N9018

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 172 OF 2019

BETWEEN
GIBSON YAWA
Plaintiff

AND:
GUARD DOG SECURITY SERVICES LIMITED
First Defendant

AND:
BRIAN SCHUTTE
Second Defendant

Lae: Dowa J
2021:	19th May &18th June 

EMPLOYMENT LAW - Unlawful Termination of Employment- Parties are bound by terms of written contract of employment-Employer had cause to terminate employment. Upon expiry of term of written contract employer has the right not to extend the contract. Claim dismissed for lack of proof

Cases Cited:

Ruhuwamo v PNG Ports Corporation (2019) N8021

Counsel:

S. Toggo, for the Plaintiff
M. Maburau, for the First & Second Defendant
DECISION

18th June, 2021

1.	DOWA J:  This is a decision on both liability and damages. The Plaintiff claims he was unlawfully terminated by the Defendant and seeks damages for unlawful termination of employment.

	Brief Facts

2.	The Plaintiff is a former employee of the Defendant. The Plaintiff instituted these proceedings for breach of contract of employment. 

3.	The Plaintiff was employed by Guard Dog Security Services Limited (“the First Defendant”) under a contract of employment (“the contract”) from 15th November 2016 to 15th November 2017 as its branch manager, Wewak. 

4.	On 30th November 2017, the Plaintiff was terminated from employment by the first Defendant. 

5.	The Plaintiff alleges that the Defendants breached the terms of contract of employment in that: 

a.	the defendants failed to do a performance review within the time stipulated in the contract. 
b.	the defendants failed to renew and extend the contract as he (the Plaintiff) was performing well and was entitled to the extension.
c.	the defendants failed to properly advise the Plaintiff of the termination.
	
6.	The Plaintiff, therefore, claims damages for the loss he suffered because of the breach of contract of employment.

7.	The Defendant filed a defense, justifying the termination on the basis that the Plaintiff’s contract of employment period expired, and it was not extended. The Defendants were under no obligation to renew or extend the Plaintiff’s employment contract with the Defendant. 
	Issues

8.	The issues for consideration are:

a.	Whether the Defendants breached the contract of employment with the Plaintiff.
b.	Whether the Plaintiff is entitled to any damages

	Law

9.	The relevant law is the Employment Act that governs employment relations in Papua New Guinea. The Act provides the minimum requirements for contract for service.  In the present case, the Plaintiff had a written contract of service. Sections 19 (a), 22, 33 and 34 of the Employment Act are relevant and applicable. These sections read: 

 “19.  WRITTEN CONTRACT OF EMPLOYMENT.
A written contract of service is of no force or effect unless and until–
(a) 	in the case of a literate employee–
(i) 	he has signed the instrument of agreement and has certified under his hand on the agreement that he has read, understood and agreed to abide by the terms and conditions endorsed on the agreement; and
(ii) 	the employer has endorsed on the agreement a note that he believes and is satisfied that–
		(A) 	the employee is literate; and
		(B) 	before signing the agreement, the employee read and understood it; and
(b)	 in the case of an illiterate employee, he has–
	(i) 	signed; or
	(ii) 	affixed his mark or an impression of his thumb on,
the instrument of agreement in the presence of a labour officer and the labour officer certifies that Section 23 has been complied with.
…………
22.	CONTRACT PERIOD.
(1) 	A contract of service made under Section 19(a), may be for a specified or 	for an unspecified period.
(2) 	Where an employee under a contract of service made under Section 19(a) is permitted by an employer to continue his employment after the expiry of 	the period specified in the contract of service, the contract shall be deemed to be extended, on the same terms and conditions, for an unspecified period.
(3) 	The period of a contract of service shall commence–
(a)	 in the case of a contract made under Section 19(a)–on the date on 	which it is signed by the employee or, if another date is specified in the contract, on that date; or
(b) 	in the case of an attested contract–on the date that it is attested by 	a labour officer under Section 23,
but in no case shall it be deemed to have commenced on a date later than 	the date the employee commenced duty.
(4) 	Subject to this Act, the period of an attested contract shall not exceed–
(a)	 in the case of an employee who is not accompanied by any of his 	dependants–two years; and
(b) 	in the case of an employee who is accompanied by all or any of his dependants–three years.
(5) 	Where an employee under an attested contract enters into a contract for a period less than the maximum specified in Subsection (4), he may, at the expiration of the contract enter into a further attested contract with the same employer for a period that, when added to the period of the original contract, does not exceed the maximum period specified in that subsection.
……….
33.	TERMINATION OF CONTRACTS.
(1) 	A contract of service for a specified time or for specified work 	shall, unless terminated otherwise under this Division, terminate when the period of time for which the contract was made expires, or the work specified in the contract is completed.
(2) 	A contract of service for an unspecified period of time shall be deemed to continue until terminated by either party under this Division.
34.	NOTICE OF TERMINATION.
(1) 	This section does not apply to a written contract of service for the first two 	years of operation of the contract unless the parties to the contract agree 	otherwise.
(2) 	Subject to this Act, a party to a contract of service may, at any time, give notice to the other party of his intention to terminate the contract.
(3) 	The length of notice of intention required to terminate a contract of 	service shall be the same for both parties and–
	(a) 	shall be as specified in the contract; or
	(b) 	shall be not less than the periods specified in Subsection (4).
(4) 	Where there is no provision in a contract of service for notice of intention 	to terminate, the length of the notice shall be not less than–
(a) 	one day’s notice if the employee has been employed for less than four weeks; or
(b)	 one week’s notice if the employee has been employed for not less than four weeks and for less than one year; or
(c) 	two weeks’ notice if the employee has been employed for not less than one year and for less than five years; or
(d)	 four weeks’ notice if the employee has been employed for five years or more.
(5) 	Notice of termination shall be given–
(a) 	in the case of a contract of service referred to in Section 19(a)– in writing; and
(b)	 in the case of any other contract of service–either orally or in 	writing,
	and the day on which the notice is given shall be included in the period of notice.”
10.	The law on termination of simple employment contract is settled in this jurisdiction.  In Ruhuwamo v PNG Ports Corporation (2019) N8021, Thompson J said this at paragraph 17-19 of her Judgement:
“17. 	It is well settled by a long line of case authorities in PNG, that an employer has the right to hire and fire his employees and does not have to give reasons for his decision. If this is done in breach of the terms of a contract, the measure of damages is what the employee would have received for his salary and other entitlements if the contract had been lawfully terminated. (see Jimmy Malai v PNG Teachers Association (1992) PNG LR 568, Paddy Fagon v Negiso Distributors Pty Ltd (1999) N 1900, New Britain Palm Oil Ltd v Vitus Sukuramu (2008) SC 946, and Porgera Joint Venture Manager Placer (PNG) Ltd v Robin Kami (2010) PGSC 11).
18. 	This is consistent with the provisions of the Employment Act. Under S 34, a contract of employment may be terminated at any time, with the length of notice being either as specified in the contract, or dependent on the length of the employment. If an employee has been employed for over five years, the length of notice shall be not less than four weeks. Under S 35, the termination may be by notice, or by payment in lieu of notice.
19. 	Under S 36, the employer may terminate without notice or payment in lieu, if the employee, inter alia, willfully disobeys a lawful and reasonable order or misconducts himself by an act of omission or commission that is inconsistent with the due and faithful discharge of his duties.”
	Evidence

11.	The Plaintiff relies on the following affidavits:

a.	Affidavi of Gibson Yawa sworn and filed 26th February 2020
b.	Affidavit of Gibson Yawa sworn 19th and filed 22nd February 2021.
c.	Affidavit of Lorraine Bulivakarua sworn 26th November and filed 3rd December 2019.
d.	Affidavit of Ruth Kondi sworn 27th November 2019 and filed 3rd December 2019.
e.	Affidavit of Anthea Phyllis sworn 27th November 2020 and filed 22nd February 2021.

12.	The Plaintiff’s evidence is this. He entered a written contract of employment with the first Defendant on 15th November 2016 for a period of one year. He was employed as Manager for the Wewak branch, of the First Defendant’s operations. He was given a probation period of three (3) months. He successfully completed the probation period and continued for one year. On 30th November 2017, he was advised by the Second Defendant that his contract of employment with the First Defendant was not renewed or extended. The plaintiff said he performed his duties well and he was commended for his good work and his contract should have been extended for a further two years as of right. He was surprised when he received notice that his contract would not be extended. The Plaintiff says the Second Defendant failed to do a proper appraisal of his work performances which resulted in termination of the contract of employment.

13.	The plaintiff states further that the appraisal was not done immediately after the lapse of the first year. The plaintiff states that he was surprised to learn of his termination as it was not properly communicated to him. Finally, the Plaintiff gives evidence that because of the unlawful termination of the contract of employment, he has suffered immense loss in income and consequential sufferings.

14.	The Defendants rely on the affidavit of Philomena Kuman sworn 6th November 2020 and filed 25th November 2020.

15.	Briefly, Ms. Kuman says the Plaintiff’s contract of employment is in writing executed by the parties on 21st November 2016. It is for a term of one year to commence on 15th November 2016. She said the contract lapsed on 15th November 2017. The First Defendant decided not to renew or extend the contract of employment. The Plaintiff was advised of the decision and was paid all his final entitlements and repatriated back to his place of hire. She says as far as the Defendants are concerned; they have not breached any terms of the contract of employment.

Submissions of Counsel

16.	Mr Toggo, counsel for Plaintiff, submits the Plaintiff was unlawfully terminated. The termination was in breach of Clause 4 and the sixth schedule of the contract of employment. Mr Toggo submits that there was an implied term of the contract that the Plaintiff’s employment would continue or be renewed unless proved otherwise by the performance appraisal. Based on this argument the Plaintiff submits further that the Defendant failed to do a work performance appraisal. Even if the appraisal was done it was done 13 days after the lapse of the contract. Finally, the Plaintiff submits that if the appraisal was properly done the Plaintiff’s contract of employment would have been renewed as he was performing well in his job. Because of the breach the Plaintiff suffered loss and should be compensated in terms set out in paragraph 34 of the Amended Statement of Claim.

17.	Ms Maburau, Counsel for the Defendant submits that the Defendants did not breach any terms of the contract of employment. Ms. Maburau submits the Plaintiff’s contract of employment was in writing executed by the parties on 21st November 2016. It was for a term of one year which commenced on 15th November 2016. The contract lapsed on 15th November 2017. The First Defendant decided not to renew or extend the contract of employment. The Plaintiff was advised of the decision and was paid all his final entitlements and repatriated back to his place of hire. She submits the Defendants have not breached any terms of the contract of employment.

	Reasons for Decision

18.	The Plaintiff’s contract of employment with the defendant is in writing to commence on 15th November 2016. The evidence shows the Plaintiff was employed by the Defendant as Manager for the Wewak branch. The contract document contains seven (7) pages and signed by both parties. The contract meets the minimum requirements of section 19 of the Employment Act. The sixth schedule of the contract provides that the period of contract is one (1) Year to be reviewed on an annual basis). This is also consistent with section 22 of the Employment Act. This means this contract expired on 15th November 2017 and its survival is subject to review. Claus 4 of the contract provides for performance reviews in following terms:

“4.1  	Performance reviews are conducted after an employee’s 3 month probationary period and subsequently in November on a yearly basis.

4.2 	Performance reviews will be the responsibility of respective department 	heads facilitated by the Human Resource Department.”

19.	The evidence shows an appraisal for the probation period was done and the Plaintiff was allowed to serve the full term of the contract. After the expiry of the term of one year, the Defendants decided not to extend the contract. The contract therefore expired or was terminated by operation of the fifth and sixth schedule of the employment agreement. This is also consistent with section 33 of the Employment Act. The Defendants notified the Plaintiff that it will not renew or extend the contract by letter dated 30th November 2017. The Plaintiff was also informed of the decision by phone on the same day. This is again consistent with the terms of the contract. 

20.	 The decision was not well received by the Plaintiff. The Plaintiff was surprised to receive the news when he was on holidays. It would appear to be unfair to be told suddenly that his contract would not be renewed especially after the lapse of the term. It would have been better if the Plaintiff was told sometime earlier for him to prepare himself and seek alternative employment.

21.	 Be that as it may, I do not find the decision of the defendants unlawful or in breach of the terms of the contract of employment. The terms were in writing and both parties are literate and understood the terms. The contract was for a period and lapsed at the last day. If the employment contract was to continue after expiration, section 22 (2) of the Employment Act would apply, provided the employer agrees. In the present case the employer decided against the continuation of the contract.

22.	In my view, the Defendants acted within their rights not to renew the Plaintiff’s contract in accordance with the terms and conditions of his employment. There is no evidence which suggests that the defendant breached the terms of the contract of employment. 

23.	I am not satisfied on the balance of probabilities that the Plaintiff’s termination was unlawful. For these reasons, I will dismiss the Plaintiff’s proceedings.

	Costs

24.	Cost is a matter of discretion. The Defendant has successfully defended the claim. It is entitled to cost.

	Orders

1.	The Plaintiff’s proceeding is dismissed.
2.	The Plaintiff shall pay the defendants cost of the proceedings to be taxed, if not agreed.
3.	Time be abridged.

Daniels & Associate Lawyers: Lawyer for the Plaintiff
Ms Maburau in house lawyer: Lawyers for the Defendant