.

The facts

The plaintiffs-respondents (hereinafter referred to as the plaintiffs) used to be employed by the defendant-appellant company (hereinafter referred to as the defendant). They were members of the Industrial and Commercial Workers’ Union (ICU) of the Ghana Trades Union Congress. On 16 May 1994 the defendant terminated the employment of the plaintiffs (along with other employees) on the ground of redundancy. In doing this, the defendant purported to be acting pursuant to article 15(e) of the labour agreement between the ICU and the defendant company. This labour agreement was the collective bargaining agreement between the two parties. By virtue of section 10(2) of the Industrial Relations Act, 1965 (Act 299), its provisions were incorporated into the individual employment contracts of the plaintiffs. Article 15(e) is in the following terms:

“(e) Employees to be declared redundant will be given two (2) months’ notice or paid in lieu.”

The defendant company paid the plaintiffs two months’ salary in lieu; exercising what it interpreted as an option available to it under the above provision. However, the plaintiffs were aggrieved by this act and instituted action against the defendant claiming the following reliefs:

“(i) a declaration that the calculation of their terminal benefits should be based on the amount of remuneration which would have accrued to, them on 15 July 1994;(ii) an order directing the defendant to pay the plaintiffs the balance of their terminal benefits based on (i) above; and(iii) interest on the balance from the date it became due to the date of payment.”

If the plaintiffs’ terminal benefits were to be calculated in accordance with the formula in relief (i), this would imply bringing into account the outcome of wage-re-opener negotiations between the ICU and the defendant, which they were obliged by the labour agreement to undertake and implement. This outcome was a 71.52 per cent across the board increase in wages for all employees which had become effective from 1 July 1994. The plaintiffs’ complaint was that by calculating their end of service benefits on the basis of their remuneration on 16 May 1994, the day of their termination, the defendant had paid them less than they were entitled to.

In order to achieve relief (i), the plaintiffs argued before the learned trial High Court judge that article 15(e) should be construed in conjunction with article 13 of the labour agreement. The full text of articles 13 and 15 are respectively set out below:

“Article 13—LEAVING OF THE COMPANY(a) If the company terminates the services of a regular employee other than in case of summary dismissal, the company shall give to the employee at least fourteen (14) days’ notice to expire not later than the last day of current month or pay to the employee a sum equal to the amount of remuneration that would have accrued to him during the period of notice.(b) Similarly, an employee wishing to resign from the company should give to the company the required notice under (a) above or in lieu of notice pay the equivalent sum of money.(c) Notwithstanding the above, a month’s notice will be given by either party in case of termination or resignation of an employee with over three (3) years continuous services.”

Article 15—REDUNDANCY“(a) In the event of redundancy, the company shall notify the union in advance as far as possible.(b) The criteria for determining employees to be declared redundant shall be based on merit, potential skill, physical and mental ability to assume other jobs and good conduct. All things being equal, length of service shall be the determinant factor. .(c) When subsequent employment arises in the same department within three (3) months from the date employees in that department were declared redundant, these employees will be given preference for reemployment. It is understood that any redundant employee re-hired under this article shall be considered a new employee.(d) Where the company wishes to retain the services of the less senior man because of his merit, ability or skill, regardless of his length of service, the union will be informed accordingly.(e) Employees to be declared redundant will be given two (2) months’ notice or paid in lieu.”

The plaintiffs argued that article 15(e) should be read together with article 13(a) and (b). When this was done, the plaintiffs’ contention was that the logical outcome would be to construe the amount to be “paid in lieu”, under article 15(e), as meaning the sum of money which would have accrued to’ the plaintiffs during the period of notice. This was because, reading the labour agreement as a whole, the phrase “leaving the service of the company” in article 13 meant the same as termination of employment; and that redundancy in article 15(e) was a form of termination of employment. Redundancy was thus recognised as a form of leaving the service of the defendant company. Accordingly, “paid in lieu” under 15(e) should be given the same meaning as in 13(a) where it is expressed as “the remuneration which would have accrued to him during the period of notice.”

The learned trial High Court judge rejected this argument of the plaintiffs and gave judgment for the defendant company. The learned judge was more impressed with the argument of the defendant that article 15(e) gave it an option to give notice or to pay two months’ salary and that, having chosen the latter option, it was not open to the plaintiffs to base their calculation on an option which had not been exercised.

The plaintiffs, being aggrieved by the judgment in the High Court, appealed to the Court of Appeal. The Court of Appeal reversed the High Court judgment by a majority, with Afreh JA (as he then was) dissenting. It is from the judgment of the Court of Appeal delivered on 2 March 2000, that the defendant company has appealed to this court. The grounds of appeal filed are the following:

“(i) Their lordships in the majority in the Court of Appeal erred in law by holding that the negotiations of the union officials were void.(ii) The majority judgment further erred in law by holding, without any factual basis whatsoever, that the ICU did not negotiate fairly for the employees.(iii) The majority judgment completely ignored the entire law of collective bargaining carefully crafted by the Industrial Relations Act, 1965 (Act 299), and thereby occasioned a substantial miscarriage of justice.”

Additional grounds of appeal were filed by the defendant company, but leave was not sought by their counsel from this court for them, to be argued. Accordingly, strictly speaking, according to rule 6(6) of the Supreme Court Rules, 1996 (CI 16), the arguments of the defendant based on the additional grounds should be ignored. The failure by the defendant to secure leave for the additional grounds, would mean that much of its statement of case would be rendered less relevant than it might have been, since it focused on the additional grounds. On the other hand, by rule 6(7)(b) of CI 16, notwithstanding the requirement for an appellant to set forth the grounds of appeal, the court is not obliged, in deciding the appeal, to confine itself to the grounds set forth by the appellant; nor is it precluded from resting its decision on a ground not set forth by the appellant. Accordingly, in the interest of justice, I would take account of such of the additional grounds of appeal as I find helpful in the re-hearing of this case, by way of appeal. In adopting this approach, I have found helpful the view expressed by Osei-II were J (as he then was) in Nkrumah v. Ataa [1972] 2 GLR 13 at 18 that when an appeal is said to be by way of re-hearing, the appellate court is in the same position as if the re-hearing were the original hearing and it may review the whole case and not merely the points as to which the appeal is brought. There will be no injustice in resting any decision I take on any of the additional grounds since the plaintiffs were given notice of them (and the arguments in support of them) and, in fact, addressed them in their statement of case.

The following additional facts need to be noted. By article 52 of the labour agreement, eighteen months after the commencement of the agreement, there was to be a salary review, ie 1 July 1994. In January 1994, the senior staff were given a 60 per cent pay increase. It was then anticipated by all, including the management, that when salaries of the unionised workers were reviewed in July 1994, there would at least be an increase of 60 per cent. This was because the long tradition in VALCO, the defendant company, had been that the unionised workers and the senior staff are given pay increase at the same time and in almost the same percentage. This was attested to by a Newsletter of Valco Management.

Grounds of appeal

The first ground of appeal, in effect, objects to the majority of the Court of Appeal’s holding that the outcome of the negotiations with the union officials on the redundancy was void. This ground is referring to the views expressed at the Court of Appeal by my learned brother Brobbey JA (as he then was) when he said:

“In the instant case, when union officials were authorised to negotiate on behalf of workers, there was the obvious presumption that they were required to negotiate fairly and in the best interest of the workers. The union officials surely had no mandate to negotiate in such a way as to give away the rights of workers. For reasons stated below, articles 13 and 15 should be read together in order to give correct and full interpretation to exhibit A. On the face of the provisions of article 13, if the union officials proceeded to negotiate for 60 per cent instead of 71.25 per cent, the contract arising out of the negotiation contravened section 10(4) of the Industrial Relations Act, 1965 (Act 299), and was therefore void for the simple reason that the negotiators had given away the rights of the workers which they could not do under Act 299, s 10(4). The employees were not obliged to accept the 60 per cent merely because it was the result of negotiations conducted on their behalf by their union officials. The fact that the negotiations were void in the terms of Act 299 is sufficient ground to set aside what was agreed upon.”

What the first ground of appeal does is to question this statement of the law. I am inclined to uphold this ground of appeal, since I do not accept that the outcome of the negotiations by the union officials was void. My reasons for this view are as follows: Section 10(4) of the Industrial Relations Act, 1965 (Act 299), which is relied on by the learned judge for his view, is in the following terms:

“(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.”

This provision does not deny to a trade union, which has negotiated a collective agreement, authority to modify it or waive rights under it. What it does is to deny authority to individual employees to waive their rights under uncollective agreements. There is a policy rationale for making this distinction between individual employees and their trade union. The trade union represents the collective strength of the workers, which enables more equal bargaining with the employer. The gains of such bargaining from strength are not to be allowed to be whittled away by individual employees who can be overawed by the bargaining strength of their employer. Act 299 does not give the courts authority to police the fairness of collective agreements. Certainly, under the general common law of contract, the courts have not given themselves the role of determining the fairness of contracts and striking down unfair contracts as void. Accordingly, to sustain the view of my learned and respected brother Brobbey JA (as he then was), there would be need for some statutory authority. That authority is not section 10 (4) of Act 299, since that deals with waiver by individual employees, and not by trades union.

In any case, the negotiations conducted by the union officials were not intended to modify the collective agreement. Rather, the subjects for discussion were, according to the Valco Newsletter, put in evidence-in-chief by the first plaintiff:

“(i) implementation plan for an orderly shutdown;(ii) procedures for determining employees who, as a result of the curtailment in operations, would be declared redundant; and(iii) benefit package for affected employees.”

These subject items for discussion arose from the cutback in electricity supply from the Volta River Authority (owing to the low level of the Volta River) which had necessitated the shutdown of one of the pot lines in the defendant company’s smelter. These were matters that the union was authorised to discuss. In this connection, the following passage from the cross-examination of the first plaintiff is instructive:

“Q The body that has the statutory power to negotiate is the union and not you individually?A That is correct but they cannot negotiate away what was due us at the time and that is what they did.Q The whole thing was a package?A Yes.Q And your union admitted that it was fair and adequate for all purposes and therefore accepted it?A The union has the right to negotiate on our behalf. But the foundations should be the agreement they were using at that time and they had gone contrary to that agreement and therefore we have lost several sums of moneys because of their mistake.Q Which guideline in the existing collective agreement (exhibit A) was breached?A Articles 15(e), 13(a) and 52.”

Thus, the complaint of the first plaintiff was not that his union was in breach of any statutory provision, but rather that the negotiated package was inconsistent with, or in breach of, particular provisions of the collective agreement.

Whether or not this was so is a matter of interpretation. These issues of interpretation will be dealt with later. On the distinct issue of whether there is power in the courts, conferred by statute or otherwise, to examine the fairness of agreements reached on behalf of workers by their union, I do not see any legal basis for such power. Indeed, if such power did exist, it would have been invidious for the courts to determine for the parties what terms in their agreements are fair. The employers and the trade unions are in a much better position to determine what is fair or not with regard to matters on which they negotiate.

In any case, from the evidence on the record, it is doubtful if it can be said that the union gave away the rights of the workers they represented. The union entered into good faith negotiations which took into account an expectation of a 60 per cent rise in wages. However, there was no contractual or other right to such increase. Therefore, the union can hardly be charged with giving away any right. In the end, the actual realised increase achieved by the negotiations of the union with management was 71.52 per cent. The first plaintiff’s evidence in cross-examination on this issue was as follows:

“Q Is it your case that the union did not inform workers of the negotiations?A I did not say that. What I said was that when VRA asked VALCO to shut down some of its pot lines, ICU and VALCO management discussed the terms under which affected employees would be laid off.Q One of the matters agreed upon was the date of redundancy?A I am aware that it was agreed that there be a redundancy exercise. But I cannot tell whether any particular date was decided upon.Q It was also a requirement that whilst you are leaving, you must get your money? A Yes.Q The six months’ pay you got, was it not expressed to be in lieu of a possible loss of increment?A The six months’ salary was paid because they were anticipating 60 per cent pay increase and that money was to make up for the loss. But the six months’ pay never made up for the losses that would have come on our end of service benefits as the 60 per cent was given. It was far below what we would have got and that is why we are here.”

Also, in the first plaintiff’s evidence-in-chief, he said:

“At the time we left the employment of VALCO there was a labour agreement between the defendant and the ICU (Industrial Commercial Workers Union) which came into effect on 1 January 1993. This agreement was to last for three years. I have with me here a copy of the said agreement and I wish to tender the same in evidence. [Admitted without objection and marked exhibit A.] By article 52 of exhibit A, eighteen months after the commencement of the agreement, there was to be a salary review (ie on 1 July 1994). I stopped working with the defendants on 16 May 1994. In January 1994, the senior staff were given 60 per cent pay increase. It was then anticipated by all including management that when we came to salary review of the unionised workers in July 1994, there would at least be an increase of 60 per cent. This was because the long tradition in VALCO had been that the unionised workers and the senior staff are given pay increase at the same time and almost the same percentage.”

From this evidence, it is clear, as already pointed out above, that, unless the collective agreement contained provisions to the contrary, the plaintiffs had no right to a 60 per cent wage increase, let alone a 71.52 percent increase. All they had was a reasonable expectation that they would receive the 60 per cent increase. It was therefore, with respect, not legitimate for the majority of the Court of Appeal to castigate the union for negotiating in such a way as to give away the rights of workers. Accordingly, I would uphold the defendant company’s first ground of appeal. I do not think, subject to the consideration of the issues of interpretation below, that the majority of the Court of Appeal had a valid legal basis for setting aside the agreement reached between the trade union officials and the defendant company.

In its second ground of appeal, the defendant company contended that the majority judgment of the Court of Appeal erred in holding, without any factual basis whatsoever, that the ICU did not negotiate fairly for the employees. I am inclined to uphold this ground of appeal as well. The issue of whether the ICU did or did not negotiate fairly for the employees was not one of the issues set down for trial in the summons for directions. Accordingly, evidence was not led on the fairness or otherwise of the negotiating efforts of the union. There was thus insufficient evidence on record on which to base a finding that the ICU had not negotiated fairly for its members.

It will be recalled that the third ground of appeal was that the majority judgment completely ignored the entire law of collective bargaining carefully crafted by Act 299, and thereby occasioned a substantial miscarriage of justice. The defendant company does not produce arguments directly in support of this ground as such, but some of its arguments in support of some of the grounds it filed as additional grounds are pertinent to the broad thrust of this ground, namely that there was an insufficient appreciation by the plaintiffs of the relevance of Act 299. Allied to this is the case argued by the defendant company that paragraph 33 of the Labour Decree, 1967 (NLCD 157), had been incorrectly applied to the collective agreement.

Let us first dispose of the issue relating to paragraph 33 of NLCD 157. In the Court of Appeal, my learned brother Brobbey JA (as he then was) said:

“Lastly, the necessity to pay a sum equal to what the employee would have earned is further emphasised in the Labour Decree,1967 (NLCD 157). Section 33(9) of the paragraph dealing with notice or pay in lieu of notice provides that:‘33. (9) Either party to an agreement, to which this paragraph applies, may determine the agreement without notice upon the payment to the other party of a sum equal to the amount of remuneration which would have accrued to the employee during the period of the notice.’This obviously provides statutory backing for the view that whenever an employee has to be given pay in lieu of notice, the pay should be equal to the amount of remuneration which would have accrued to him during the period of the notice.”

The defendant points out in its statement of case that this application of the above statutory provision was in error since sub-paragraph 10 of that same paragraph 33 of NLCD 157 provides as follows:

“In this paragraph ‘agreement’ means any oral engagement to work.”

It is thus quite clear that the provision is not applicable to the employment contract between the defendant company and the plaintiffs, since the labour agreement is incorporated in that contract and the labour agreement is in writing. The plaintiffs do not aver in their pleadings nor does the first plaintiff, who gave evidence, state that their individual contracts were oral engagements, but it is highly likely, given the usual practice of employers similar to the defendant, that the plaintiffs’ individual contracts were also in writing. Indeed, the labour agreement provides in its article 4 as follows:

“(a) All newly hired employees covered by this agreement shall be given letters of appointment indicating:salary pointsalary scaleeffective datedepartment assignedjob titleprobation periodFurther, the major duties of the position will be discussed with the new employees.”

Thus, the collective agreement clearly contemplated individual written contracts between the defendant company and its employees. Moreover, the preamble of the labour agreement provides as follows:

“This agreement made this 7 April 1993 between the Volta Aluminium Company Limited (VALCO) (hereinafter referred to as the company) and the Industrial and Commercial Workers’ Union of TUC of Ghana officially certified under the Industrial Relations Act, 1965 (hereinafter referred to as the union), as the negotiating body, provides for the terms and conditions of employment and non-employment and the conditions of labour which shall apply to all employees of the said company for whom the union has been certified to negotiate.”

In spite of this context, the plaintiffs argued in their statement of case, while admitting that paragraph 33 of NLCD 157 only applied to oral agreements, that the individual contracts between the defendant company and its employees should be regarded as oral agreements. Their argument was as follows:

“In Ghana statutory interventions have given protection to employees whose employment is terminated on various grounds without notice when employed under oral agreements. Oral agreement is explained in paragraph 14(3) of the Labour Decree, 1967 (NLCD 157), to mean a contract of employment between an employer and employee which has not been presented to the Chief Labour Officer or Labour Officer for attestation. Even though exhibit A derived its validity from the Industrial Relations Act, 1965 (Act 299), and section 10(1) of Act 299 makes any agreement concluded by the trade union through standing negotiations applicable to all employees belonging to the union, it does not make such agreement between the employee and the employer a written agreement between individual employees and the employer as envisaged in paragraphs 11, 12, 13 and 14 of NLCD 157.”

In response to this argument, the defendant company contends that there is no evidence on the record showing that the labour agreement had not been submitted for attestation. Secondly, it argues that paragraphs 11 to 14 of NLCD 157 apply to individual employment contracts only, and not to collective agreements. The defendant argues that collective agreements are dealt with and regulated exclusively by Act 299. Accordingly, the defendant concludes as follows:

“It is our humble submission therefore that the labour agreement cannot, by any stretch of any principle of law or one’s imagination, be treated as an oral contract. It does not fall under NLCD 157 as the respondents [the plaintiffs] seek to persuade this honourable court, but under Act 299. It is respectfully absurd to say that a written collective agreement under Act 299 should be treated as an oral individual employment contract under NLCD 157. Accordingly, section 33 of NLCD 157 which applies only to oral agreements, does not apply to the labour agreement.”

On this issue, the burden of persuasion lies on the plaintiffs to establish the fact that the individual contracts of the plaintiffs were oral. Ei incumbit probatio qui affirmat, non qui negat. Section 14 of the Evidence Decree, 1975 (NRCD 323), expresses the essence of this Latin maxim thus:

“(14) Except as otherwise provided by law, unless and until it is shifted a party, has the burden of persuasion as to each fact the existence or non-existence of which is essential to the claim or defence he is asserting.”

Accordingly, the plaintiffs, if they are to sustain, on appeal, their arguments on this point, should have led evidence at the trial establishing that their individual contracts were not written. Having failed to do this, they have failed to establish a fact the existence of which is essential to their claim on this issue. Indeed, the circumstantial evidence points in a different direction. Accordingly, I hold that, given the evidence on record, paragraph 33 of NLCD 157 does not apply to the facts of this case.

The core of the appeal

Now, let me deal with the core of the appeal. This relates to the interpretation of articles 13 and 15 of the labour agreement. The defendant company insists that the two articles are separate and distinct provisions of the agreement and should, therefore, be interpreted as such in their own terms. The plaintiffs, on the other hand, contend that articles 15(e) and 13(a) should be read together.

What are the merits of these contending interpretations? I am inclined to support the view of Afreh JA (as he then was) of blessed memory, expressed in the Court of Appeal in this case that:

“The two articles are so clear that there should have been no controversy over their meaning or effect.”

Article 15 of the labour agreement deals with termination through redundancy and, under that mode of termination, according to paragraph (e) thereof, the employer has the option either to give two months’ notice to the employees or to pay the employees two months’ pay in lieu of notice. The mode of calculating the two months’ salary is not specified in article 15, but the clear implication is that it should be based on the salary that the employee was entitled to on the date of the termination. On the facts of this case, that salary was what the plaintiffs were earning as at 16 May 1994. In my view, the plaintiffs’ argument in favour of importing into article 15(e) of the labour agreement the concept of payment contained in article 13(a) of the labour agreement that the sum to be paid in lieu is “a sum equal to the amount of remuneration which would have accrued to him during the period of notice” is far-fetched and not justified by the overall structure of the labour agreement. It is a provision whose effect should be limited to article 13 of the labour agreement within which it is contained. There is no persuasive reason to expand its reach to other termination provisions in the labour agreement.

The plaintiffs, of course, contended to the contrary. In their statement of case, they argued as follows:

“It is submitted that as far as exhibit A is concerned redundancy is not a form of termination but a ground of termination and therefore redundancy and termination are not mutually exclusive to each other and this position is supported by article 17 which makes it clear that redundancy is only a ground of termination. The foregoing notwithstanding, the question the appellant [the defendant] failed to ask and answer is why would employees whose employment is terminated on different grounds without notice be treated differently in terms of payment of remuneration that would have accrued to the employees during the period of notice. Article 13(a) of exhibit A is therefore applicable to all grounds of leaving the services of the company involuntarily except when an employee is summarily dismissed. For clarity, it needs to be stated that in exhibit A a person who lost his job involuntarily when asked why his appointment was terminated will reply:‘my appointment was terminated on the ground of either medical as under article 17 or fighting on company premises under article 9(f)(i) or for having received five (5) warning letters within twelve consecutive months under article 9(e) or redundancy under article 15.’In the result, articles 13(a) and 15(e) are not exclusive of each other and therefore the majority in the Court of Appeal held rightly that articles 13(a) and 15(e) of exhibit A should be treated as one provision and that article 13(a) should be applied to all other sections that deal with leaving the services of the company involuntarily.The Supreme Court in Boateng v. Volta Aluminium Company Ltd [1984-86] 1 GLR 733, CA applying the principle of reading a document as a whole when construing the document (stated as in the headnote):‘In attempting to construe the termination .provisions, regard should be had to all the four clauses, ie the language used and all the provisions in the termination clauses should be looked at as a whole and every clause must be compared with the other and one entire sense made out of them.”

While this advice from the Supreme Court is unexceptionable, it does not justify what the plaintiffs are arguing for, which is a virtual re-writing of article 15 (e) of the labour agreement. My view is that, after reviewing and construing the totality of the labour agreement, one should reach the conclusion that articles 13 and 15 had different purposes and therefore should not be interpreted as one provision. If the parties had intended such a result they would have so indicated. As Afreh JA (as he then was) and now of blessed memory, asked poignantly in the Court of Appeal, in relation to the application of the dictum in the case of Boateng v. Volta Aluminium Co Ltd [1984-86] 1 GLR 733, CA:

“Applying this dictum to interpretation of the labour agreement, exhibit A, in this case, the question that must be asked is: if articles 13 and 15 do not deal with two separate situations why did the labour agreement deal with their situation in two different clauses or articles? Why do end-of-service benefits for redundancy and termination/resignation differ so remarkably? Under article 48 a person who is declared redundant may get, depending upon the number of years he has served, 134 per cent to 234 per cent of the consolidated pay for each pro-rata year of service as end-of-service benefits. But a person whose contract is terminated or who resigns can only get 67 percent to 100.46 percent. And why is redundancy put in the same category as retirement, ill-health and death and not as termination/resignation?”

In my view, the majority of the Court of Appeal, with respect, strayed beyond the bounds of interpretation into remaking a contract for the parties to the labour agreement. I am thus unable to support their view.

In conclusion, my opinion on this issue is that the true interpretation to be put on article 15(e) of the labour agreement is that the employer, in a redundancy situation, had an option either to give his employees two months’ notice of their termination or to pay them two months of their existing salaries as at the date of termination in lieu of such notice. The payment of salary in lieu to the plaintiffs did not constitute a diminution of their contractual emoluments. The fact that, on the date on which the plaintiffs’ employment contracts were terminated, they had an expectation that they would, in fact, soon receive an increase in salary under the wage-re-opener, does not change what rights they actually had as at that day. Neither are their existing rights changed by the fact that if the defendant company had exercised a different option under article 15(e) of the labour agreement they would have benefited from the increase in wages which took effect from 1 July 1994. Thus, whilst one understands the plaintiffs’ motive in seeking an interpretation that enables them to benefit from the salary increase on 1 July 1994, this motive should not be allowed to distort the meaning intended by the parties to the labour agreement.

This explains my inability to agree with the following reasoning expressed in the judgment of my learned and respected brother Brobbey JA (as he then was) in the Court of Appeal:

“At the time the appellants [namely the plaintiffs] were laid off, the wage-re-opening had not commenced. It was commenced, according to the evidence, on 1 July 1994. The two months’ pay from 16 May expired on 16 July. If the contention of counsel for the respondent [the defendant] is accepted and the effective date of the termination of employment were taken to be 16 May when the entitlements were paid, then those who were paid could be taken to have severed their relations with the company and could not be affected by the wage-re-opening.That reasoning would, however, not be accurate or fair to the appellants [the plaintiffs] for the following reasons: The wage-re-opening resulted in increasing the earnings of the employees. In fact, the evidence showed that the increase was as much as 71.25 per cent. To peg the entitlements of the appellants [the plaintiffs] to the time of their termination on 16 May would mean a diminution in the emoluments of the appellants [the plaintiffs] because on 16 May, the emoluments were less 71.25 per cent. The respondent [the defendant] itself realised this fact and therefore gave the appellants [the plaintiffs] what they described as ‘goodwill payment to employees declared redundant on 16 May 1994... to make up for the apparent financial loss prior to an anticipated 60 per cent wage settlement’ as will be found in the Valco Newsletter tendered as exhibit B, pp 3 and 4.The reality of the situation was that the respondent was faced with two choices; one choice was to make the emoluments of the employees worse off by obvious diminution in their entitlements if they were given entitlements based on their earning as at 16 May 1994; the second choice was based on the wage-re-opening which would have enhanced the emoluments of the employees by the 71.25 per cent which the wage-re-opening brought about.To my mind, there are four reasons why it was wrong for the employer to have exercised the discretion, which resulted in the diminution of the emoluments of the appellants [the plaintiffs] as employees. In the first place, where an employer has to exercise any discretion which would reduce the employee’s emoluments as against that which would enhance those emoluments, common sense dictates that the latter should be preferred. Secondly, the generally accepted principle is that the earnings of an employee cannot be reduced unless for stated misconduct or stated just cause. There is no evidence that the employees did anything amounting to misconduct, which justified a reduction in their emoluments. Thirdly, the employers themselves realised that the emoluments of the workers would be reduced and that was evidenced by the goodwill payment. The realisation alone was enough support for the view that the employees were not being fairly treated by the payment based on the day of their termination. If the employers realised that the employees would be taking less emoluments home by that mode of payment, why should they be allowed to make that payment to the employees? Was it because the employer had greater bargaining power? If that were the correct situation, would that not amount to encouraging employers to take undue advantage of situation warranting resort to redundancy to lay off workers and thereby bring about reduction in the earnings of workers? That will surely be against public policy.”

With the greatest respect, this passage confuses contractual rights with non-contractual expectations. It is important that legally enforceable contract rights are not confused with mere expectations, however well-founded the latter may be. The limitation sought to be imposed on the contractual discretion of the employer by the learned and respected judge was totally unjustified.

The employer had an option conferred on him by the contract. The fact that its exercise caused the plaintiffs to receive less emoluments than they had cause in fact to expect, but for their intervening termination, is not a legal impediment to the due exercise of that option.

Under the common law of contract applied in this jurisdiction, whether the result of a valid exercise of a binding contractual right is fair or not cannot affect the validity of that right. Generally, the fairness of contract is not a matter for the courts, unless a statute so prescribes. The refusal of common law courts to intervene to set aside contracts on the grounds of their assessment of the contracts’ fairness is meant, to avoid the re-opening of bargains. In the interest of freedom of contract, the courts do not wish to interfere to determine for the parties what their bargain ought to be. That is a matter for them and not for the courts. This fundamental principle of the common law of contracts was expressed thus by Lord Denning MR in Lloyds Bank Ltd v. Bundy [1975] QB 326 at 336, CA as follows:

“No bargain will be upset which is the result of the ordinary interplay of forces. There are many hard cases which are caught by this rule. Take the case of a poor man who is homeless. He agrees to pay a high rent to a landlord just to get a roof over his head. The common law will not interfere. It is left to Parliament. Next take the case of a borrower in urgent need of money. He borrows it from the bank at high interest and it is guaranteed by a friend. The guarantor gives his bond and gets nothing in return. The common law will not interfere.”

The final argument of the plaintiffs which I will address is as follows. The plaintiffs contended that the failure of the defendant company to pay them the new wage award effective on 1 July 1994 rendered the agreement concluded between the ICU and VALCO null and void, because it was in conflict with article 13(a) of exhibit A, the labour agreement. The argument fails since I believe that article 13(a) has no application to the redundancy situation.

Conclusion

In the result, I would allow the appeal and restore the judgment of the learned trial High Court judge dismissing the action of the plaintiffs.

ATUGUBA JSC.

I have had the advantage of reading beforehand, the well-reasoned and elaborate judgment of my learned and respected brother Date-Bah JSC. I agree with him that the appeal be allowed and that the plaintiffs-respondents’ action be dismissed as the trial High Court judge did. For my part I do not think that much turns on the different wording of articles 13 and 15 of the collective agreement in this case. The pertinent parts thereof, namely articles 13 (a) and 15(e) respectively state as follows:

“13 (a) If the company terminates the services of a regular employee other than in case of summary dismissal, the company shall give to the employee at least fourteen (14) days’ notice to expire not later than the last day of current month or pay to the employee a sum equal to the amount of remuneration that would have accrued to him during the period of notice...15 (e) Employees to be declared redundant will be given two (2) months’ notice or paid in lieu.”

Much reliance has been placed by the plaintiffs-respondents (hereinafter called the plaintiffs) on the need to read and construe a document as a whole, as stated in Boateng v. Volta Aluminium Co Ltd [1984-86] 1 GLR 733, CA which has been quoted already by my brother Date-Bah JSC. That is a trite and well-settled rule for the construction of any document. It has been stated in relation to contractual documents even more forcefully in Sengena v. Poku (1943) 9 WACA 143 at 146 where the court quoted with approval a statement by Lord Watson in McEntire v. Crossley Bros Ltd [1895] AC 457 at 467, HL as follows:

“The duty of a Court is to examine every part of the agreement, every stipulation which it contains, and to consider their mutual bearing upon each other; but it is entirely beyond the function of a Court to discard, the plain meaning of any term in the agreement unless there can be found within its four corners other language and other stipulations which necessarily deprive such term of its primary significance.”

(The emphasis is mine.)

I would add that even a plain stipulation must be applied ut res magis valeat quam pereat. In this case, article 13(a) of the collective agreement needs to be repeated. It states as follows:

“13 (a) ... the company shall give to the employee at least fourteen (14) days’ notice to expire not later than the last day of current month or pay to the employee a sum equal to the amount of remuneration that would have accrued to him during the period of notice.”

(The emphasis is mine.)

The stipulation in article 13(a) relates to the payment of such a sum as at the date of termination. That means that such a sum should be a liquidated sum and, therefore, at the most extreme form of a liquidated sum, quid certum reddi potest and not a sum that is philosophical or entirely hypothetical; for in the case of the latter, the stipulation would be impossible to exercise. The words “would have accrued to him during the period of notice” govern the word “remuneration” in that stipulation and suggest the reasonable foreseeability test and requires that one uses the known facts at the date of the termination to compute the salary and not proceed on uncertain facts which would make that computation impossible. All this boils down to this, that an increase in salary during the requisite period of notice, which at the date of termination of the employment was not reasonably foreseeable and even then capable of ready ascertainment, as at that date, is not part of the “sum equal to the amount of remuneration that would have accrued to him during the period of notice” within the true contemplation of the parties upon a proper construction of those words in article 13(a) of the collective agreement.

That apart, it is trite law that the rules of construction of statutes are generally the same as those for the construction of deeds and other documents. It is a settled canon of construction that variations in language of statutory provisions do not always point to a change of intent: see Bilson v. Apaloo [1981] GLR 24 at 52, SC which I quoted with approval in New Patriotic Party v. National Democratic Congress [2000] SCGLR 461 at 516. Thus in Director of Public Prosecutions v. Luft; Director of Public Prosecutions v. Duffield (Consolidated) [1976] 3 WLR 32 at 41, HL Lord Diplock, commenting on variations in statutory provisions said:

“In their Lordships’ view, so far as the meaning of the subsection is concerned no significance can be attached to these substitutions ... The substantive alteration to section 34(1) of the Act of 1918 which was affected by section 63(1) of the Act of 1949 was to add to the matters upon which expenses could not be incurred without the written authority of an election agent. In order to make this addition the draftsman found it necessary to re-arrange the order of words which his predecessor had adopted in section 34(1). In this re-arrangement the retention of the phrase ‘for the purpose of’ would have been inelegant as a matter of draftsmanship as compared with the use of the equivalent phrase ‘with a view to’ to convey the same meaning. Similarly the substitution of ‘a’ for ‘any’ was called for as a matter of draftsmanship by the subsequent references to ‘the candidate’ and ‘another candidate.’ In my view these substitutions are stylistic only. The substituted words mean the same as those which fell to be construed in Rex v. Hailwood and Ackroyd Ltd. [1928] 2 K.B. 277.”

(The emphasis is mine.)

Similarly in In re F (A minor) (Publication of Information) [1976] 3 WLR 307 at 318 Tudor Evans J said:

“It is quite true that the words ‘information relating to’ found in section 12(1) are not repeated in sub-paragraph (a), but the section and the sub-paragraph have to be read together ...”

Whereas it is normal and easy to talk in terms of a month’s salary, it is not a common way of talking in terms of two weeks’ salary. It is therefore easy to see that the parties in the instant case, when they had to express themselves about a salary in respect of two weeks, found it inelegant to express themselves in terms of two weeks’ salary, and, therefore, had to resort to some circumlocution about it, without thereby evincing a change of intent.

I would therefore also allow this appeal.

BADDOO JSC.

This is an appeal against the majority judgment of the Court of Appeal dated 2 March 2000.

The brief facts of the case are that the Volta Aluminium Co Ltd (VALCO), the appellant (hereinafter referred to as the defendant), declared a number of its employees redundant in May 1994 as a result of the low water level on the dam, which made it impossible for the Volta River Authority (VRA), to meet the power supply to VALCO. Consequently, VALCO was requested to shut down some of its pot lines.

When this was done, it affected the labour force and some workers had to be laid off.

A collective agreement signed between the employees’ union the Industrial and Commercial Workers’ Union (ICU) of the Ghana Trades Union Congress and the defendant company, was reached on the terms of the lay off and each of the workers so laid off, received two months’ pay, end of service benefits and a package which the defendant named, golden handshake. This included six months’ salary calculated on incomes as at 16 May 1994, food package, long service awards, medical facilities and scholarships for children of the employees.

The employees, now the respondents (hereinafter referred to as the plaintiffs) were not satisfied with the benefits paid out to them and claimed that the defendant company did not comply with the terms of the collective agreement. Their complaint was that their redundancy benefits should have been calculated not on their salaries as at May 1994 when they were laid off, but on what would have accrued to them if they had been given two months’ notice, instead of being paid their salary, in lieu of notice. The plaintiffs therefore issued a writ of summons claiming the following:

“The plaintiffs on behalf of themselves and all other workers laid off on grounds of redundancy in May 1994 claim damages against the defendants for the following reliefs:(i) a declaration that the calculation of their terminal benefits should be based on the amount of remuneration, which would have accrued to them by 15 July 1994;(ii) an order directing the defendant to pay the plaintiffs their balance of their terminal benefits calculated on (i) above; and(iii) interest on the balance from the date it became due to date of payment.”

On 3 June 1998 the High Court dismissed the claims of the plaintiffs who thereupon appealed to the Court of Appeal in August 1998. The Court of Appeal by a majority decision set aside the judgment of the High Court and granted all the reliefs of the plaintiffs.

The defendant company, aggrieved by the majority decision, appealed to this court on 22 March 2002 on the following grounds:

“(i) their lordships in the majority in the Court of Appeal erred in holding that the negotiations of the union officials were null and void;(ii) the majority judgment further erred in law by holding, without any factual basis whatsoever, that the ICU did not negotiate fairly for the employees; and(iii) the majority judgment completely ignored the entire law of collective bargaining carefully crafted by the Industrial Relations Act, 1965 (Act 299), and thereby occasioned a substantial miscarriage of justice.”

Matter for determination

The fundamental issue in this dispute is that, the plaintiffs maintain that their end of service benefits should have been calculated on the basis of what would have accrued to them as wages, if they had been given two months’ notice of the termination of their appointment; while the defendant company insists that in computing payment due to employees to be declared redundant, the reference point is the remuneration at the date of termination. The case for the plaintiffs is that since article 13 deals with “leaving the service” and redundancy is another mode of “leaving the service”, the phrase “paid in lieu,” contained in article 15(e) must be interpreted by reference to the provisions contained in article 13(a) and (d). By this interpretation, the plaintiffs would be entitled to have their end of service benefits computed on the basis of the amount of remuneration that would have accrued to them during the two months’ notice.

The majority judgment held that the trial judge erred by calculating the end of service benefits from 16 May 1994 when the plaintiffs were laid off. The court held that the calculation of their end of service benefits should have included the period which the wage-re-opening covers and should have been based on the earnings which would have accrued to them during the latter period up to 15 July 1994. In other words, even though the plaintiffs had been laid off as at 16 May 1994, they should have been paid as if they had been given two months’ notice which would have expired on 15 July 1994. According to the majority judgment:

“the necessity to pay a sum equal to what the employees would have earned is further emphasised in the Labour Decree, 1967 (NLCD 157), s 33(9) dealing with notice to pay in lieu of notice. The said section 33(9) provides that:‘33 (9) Either party to an agreement, to which this paragraph applies, may determine the agreement without notice upon the payment to the other party of a sum equal to the amount of remuneration which would have accrued to the employee during the period of the notice.”

In the opinion of the majority of the court, the above provision provides statutory backing to the view that whenever an employee has to be given pay in lieu of notice, the pay should be equal to the amount of remuneration which would have accrued to him during the period of the notice. However, if section 33 of NLCD 157 is read in its entirety, it will be seen that subsection (9) expressly states that its provisions apply to employment agreement to which that paragraph applies. Section 33(10) then states that in respect of section 33, the term agreement means “any oral agreement to work.”

Written or oral agreement

The question therefore is what sort of agreement existed between the plaintiffs and the defendant? Was it an oral agreement or a written agreement? If it was an oral agreement then of course, NLCD 157, s 33(9) is applicable. But if it is a written agreement then this provision is inapplicable. However, in this case, the terms and conditions of the employment of the plaintiffs are governed by the labour agreement. The agreement has made express provision for situations where the parties decide to terminate the contract without notice. There is also provision for situations where the parties wish to give notice. Therefore, if one of the parties has exercised its right within the terms of the agreement, I cannot see how that right can be questioned.

The majority of the Court of Appeal erred when it applied the provision of NLCD 157, s 33(9) which deals with oral agreements to this situation where there is a written agreement between the parties. Clearly, section 33(9) of NLCD 157 is inapplicable to this written agreement where express provision has been made for every situation possible.

Should articles 13 and 15 be read together?

The majority of the Court of Appeal also held that articles 13 and 15 of the labour agreement should be read together. The majority said as follows:

“It may also be observed that the expression ‘pay-in lieu’ is referred to expressly or impliedly in various parts of exhibit A, but it is only article 13(a) which contains the qualification that the employer is to give the employee notice or pay a sum equal to the amount of remuneration which would have accrued to him during the period of notice. It cannot, however, be seriously argued that the omission in other sections to state that the qualification expressly means that in respect of all those other sections, equal remuneration was not intended. That would be an erroneous way to consider the entire exhibit A ... It follows from the foregoing that the only way to correct and give full meaning and effect to exhibit A and to effectively enforce the intentions of the parties is to read articles 13 and 15 together.”

It is trite law that in interpreting a document the whole document must be read together. Where, however, provision has been made for specific situations in a document, effect must be given to those provisions. Articles 13 and 15 of the labour agreement could be read together if they dealt with the same or similar matter. Where the two articles deal with entirely different situations, it will be doing violence to the rules of interpretation to insist that the two should be read together. Article 13 dealing with leaving the service of the company reads:

“(a) If the company terminates the services of a regular employee other than in case of summary dismissal, the company shall give to the employee at least fourteen (14) days notice to expire not later than the last day of the current month or pay to the employee a sum equal to the amount of remuneration which would have accrued to him during the period of notice.(b) Similarly an employee wishing to resign from the company should give to the company the required notice under (a) above, or in lieu of notice pay the equivalent sum of money.(c) Notwithstanding the above, a month’s notice will be given by either party in case of termination or resignation of an employee with over three years’ continuous services.”

Article 15 on redundancy reads:

“(a) In the event of redundancy, the company shall notify the union in advance as far as possible.(b) The criteria for determining employees to be declared redundant shall be based on merit, potential skill, physical and mental ability to assume other jobs and good conduct. All things being equal, length of service shall be determinant factor.(c) When subsequent employment arises in the same department within three (3) months from the date employees in that department were declared redundant, those employees will be given preference for re-employment. It is understood that any redundant employee re-hired under this article shall be considered a new employee.(d) Where the company wishes to retain the services of the less senior men because of his merit, ability or skill, regardless of his length of service, the union will be informed accordingly.(e) Employees to be declared redundant will be given two (2) months’ notice or paid in lieu.”

A critical examination of articles 13 and 15 shows that they deal with completely different and distinct situations. In article 13 termination of employment by the company is reckoned as a matter between the employer and the employees. The company is not bound to give reasons for termination nor even justify it, so long as the requirement for notice is complied with by the company. But in article 15 there is a criteria for determining employees who can be declared redundant. In article 15 there is a requirement that in the event of redundancy, the company must notify the union in advance as far as possible. There is no such requirement in article 13. In article 13 if the company terminates the services of a regular employee, he needs to be given fourteen days’ notice to expire at the end of the current month, if he has worked for less than three continuous years. In the case of an employee with over three continuous years, he must be given one month’s notice. Thus, in article 13 the notice that is required should not exceed one month. The provision in article 15 is clear and unambiguous, and does not require any special interpretation. It states clearly that employees to be declared redundant must be given two months’ notice or they must be paid two months’ salary instead of such notice. I cannot see how the two articles can be read together since the two are dealing with separate and distinct matters. I would hold that the majority judgment erred in holding that articles 13 and 15 should be read together.

Were the negotiations fair?

The majority judgment held that the union officials had no mandate to negotiate in such a way as to give away the rights of the workers. The court held that the union officials negotiated for 60 per cent instead of 71.25 percent and for that reason the contract arising out of the negotiations contravened section 10(4) of the Industrial Relations Act, 1965 (Act 299), and was therefore null and void for the simple reason that the negotiations had given away the rights of the workers which they could not do under Act 299, s 10(4). The conclusion is based on the premise that articles 13 and 15 of the labour agreement should be read together. But since I have held that the two are distinct and separate, the basis for that conclusion is eroded and cannot stand.

I wish, however, to observe that the conclusion of the majority of the Court of Appeal is not based on the facts of the case. At the time the negotiation took place, there had been no wage increase. Since their termination took place on 16 May 1994, the calculation of their end of service benefits could only be calculated on the salary prevailing at the time their contracts ended. At the time of the negotiations, the increase of wages had not accrued and the negotiators cannot be said to have given away non-existent rights or benefits. The 71.25 per cent increment could only have been realised, if the employees had been given two months’ notice for the termination of their contract. Then the contract would have been terminated on 15 July 1994 and the end of service benefits would have been affected by the wage increase. Section 10(4) of Act 299 merely states that the employee has no right to waive the rights conferred on him by a collective agreement. It does not affect the negotiations conducted by the union officials.

Collective bargaining

On the issue of the collective bargaining, the plaintiffs were members of the ICU. Under sections 3 and 6 of Act 299, the ICU is authorised to conduct collective bargaining with VALCO on behalf of the employees. It is in pursuance of this statutory authority that the ICU negotiated with VALCO on behalf of the workers. The union was also authorised to negotiate redundancy packages of affected employees. Under section 6 of Act 299, negotiations on all matters connected with employment covered by a collective bargaining certificate under section 3 of Act 299, must be done through the standing negotiating committee set up under section 5 of Act 299. Thus, only the union could go back to VALCO to renegotiate the terms of the redundancy package.

A court can set aside a contract if it is illegal or void or avoidable. But where the parties have entered into a valid contract, the court should not interfere merely because one party is not happy. It is my considered opinion that the collective bargaining agreement between the defendant company and the plaintiffs cannot be set aside.

Were the plaintiffs entitled to any emoluments?

On the issue of the wage increase, the majority of the Court of Appeal (per Brobbey JA (as he then was)), held as follows:

“It follows from the foregoing that the trial judge erred by calculating the end of service benefits from 16 May when the appellants [the plaintiffs] were laid off. To my mind the calculation of their end of service benefits should include the period, which the wage re-opening covers and should have been based on the earnings which would have accrued to them during the latter period up to 15 July 1994.”

This finding is based on the premise that the payment to the plaintiffs on 16 May 1994 did not end the contractual relationship between the parties, but continued for the next two months up to 15 July 1994. But this premise is an illusion, because the plaintiffs were paid their end of service benefits as at 16 May 1994, instead of being given two months’ notice, which would have taken them to 15 July 1994.

Under article 15(e) the defendant company had two options when declaring employees redundant. Either the employees will be given two months’ notice, or they will be paid two months’ wages, instead of being given notice. If the employees had been given two months’ notice on 16 May 1994 that would have carried them to 15 July 1994, when they would have been affected by the wage increase. But since they agreed to take two months’ wages instead of two months’ notice, their contractual relationship with the defendant company ended on 16 May 1994 when they ceased to be employees of the defendant company.

With regard to the holding that payments made to the plaintiffs in lieu of notice amounted to a diminution of the emoluments of the plaintiffs as employees, it is my considered opinion that since the payments were the result of collective bargaining and the amount paid was based on salaries as at the date of termination, there cannot be any diminution of emoluments. The employees were paid what was due to them.

Goodwill payment

The majority of the Court of Appeal also held that the goodwill payment made by the defendant company amounted to an admission that the plaintiffs were entitled to 71.25 per cent increase in wages. There was evidence that the goodwill payment was based on the end of service benefits that the employees were entitled to. There were other benefits agreed upon between the negotiating parties, which were termed goodwill. It was to compensate those employees who were to be declared redundant before the wage increase. The parties reached agreement through negotiation in accordance with the labour agreement. I do not think this could constitute admission by the defendant company that the plaintiffs were entitled to 71.25 per cent wage increase.

From the foregoing, I would also allow the appeal and set aside the majority judgment of the Court of Appeal.

KPEGAH JSC

(JUSTICE OF THE SUPREME COURT)

ATUGUBA JSC

(JUSTICE OF THE SUPREME COURT)

AKUFFO JSC,

(JUSTICE OF THE SUPREME COURT)

BADDOO JSC

(JUSTICE OF THE SUPREME COURT)

DATE-BAH JSC 

(JUSTICE OF THE SUPREME COURT)

COUNSEL

ANNAN ANKOMAH FOR THE APPELLANT

DANSO AKYEAMPONG FOR THE RESPONDENTS.