clr/1979/1979_1_815.pdf

(3)of Law 24/67 under which.it ordered payment of the amount of £150 to each one of the employees—Object of relevant proviso to thesaidsection 16

(3)—Principle of "last in, first out", embodied 815 LaniUs Bros τ. Ioannides & Others

(1979)m relevant collective agreements, of no avail because though termination of employment wasagreed to within the ambit ofsuch agreements it tookplaceas a resultof specific ad hoc agreement reached with approvalofemployees. Contract—Agency—Master and servant—Tradeunion—Negotiating 5 settlement of dispute onbehalfof,andwithapprovalofemployees— Whethersettlementbinding on employees. Following the Turkish invasion of Cyprus in 1974 the sale of Lanitis Bros. Co. Ltd. ("the company"), which carries on the business of manufacturing andsellingbottledrefreshment drinks, 10 were reduced by aboutfiftyper centumand decided toterminate the employment of a number of its employees. There followed negotiations with the trade unions of which the employees involved in this case, as well as other persons in theemployment of thecompany,were members and in the end an agreement was 15 reached for the termination of the employment of thirty-two employees of the company. When this agreement was reached the trade unions, before signing it, called a general meeting of their members which approved such agreement. In the collective agreements which were in force at that time between 20 the trade unions concerned and the company there were clauses stating that the principle of "last in,firstout" would be applied in cases of dismissals for redundancy, provided that the abilities of those to be dismissed would not be substantially higher than those who would remain in the service; and it, was, also, stipu- 25 lated in such clauses that in case of any dispute it would be examined by means of the machinery of the Joint Consultation Committees. On September 27, 1974, the affected employees were informed in writing by the company that their employment was being 30 terminated at once, with one month's salary being paid tothem in lieu of notice. In proceedings instituted by some of the employees, under sections 3 and 9 of the Termination of Employment Law, 1967 (24/67) the Industrial Disputes Court held that though under paragraph 2(b) of the Supplies and Services (Controlof Employ­ ment) Order* of 1974 ("the Order"),which was in force at the material time, it was not possible to terminate the relationship • The full text of the Order is quoted at pp. 821-3 post. 816 35 1 C.L.R. 5 10 15 20 25 30 35 40 Lnnitis Bros τ. Ioannldes & Others of employer and employee under section 5(b) of Law 24/67 on theground of redundancy,such a course was possible inview of the provisions of paragraph 2(a) of the Order, when there existed a collective agreement between the parties providing for termination of employment on the ground of redundancy. As a result, the trial Court held that the employment of the employees in question was terminated on the ground of redundancy in the sense of section I8(c)(vii) of Law 24/67, namely due to the reduction of the volume of work or business of thecompany and awarded to each one of them, under section 16

(3)of Law 24/67, the sum of £150 payable by the company. Upon appeals by way of case stated by both thecompany and the employees the company complained that it should not have been ordered to pay the above sum to each oneof the employees and theemployees contended that it was wrongly held that their employment was terminated lawfully. Held,

(1)(onthequestion whether thefindingof thetrial Court that the trade unionsconcerned had the specific authorization of the employees to negotiate andacceptthe termination oftheir employment wascorrect) that though it is correct that the general view is that collective agreements between trade unions and employers are not legally binding between the parties to them, their terms may be incorporated in individual employment contracts and so become binding on the parties thereto (see Chitty on Contracts, 24th ed., vol. 1, p. 60, para. 123); that it appears to be legitimate to rely on the doctrine of agency when union officials negotiate a settlement of a dispute on behalf of a few employees identified by name (see Chitty, supra, vol. 2t p. 548, para. 3537); that, therefore, in the light of the facts as they were found by the trial Court its conclusion that, in the present case, the three trade unions concerned had the specific authorization of the employees, and that by such authorization there was covered the probability of the termination of the employment of each of the employees, was fully warranted.

(2)That there is no merit in the contention of counsel for Ihe employees that the agreement reached between the trade unions and thecompany was notvalidly concjuded inthat therewas not given effect to the "last in,firstout" clause which was found in the relevant collective agreements, because though the termination of employment in question concerned was agreed to within 817 Lanitls Bros v. Ioannides &Others

(1979)the ambit of the said collective agreements, it did not take place by operation of the collective agreements as such, but as a result of a specific ad hoc agreement which was reached, with the approval of the employees concerned (p. $26post); and that, therefore, the said terminations of employment took place in a mode consistent with paragraph 2(a) of the Order. 5

(3)That it was not open to the trial Court to treat the termination of the employment of the employees of the company as a case of redundancy envisaged by section 5(b) of Law 24/67, and regulated by the other lelevant provisions of such Law, such as 10 section 16

(3)thereof; that such a course was expressly excluded by the provisions of paragraph 2(

1. b)of the Order, which prohibits, in unambiguous terms, the termination of the employment relationship on the ground of "redundancy" as envisaged by means of section 5(
2. b)of Law 24/67; and that the mere fact that 15 the agreement of September 27, 1974, was concluded on the ground of redundancy did not warrant, also, the course which was adopted by the trial Court, namely to treat such redundancy, in spite of the aforesaid express provisions of paragraph 2(
3. b)of the Order, as a redundancy envisaged and regulated by the 20 aforementioned relevant provisions of Law 24/67, and, in particular, by section 16

(3)of such Law, under which it was ordered that the company should pay to each one of its dismissed employees the sum of £150.

(4)That this was a case of mutually agreed termination of 25 employment in which the compensatory benefits, to be enjoyed by those whose employment was terminated, were, also, negotialed and agreed, and where there was no room for awarding to the employees concerned any other benefits under Law 24/67, to the detriment of their employer, the company in 30 question; and that, in any event, even if this case were to be regarded, contrary to what has already been stated above, as one in which the relevant provisions of Law 24/67 were applicable, it was not, warranted to make, on a proper application of section 16

(3)of Law 24/67, an order for the payment of 35 any amount to the employees by the company (see Phokou v. Kyriakou

(1968)A.T.R., vol. I, Part 1,28,31 and Constantinou v. Loel Ltd.,

(1968)A.T.R., vol I, Part 2, 63, 67). Appeal by way of Case Stated No. 164 partly allowed; appeal by way of Case Stated No. 165 dismissed. 818 40 1 C.L.R. 5 Lanltis Bros τ. Ioannldes & Others Cases referred to: Edwards v. Skyway*. Ltd., [1964] 1 All E.R. 494; Allenv. ThornElectrical Industries, Ltd. Griffin v. Receiver for the Metropolitan PoliceDistrict[1967] 2 All E.R. 1137; Phokou v. Kyriakou

(1968)A.T R. vol. I, Part 1, p. 28 at p. 31; Constantinou v. Loel,

(1968)A.T.R. Vol. I,Part2,p.63at p.67. Cases Stated. 10 15 CasesStated by theChairmanof theIndustrialDisputesCourt, relative to his decision of the 19th June, 1976 in proceedings under sections 3 and 9 of the Termination of Employment Law, 1967 (Law 24/67), instituted by Cleopas Ioannides and others, whereby it was held that the termination of their employment by their employers was lawful on the ground of redundancy and that the employers should pay to each one of them the sum of £150.— under section 16

(3)of Law 24/

1. K. Michaelides, for the appellants in Case Stated No. 164 and for the respondents in Case Stated No.
2. E. Lemonaris, for the respondents in Case Stated No. 164 and for the appellants in Case Stated No.
3. Cur, adv. vult. 20 TRIANTAFYLLIDES P. read the followingjudgment of the Court. 25 30 35 The parties to these proceedings have appealed, respectively, by way of two Cases Stated, against the decision of the Industrial Disputes Court by means of which it has held, in Applications Nos. 54/75, 56/75-62/75and 80/75before it, that the termination of the employment of the respondents in Case Stated No. 164 (and appellants in Case Stated No. 165, to be referred to herein­ after as the "employees") by the appellants in Case Stated No. 164 (and respondents in Case Stated No. 165, to be referred to hereinafter as the "company" ) was lawful on the ground of redundancy,and that the company should pay to each one of the employees the sum of £150 under section 16

(3)of the Termina­ tion of Employment Law, 1967 (Law 24/67). Thecompany complains, in effect, that it should not have been ordered to pay the above sum to each one of the employees, and the employees contend that it was wrongly held that their employment was terminated lawfully, and that, in any event, the sum which ought to have been paid to each one of them 819 Triantafyflides P. Lanitis Bros τ. Ioaimides & Others

(1979)under the provisions of Law 24/67 ought to have been much higher. The salient facts of this case,as found by thetrial Court, are, briefly, as follows:The company carries on the business of manufacturing and selling bottled refreshment drinks. 5 Due to theTurkish invasion of Cyprus in 1974thesales of the company were reduced by about fifty per centum. As aresult therearose thequestion of terminatingtheemploy­ ment of about sixty persons, who were in the service of the 10 company at the time,and of reducing the salaries of the rest of those in its service by twenty per centum. Negotiations were embarked upon, in this respect, with the trade unions of which the employees involved in this case, as well as other persons in the employment of the company, were 15 members, and in the end an agreement was reached that there would be terminated the employment of only thirty-two out of those who were in the employment of the company at the time';all through thecourtcof the negotiations thetradeunions concerned were keeping their members informed of their pro- 20 gress, at genera! meetings called for thepurpose, and,whenthe aforementioned agreement for termination of the employment of thirty-two out of themwas reached,thetrade unions, before signing it on September 27, 1974, called a general meeting of their members which approved such agreement. 25 At that particular time it was not yet known who were the thirty-two persons whose employmentwould be terminated,but assoonas theagreementwas signed theirnameswereannounced and some of those who were to lose their jobs protested that others ought to have been dismissed instead of them. 30 In the collective agreements which were in force at thattime between the three trade unions concerned and the company therewere clauses stating thattheprinciple of "last in,firstout" would be applied incases of dismissalsfor redundancy,provided that the abilities of thoseto be dismissed would not be substan- 35 tally higher than those who would remain in theservice; and it was, also, stipulated in such clauses that in case of any dispute 820 1 C.L.R. Lanftis Bros v. loannides & Others Triantaf>Hides P. it would be examined by means of the machinery of the Joint Consultation Committee. Among the thirty-two persons to be dismissed were the employees who are parties to these proceedings. 5 Ori,Septemb'er 27, 1974, the company informed· iii writing, the affected employees that their employment was being termi­ nated at once, with one month's salary being paid to theni in lieu of notice; arid each one of the said employees signed a certificate of discharge iii wtiicti it was stateil that He had,received a month's 10 salary, wHat was due to hirii from the Provident,Fund and one half share of the Christmas bonus. As th'e end of each such certificate there appears the following statement:- 15 20 "Received the sum of from Lariitis Bros Liriiited, in full settlement of my accounts with that Company, arid in full settlement of any claims that I have or riiay have on that Company." At the material tiriie there was iri ;fdrce the Supplies and Services (Control of Employment) Order, 1974, hereinafter to be referred as the "Order" (see No.249 in the Third Supplement, Part Ϊ, to the Official Gazette of September 13, 1974), which reads as follows:" Ο ΠΕΡΙ ΠΡΟΜΗΘΕΙΩΝ ΚΑΙ ΥΠΗΡΕΣΙΩΝ (ΣΥΝΕΧΓΣΙΣ ΜΕΤΑΒΑΤΙΚΩΝ ΕΞΟΥΣΙΩΝ) ΝΟΜΟΣ (ΚΕΦ. Ϊ75Α) Διάταγμα ύπό τοΰ Υπουργικού Συμβουλίου δυνάμει του Κανονισμού 'Αμύνης 79Α

(4)25 Το Υπουργικού Συμβούλιον, ένασκόϋν τάς δυνάμει τοΰ Κανονισμού 'Αμύνης 79Α

(4)χορηγούμενος αύτω έΕουσίας, εκδίδει το παρόν Διάταγμα:

1. Το παρόνΔιάταγμαθα άναφέρηται ώς τά περίΠρομηθειών κα · Υπηρεσιών ("Ελεγχος Απασχολήσεως ) Διάταγμα τοΰ
3. Δια τοΰ παρόντος Διατάγματος απαγορεύεται ό τερμα­ τισμός της σχέσεως εργοδότου και έργοδοτουμένου οπού τοιαύτη σχέσις ύφίστατο κατά την 12ην Σεπτεμβρίου 1974, πλην είς περιπτώσεις καθ' ας: 30 35 (α) ό τοιούτος τερματισμός έγένετο συμφώνως προς τάς 821 Triantafyllidcs P. Lanitis Bros v. Ioannides & Others

(1979)προνοίας υφισταμένης συλλογικής συμβάσεως μεταϋύ της οίκείαςσυντεχνίαςκαΐ τοΰοικείουεργοδότουκατόπιν αμοιβαίας συμφωνίας μεταϋύ εργοδότου και έργοδοτουμένου· (β) αύτη έγέυετο βάσει οιασδήποτε των περιπτώσεων αΐτινες καθορίζονται είς το άρθρον 5 των περ'ι Τερματισμοϋ 'Απασχολήσεως Νόμων τοΰ 1967 και 1968, πλην της παραγράφου (β) ή δυνάμει τών διατάϋεων οίουδήποτε ετέρου έν ίσχύϊ Νόμου. 24 τοΰ 1967 17 τοΰ 1968 3. 5 Ή Ισχύς τοΰ παρόντος Διατάγματος άρχεται άπό της 10 12ης Σεπτεμβρίου 1974 και λήγει τήν 30ήυ Σεπτεμβρίου 1974." ( " T H E SUPPLIES AND SERVICES (TRANSITIONAL POWERS) (CONTINUATION)LAW (CAP. 175 A) Order made by the Council of Ministers under Defence Regulation 79A

(4). 15 The Council of Ministers, in the exercise of the powers vested in it under Defence Regulation 79A

(4), makes this Order: 1. This Order is to be cited as the Supplies and Services (Control of Employment) Order of 1974. 2. By means of the present Order the termination of the relationship of employer and employee, when such relationship existed on September 12, 1974, is prohibited, except in cases where: 20 (

1. a)such termination is made in accordance with the provisions of an existing collective agreement between the trade union and employer concerned as a result of mutual agreement between employer and employee; 24 of 1967 17. of 1968 (
2. b)it was made on thebasis of any of the instances referred 30 to in section 5 of the Termination of Employment Laws of 1967 and 1968, except paragraph (b), or by virtue of the provisions of any other Law in force. 822 25 ) 1 C.L.R. Lanitis Bros v. Ioannides & Others Triantafyllides P. 3. This Order shall come into force on September 12, 1974, and shall expire on September 30, 1974."). The trial Court held that though under paragraph 2(
3. b)of the Order it was not possible to terminate the relationship of 5 employer and employee under section 5(
4. b)of Law 24/67 on the ground of redundancy, nevertheless such a course was possible, in view of the provisions of paragraph 2(
5. a)of the Order, when there existed a collective agreement between the parties providing for termination of employment on the ground of redundancy. 10 As a result, the trial Court held that the employment of the employees in question was terminated on the ground of redundancy in the sense of section 18(c)(vii) of Law 24/67, namely due to the reduction of the volume of work or business of the company and proceeded to award—as already stated—under 15 section 16

(3)of Law 24/67, to each one of the employees, the sum of £150, payable by the company. In reaching its conclusion that the services of the employees , in question were lawfully terminated on the ground of redundancy, the trial Court has found that the trade unions concerned 20 had been authorized by each and everyone of their members, who was employed by the company, to negotiate in relation to, and accept, the termination ofemployment of thirty-two persons in the employment of the company, and that this specific authorization included the acceptance by each one of those 25 affected of the possibility of the termination of his own employment. We cannot accept the contention of counsel for the employees that the above finding iserroneous. Itiscorrect that the general view is that collective agreements between trade unions and 30 employers are not legally binding between the parties to them, but their terms may be incorporated in individual employment contracts and so become binding on the parties thereto (see Chitty on Contracts, 24th cd., vol. 1, p. 60, para. 123). It appears to be legitimate to rely on the doctrine of agency 35 when union officials negotiate a settlement of a dispute on behalf of a few employees identified by name (see Chitty, suprat vol. 2, p. 548, para. 3537). In Edwards v. Skyways, Ltd., [1964] 1 All E.R. 494, the hcadnote of the report reads as follows:823 Triantafyllides P. Lanitis Bros τ. loannides & Others

(1979)" The plaintiff was employed by the defendant company as an aircraft pilot, and as such he was a member of the defendant company's contributory pension fund and entitled under its rules on leaving the defendant company's service in advance of retirement age to a choice between two 5 options, either to withdraw the sum of his own contributions to thefund or to take theright to a paid-up pension payable at retirement age. In January, 1962, the defendant company wrote the plaintiff, among others, informing him that it was necessary to declare a redundancy of approxima- 10 tely fifteen per cent, of the defendant company's pilot strength and giving him three months' notice terminating his employment. At a meeting on Feb. 8, 1962, between authorised representatives of the defendant company and BALPA, the plaintiff's trade association, it was agreed 15 (as icccrdcd in thenotes of the meeting) that 'pilots declared redundant and leaving (the defendant company) would be given an ex gratia payment equivalent to the defendant company's contributions to the pension fund'. The representative of the defendant company actually said at 20 the meeting that the defendant company would make ex gratia payments ' approximating t o ' the defendant company's contributions. Having been informed of the recorded agreement, and having found other employment and left the defendant company's employment at the end 25 of March, 1962, the plaintiff elected on May 1, 1962, to withdraw his contributions to the pension fund and to receive the ex gratia payment that the defendant company proposed to make. The defendant company paid to the plaintiff the amount of his contributions, but did not make 30 the ex gratia payment, and rescinded the decision to make ex gratia payments, having regard to the defendant company's financial difficulties and creditors. The plaintif brought this action to recover a sum equal to the total coVributions made by the defendant company in respect 35 rf him to the pension fund. The defendant company . ontended that the recorded agreement was not intended to create legal relations and was too vague, and thus was not legally binding. It was admitted at the hearing that there was consideration moving from the plaintiff 40 and that at the time of the meeting of Feb. 8, 1962, the 824 1 C.L.R. Lanltts Bros τ. Ioannides & Others Triantafyllides P. defendant company intended to carry out the recorded agreement. 5 Held: where, as here, there was agreement and the subject of agreement related to business affairs, the onus of establishing that the agreement was not intended to create legal relations, which was on the party setting up that defence, was a heavy onus; and the defendant company had failed to discharge it for the following reasons— 15

(1)the words 'ex gratia' were used simply to indicate that the party agreeing did not admit any pre-existing liabi­ lity on the defendant company's part, and the mere use of the phrase ' ex gratia ' as part of a promise to pay (even if prompted by the purpose of avoiding the incidence of income tax) did not show that the promise, when accepted, should have no binding effect in law, and 20 (ii) the use of the words 'approximating to' on behalf of the defendant company did not render the terms of the agreement too vague to be enforceable, for at most the phrase would connote on the evidence a rounding off of a few pounds downwards to a round figure". 10 Also, in Allen v. Thorn Electrical Industries, Ltd. Griffin v. Receiverfor the Metropolitan Police District, [1967] 2 All E.R. 1137, it was held that an agreement between the employers and a tradeunionby means of which the employers agreed to increase 25 the salary of hundred and twenty employees of theirs amounted to a binding contract. 30 35 In the light of the foregoing, as well as of the facts as they were found by the trial Court, we are of the opinion that its conclusion that, in the present case, the three trade unions concerned had the specific authorization of the employees, and that by such authorization there was covered the probability of thetermination of the employment of each of the employees, was fully warranted. Moreover, we find no merit in the contention of counsel for the employees that the agreement reached between the trade 825 Triantafyllides P. Lanitis Bros v. Ioannides & Others

(1979)unions and thecompany wasnotvalidlyconcluded inthat there _ was not given effect to the "last in,firstout" clause. As has been mentioned, earlier on in this judgment, such a clause was to be found in the relevant collective agreements. Though, however, the termination of the employment of the 5 employees, who are parties to these proceedings, was agreed to within the ambit of the said collective agreements, it did not take placeby operation of thecollectiveagreements as such, but as a result of a specific ad hoc agreement which was reached, with the approval of the employees concerned, on September 10 27, 1974; and it is significant, in this respect, to bear in mind that the trade unions obviously treated the said specific agreement as dispensing with the need to comply with the aforementioned "last in, first out" clause, because when the thirty-two employees of the company were dismissed, without such clause 15 having been fully complied with, there does not appear to have arisen any dispute between thecompany and thetrade unionsin thisconnection; and, indeed,no suchdisputewasreferred tothe Joint Consultation Committee. In our opinion, therefore, the termination of the employment 20 oftheemployeesofthecompanytook placeinamodeconsistent with paragraph 2(a) of the aforementioned Order. But, we do not agree, that it was open to the trial Court to treat the termination ofthe employment of theemployees of the company as a case of redundancy envisaged by section 5(b)of 25 Law 24/67, and regulated by the other relevant provisions of such Law, such as section 16

(3)thereof. Wetaketheviewthat sucha coursewasexpresslyexcludedby the provisions of paragraph 2(

1. b)of the Order, which prohibits, in unambiguous terms, the termination of the employment 30 relationship on the ground of "redundancy" as envisaged by means of section 5(
2. b)of Law 24/67. The mere fact that the agreement of September 27, 1974,was concluded on the ground of redundancy did not warrant, also, the course which was adopted by the trial Court, namely to treat such redundancy, in 35 826 1 C.L.R. Lanitis Bros v. Ioannides & Others Triantafyllides P. spite of the aforesaid.express provisions of paragraph 2(
3. b)of the Order, as a redundancy envisaged and regulated by the aforementioned relevant provisions of Law 24/67, and, in particular, by section 16

(3)of such Law, under which it was ordered 5 that the company should pay to each one of its dismissed employees the sum of £150. In our opinion, thiswas a case of mutually agreed termination ofemployment inwhich thecompensatory benefits, tobe enjoyed by those whose employment was terminated, were, also, nego10 tiated and agreed, and where there was no room for awarding to the employees concerned any other benefits under Law 24/67, to the detriment of their employer, the company in que5tion. In any event, even if we were to regard this case, contrary to what has already been stated above, as one in which the relevant 15 provisions of Law 24/67 were applicable, it was not, in our view, warranted to make, on a proper application of section 16

(3)of Law 24/67, an order for the payment of any amount to the employees by the company, because as correctly held by the Industrial Disputes Tribunal in Phokou v. Kyriakou,

(1968)20 A.T.R., vol. I, Part I, 28, 31 and Constantinou v. Loel Ltd.,

(1968)A.T.R., vol. I, Part 2, 63, 67, the object of the relevant proviso to section 16

(3)25 " is not to penalize the employer- who had to dismiss employees because he is in serious financial difficulties. It is rather intended to ensure that any financial benefit to an employer who deliberately creates redundancy (e.g. by mechanization) is passed on in part to the redundant employee." In the result, the appeal by way of Case Stated No. 165 fails, 30 but the appeal by way of Case Stated No. 164 succeeds to the extent that the awards of £150 to each one of the employees concerned are set aside, for the reasons given hereinbefoie, and this case is remitted, with our opinion as contained in this judgment, to the Industrial Disputes Court so that it will proceed 35 to modify its subjudice decision accordingly. Bearing in mind all relevant considerations we have decided 827 Triantafyllides P. Lanitis Bros v. ioannides & Others

(1979)to make no order as to costs as regards the present proceedings before us. Appeal by way of Case Stated No. 165 dismissed; appeal by way of Case Stated No: 164 allowed to the extent of setting aside awards of £150 to each one of the employees concerned. No order as to costs. 828 5