FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 15(1), PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT, 2003 PARTIES : DUBLIN AIRPORT AUTHORITY - SHANNON AIRPORT (REPRESENTED BY ARTHUR COX SOLICITORS) - AND - BRENDAN KEEHAN & PETER FLANNERY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Grier Worker Member: Mr Nash |
1. Appeal against Rights Commissioner’s Decisions FT/52228/07/MR & FT/52229/07/MR.
BACKGROUND:
2. Introduction
This is an appeal by Brendan Keehan and Peter Flannery against the decision of a Rights Commissioner in their complaint against Dublin Airport Authority made under the Protection of Employees (Fixed-Term Work) Act 2003 (the Act). The Rights Commissioner issued separate decisions in respect of each of the Claimants. However the issues of fact and law arising in both cases are identical and the appeals were conjoined for the purpose of the hearing. Accordingly this Determination applies to both appeals.
For ease of reference the parties are referred to in this Determination using the same description as they had at first instance. Hence Mr Keehan and Mr Flannery are referred to as the Claimants and Dublin Airport Authority is referred to as the Respondent.
Background
The Claimants were employed by the Respondent at Shannon Airport from 1st May 2003 until 29th June 2007, when their employment terminated. Initially both Claimants worked as catering assistants in the In-flight Catering Services Department on a succession of fixed-term contracts. They were then appointed to positions in the Airport Seasonal Reserve Unit (ASPU). Mr Keehan commenced employment with the unit on 8th August 2005 and Mr Flannery on 1st June 2005. Both Claimants were employed on time specific fixed-term contracts up to 1st February 2006, when their contracts were extended on “a month-to-month basis.
On 21st May 2007 the Claimants presented a complaint to a Rights Commissioner pursuant to s14 of the Act. They claimed,inter alia, that they were entitled to a contract of indefinite duration by reason of the successive renewal of their fixed-term contracts.
At all times material to this case the Respondent was involved in negotiations with the trade unions representing its staff on a major restructuring programme at Shannon Airport. Agreement on this restructuring programme was finally reached on or about March 2007. This agreement provided,inter alia,for a voluntary redundancy programme intended to reduce the workforce at the Airport by some 200.
While the agreement reached on a reduction in staffing was expressed to be voluntary, the Claimants’ employment was compulsorily terminated with effect from 29th June 2007. They were offered the monetary terms of the voluntary redundancy package. They refused this offer claiming that they should be given the option to remain in employment by virtue of having become entitled to a contract of indefinite duration by operation of Section 9(1) of the Act.
Their complaint was heard on 24th July 2007 by a Rights Commissioner who found that the extension of the Claimants’ contract from month-to-month amounted to a single fixed-term contract which would expire on the implementation of the restructuring proposals. On that basis he found that the Claimants had not accrued an entitlement to a contract of indefinite duration. The Rights Commissioner's decision was as follows:
"In accordance with the terms of Section 14(2) of the Protection of Employees (Fixed Term Work) Act, 2003, I hereby declare that this complaint was not well founded".
The Claimants appealed that decision to this Court on 21st September 2007, in accordance with Section 15(1) of the Protection of Employees (Fixed-Term Work) Act, 2003. A Labour Court hearing took place on 26th February 2008, the earliest possible date suitable to the parties.
The Facts
The facts surrounding the Claimants employment history are not in dispute. They were employed originally for seasonal work in the In-flight Services Department of the Respondent with effect from 1st May 2003. The terms and conditions under which they were employed are recited in letters from the Respondent to each of the Claimants dated 25th April 2003, in the case of Mr Keehan, and 30th April 2003 in the case of Mr Flannery. The conclusion of these contracts preceded the enactment of the Act. They were fixed-term contracts expressed to expire on 31st October 2003. The Claimants signed an acceptance of the terms offered on 1st May 2003.
By letters dated 24th October 2003 the Respondent wrote to each of the Claimants setting out the terms on which their fixed-term contracts were to be renewed for the period 1st November 2003 to 30th September 2004. Further, the contracts specified that the reason they were being offered a fixed-term was“that it is not envisaged that Catering Services, Aer Rianta, Shannon will remain part of Aer Rianta”.This was a reference to a proposed restructuring of services at the Airport. It was envisaged that as part of the restructuring the direct provision of catering services by the Respondent would be discontinued. By further letters dated 24th September 2004 the Respondent wrote to each of the Claimants renewing their contracts from 1st October 2004 to 31st March 2005. These letters again specified the envisaged discontinuance of directly provided catering services as the reason for renewing the contracts for a fixed-term. Again, on 30th March 2005 the contracts were renewed up to 31st October 2005. The stated reason for these renewals on a fixed-term was identical to that stated in the two earlier renewals.
Each of these renewals specified that the contract could be terminated before its expiry on notice in accordance with the Minimum Notice and terms of Employment Act 1973 to 1991.
In respect of each of the renewals the Claimants signed an acceptance of the terms offered.
It would appear that at some point the Claimants applied for employment with the Respondent’s Airport Police Seasonal Reserve Unit. They were informed by letter dated 26th May 2005 in the case of Mr Flannery and 29th July 2005 in the case of Mr Keehan, that their applications were successful. They were offered employment with the Unit commencing on 7th June 2005 in the case of Mr Flannery and 8th August 2005 in the case of Mr Keehan. The letters of appointment did not specify that the contracts being offered were of fixed duration. However, by letter dated 4th October 2005 the Respondent wrote to each of the Claimants advising them that their contracts would expire on 31st December 2005. No issue was taken concerning the efficacy of incorporating a fixed termination date in the contracts after they had been concluded.
On 19th December 2005 the Respondent wrote to each of the Claimantsextendingtheir contracts to 31st January 2006. The stated reason for the extension was the Respondent’s“Business and Manpower requirements”.By a further letter dated 24th January 2006 the Respondent wrote to the Claimants extending their contracts but this time on a “month-to-month” basis. The reason for this extension was again stated to be“Business and Manpower requirements”. The full text of this letter is: -
- Further to our letter of 19th December 2005, we now wish to inform you that due to Business and Manpower requirements, we are pleased to extend your contract of Employment on a month-to month basis until further notice.
Effective 05th February 2006, payment of wages will be by credit transfer on a fortnightly basis. In the event of an overpayment the Company reserves the right to deduct such overpayment and make the necessary adjustments to any subsequent salary /wage payment.
The remaining Terms and Conditions of our letter of 4th October 2005 still apply.
We would like to take this opportunity of wishing you continued success and happiness.
Position of the Parties
The opposing positions taken by the parties can be briefly summarised.
The Claimants contend that the import of the Respondent’s letter of 24th January 2006 was to offer them rolled-over contracts on a month-to-month basis. This, they contend, amounted to a succession of fixed-term contracts, each of which was of one-month duration.
The Respondent submitted that following the letter of 24th January 2006 the Claimants entered into a contract of indefinite duration, determinable on one months notice. Thus, it was argued, at the time they made their complaints, and at the time of the hearing before the Rights Commissioner, the Claimants were not fixed-term workers and lackedlocus standito pursue the complaints. In the alternative the Respondent contended that if the letter of 24th January 2006 did create a further fixed-term contract it was a single contract determinable on the occurrence of an event, namely the successful conclusion of the restructuring negotiations then in train.
The importance of this distinction is that if the Claimants are correct and they were employed on a succession of fixed-term contracts after 24th January 2006, they completed three years of successive fixed-term employment on 30th April 2006. The Respondent was then limited to renewing their fixed-term contracts once only and for a maximum period of one year. If the Respondent continued to roll-over their fixed-term contracts on a month-to-month basis, the Claimants became entitled to a contract of indefinite duration by operation of law on 1st June 2006. It was on this date that their contracts were renewed for the second time following the completion of their third year of fixed-term employment.
If however the Respondent is correct in its alternative argument, and the letter of 24th January gave the Claimants a single fixed-term contract until the restructuring negotiations were successfully concluded, that contract was granted before the Claimants completed their third year of fixed-term employment. If that were the case the Claimants would not have become entitled to a contract of indefinite duration by virtue of the extension of their employment.
Statutory Provision
The Act was enacted to give effect to Ireland’s obligations under Directive 99/70/EC concerning the framework agreement on fixed-term work. The object of the Directive is to provide for the application of the principle of equal treatment to fixed-term workers and to introduce measures to prevent the abuse of successive fixed-term contracts of employment.
It is now trite law that an Act of the Oireachtas enacted to transpose a Directive must be interpreted and applied in light of the wording and purpose of the Directive so as to achieve the objective pursued by the Directive.
The relevant statutory provisions, for present purposes, are to be found at Sections 2, 8 and 9 of the Act.
Section 2 of the Act defines a fixed-term employee as follows: -
- ‘‘fixed-term employee’’ means a person having a contract of employment entered into directly with an employer where the end of the
contract of employment concerned is determined by an objective
condition such as arriving at a specific date, completing a specific
task or the occurrence of a specific event but does not include—- (a) employees in initial vocational training relationships or
apprenticeship schemes, or
(b) employees with a contract of employment which has been
concluded within the framework of a specific public or
publicly-supported training, integration or vocational
retraining programme;
- (a) employees in initial vocational training relationships or
- "(1) Where an employee is employed on a fixed-term contract the fixed-term employee shall be informed in writing as soon as practicable by the employer of the objective condition determining the contract whether it is—
- (a) arriving at a specific date,
(b) completing a specific task, or
(c) the occurrence of a specific event.
(3) A written statement under subsection (1) or (2) is admissible as evidence in any proceedings under this Act.
(4) If it appears to a rights commissioner or the Labour Court in any proceedings under this Act—- (a) that an employer omitted to provide a written statement, or
(b) that a written statement is evasive or equivocal,
- (a) arriving at a specific date,
- (1) Subject to subsection (4), where on or after the passing of this Act a fixed-term employee completes or has completed his or her third year of continuous employment with his or her employer or associated employer, his or her fixed-term contract may be renewed by that employer on only one occasion and any such renewal shall be for a fixed term of no longer than one year.
(2) Subject to subsection (4), where after the passing of this Act a fixed-term employee is employed by his or her employer or associated employer on two or more continuous fixed-term contracts and the date of the first such contract is subsequent to the date on which this Act is passed, the aggregate duration of such contracts shall not exceed 4 years.
(3) Where any term of a fixed-term contract purports to contravene subsection (1) or (2) that term shall have no effect and the contract concerned shall be deemed to be a contract of indefinite duration.
Issues for consideration
The first issue for determination in this case is whether the Claimants were fixed-term employees at the time they made their complaint to the Rights Commissioner and so hadlocus standito maintain the complaints. If the Court resolves that question in the Claimant’s favour a further question arises as to whether the Claimants were employed on a succession of fixed-term contracts from 24th January 2006 onwards or on a single contract commencing on that date and terminating when their employment came to an end on 29th June 2007.
These are mixed questions of law and fact which turn on the true construction of the contractual terms under which the Claimants were employed at the material times.
Employment from month-to-month
A central issue in this case concerns the legal effect which should be ascribed to the Respondent’s decision to extend the Claimant’s contract on a“month-to month”basis.This is not a commonly used expression in employment law or practice. Nor is it a term having any fixed or technical meaning of which the Court is aware. It cannot therefore be equated with a periodic tenancy from month-to-month in landlord and tenant law.It is capable, if the context in which it is used permits, of being construed as describing a contract of indefinite duration or as connoting a continuing employment relationship based on either a single or a series of rolled-over fixed term contracts. The term must be understood as bearing the meaning which the parties using the term intended it to bear.
Interpreting the Contract – the law applicable
In construing a contractual term the function of the Court is to give effect to the intention of the parties. Where, as in the present case, the contract is reduced to writing the intention of the parties is to be ascertained from the words and expressions used in the document as a whole. In so doing ordinary words should be given their ordinary and natural meaning and technical words should be given their technical meaning. InLAC Minerals v Chevron,unreported , High Court, Keane J , August 6, 1993, the plain meaning rule was described as follows: -
- “If … a term of a contract is unambiguous and can only have one meaning the court cannot go beyond that unambiguous meaning so as to interpret the intention of the parties.
- “Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.”
- The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life)to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945.
It is accepted that the Respondent drafted the letter of 24th January 2006 without any negotiation with or input from the Claimants. In these circumstances Counsel for the Respondent, Mr Mallon B.L., accepts that the document should be construedcontra proferentem(against its author).
Did the renewal of 24th January 2006 create a contract of indefinite duration?
The test to be applied in ascertaining the meaning of the term in issue is what would a reasonable person having knowledge of the relevant background understand if told what the Claimants were told in the letter of 24th January 2006. The relevant background includes the Claimants’ employment history and the negotiations then in train on the proposed reduction in the workforce of some 200 personnel. The Respondent’s letter of 24th January 2006 must also be read in conjunction with its earlier letters of 4th October 2005 and of 19th December 2005.
In its letter of 4th October 2005 the Respondent informed the Claimants that their employment would not extend beyond 31st December 2005. In its letter of 19th December 2005 the Respondent advised the Claimants that their contracts were being extended by one month to 31st January 2006. The letter of 24th January 2006 advised the Claimants that the contract was being extended on a month-to-month basis until further notice. The introductory language used in each of these letters is remarkably similar except that in the letter of 24th January 2006 no specific termination date is given. It was submitted by Mr Carroll of SIPTU, on behalf of the Claimants, that the explanation for the extension of the contracts from month-to-month is that the Respondent wished to avoid the necessity to issue renewal notices to its fixed-terms staff at the end of each month. No witnesses were available from the Respondent to confirm or deny the accuracy of this explanation.
Based on the facts of this case the more reasonable construction of the letter of 24th January is that the Respondent intended to extend the Claimants’ subsisting fixed-term contracts by a series of renewals from one month to the next rather than converting them into contracts of indefinite duration determinable on one months notice. This conclusion is supported by the fact that at the material time the Respondent was actively seeking agreement to reduce its workforce by some 200 and it would seem unlikely that it would have consciously intended to confer permanent status on any fixed-term employee.
Moreover, in none of the documents which the Respondent furnished to the Claimants was it stated that the contract was determinable on one months notice. The earlier contracts, as renewed, expressly provided that the notice provisions of the Minimum Notice and Terms of Employment Act 1973 to 1991 would apply. If it was intended to amend these terms the Claimants could reasonably have expected that the Respondent would have said so expressly.
It is also significant that the Respondent did not treat the Claimants as permanent employees in implementing the restructuring agreement. The terms of the agreement made it clear that there would be no compulsory redundancies. While the agreement did not expressly say so the Court was told that this commitment was confined to permanent employees and did not extend to those on fixed-term contracts. The Claimants were not ultimately given the options set out in the agreement of remaining in employment, taking redeployment or opting for voluntary redundancy.
There is a further consideration which should be taken into account in addressing the proposition that a contract of employment from month-to- month is, as a matter of law, a contract of indefinite duration. The expressions “contract of indefinite duration”and“fixed-term contract”appear in the Framework Agreement as well as in the Act. As was pointed out by Leffoy J. inMinister for Finance v McArdle[2007] 18 ELR 165, the expressions must, therefore, have a Community wide meaning.
A key objective of the Framework Agreement is to prevent abuse arising from the successive use of fixed-term contracts. In that respect it must be assumed that an objective of the Framework Agreement is to afford workers reasonable security of tenure in employment unless there are valid objective reasons as to why their position should be otherwise. If it were to be held that the protection of the Act does not extend to the use of contractual arrangements under which the continuation of an employment relationship could be opened to reconsideration on a month-to month basis (as an alternative to providing a fixed termination date) the purpose of the Framework Agreement would be subverted and the attainment of its object would be seriously compromised.
A contract of fixed-duration or until the occurrence of an event
It appears that on a true construction of the contracts in issue the Claimants were fixed-term employees at all times material to these complaints. The question which then arises is whether there was a plurality of individual time specific contracts or a single contract determinable by the occurrence of an event, namely the conclusion of the restructuring negotiations. The Rights Commissioner found the latter to have been the case.
In its alternative argument the Respondent contends that the purpose of extending the Claimants’ contracts was to cover the period up to the conclusion of the restructuring negotiations. It was submitted that the Claimants knew and understood that their employment would terminate when agreement was reached. For the Claimants it was submitted that while it was generally understood that catering services would be discontinued on reaching agreement, there was no proposal to close the unit to which the Claimants were assigned, nor was that unit subsequently closed.
On each renewal of the Claimant’s fixed-term contracts the Respondent was obliged by s8 of the Act, to specify the objective condition by which the contracts were be determined. The Respondent was also obliged to specify in writing the objective grounds justifying the renewal of the fixed-term contract and the failure to offer a contract of indefinite duration. If the contracts were to be determined on the conclusion of negotiations or on reaching agreement, that is the occurrence of an event and the contract should have provided accordingly. Further, if the reason for the renewing of the contracts was to cover the Respondent’s temporary short-term requirements in the period up the conclusion of an agreement that too should have been specified.
There were no express terms in the contracts by which their duration could be linked to the restructuring negotiations. If it were to be held that the contracts were so limited it could only be by reliance on an implied term to that effect.
Implied contractual terms
There are limited circumstances in which a term can be implied into a contract. The most common form of implied term is one which arises from the presumed intention of the parties by application of what is known as the officious bystander test set down inShirlaw v Southern Foundries (1926) Ltd, [1932] 2 KB, at 206, 207. Here MacKinnon LJ set out the test in the following terms: -
- Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common “Oh of course”
- Whether a term is implied pursuant to the presumed intention of the parties or as a legal incident of a definable category of contract it must be not merely reasonable but also necessary. Clearly it cannot be implied if it is inconsistent with the express wording of the contract and furthermore it may be difficult to infer a term where it cannot be formulated with reasonable precision.
Conclusion
The letters issued by the Respondent to the Claimants dated 24th January 2006 must be interpreted as meaning that their employment was being extended by a succession of fixed-term contracts, commencing on the first day of each month and terminating on the last day of the month, between 1st February 2006 and 29th June 2007. The Claimants commenced employment with the Respondent before the commencement of the Act and completed their third year of continuous fixed-term employment on 30th April 2006. Their fixed-term contracts were renewed on more than one occasion after that date in contravention of s9 (1) of the Act. Accordingly by operation of s 9(3) of the Act the Claimants became entitled to a contract of indefinite duration on the second such renewal on 1st June 2006.
There is a final point which should be addressed in this case. The Claimants presented their complaints to the Rights Commissioner on 21st May 2007. On the conclusion reached above their contracts had become ones of indefinite duration by operation of law on 1st June 2006. It was thus submitted that they could not have hadlocus standiunder the Act at the time they made these complaints.
A similar situation was considered by Ms Justice Leffoy inMinister for Finance v McArdle[2007] 18 ELR 165. In addressing an argument made by Counsel for the Plaintiff to the effect that the Rights Commissioner had no jurisdiction to entertain the claim because at the time of its presentation the defendant had obtained a contract of indefinite duration by operation of law, Leffoy J. had this to say: -
- “Secondly, a more fundamental submission made on behalf of the plaintiff was that the Rights Commissioner had no jurisdiction to entertain the complaint as at the date it was lodged because at that point in time the defendant was not employed on a fixed-term contract but had obtained the benefit of a contract of indefinite duration with effect from March 2004. It was submitted that, given that the defendant had ceased to be employed on a fixed-term contract since March 2004, no contravention of the Act could have been committed within the six months preceding the presentation of her complaint on January 10, 2005. Put another way, the plaintiff's argument was that the defendant had no locus standi to rely either on the Directive or the Act after March 22, 2004 because she had ceased to be a fixed-term worker.
As a matter of fact, the position when the defendant presented her claim to the Rights Commissioner was that she was in the employment of the State laboratory on foot of the document which was issued on May 31, 2004, which, as the Labour Court recorded, purported to be in respect of the period from March 22, 2004 until March 21, 2005, which she had executed. It is true that at the hearing before the Rights Commissioner the concession was made by the plaintiff that the defendant was employed under a contract of indefinite duration which had commenced in March 2004, although counsel for the defendant told the court that that concession was only made two days before the hearing. It is reasonable to infer that it was the complaint which provoked the concession. Accordingly, there can be no question but that the Rights Commissioner had jurisdiction to entertain the complaint as of January 10, 2005”.
In this case the Claimants were still employed under the document of 24th January 2006 at the time they made their complaints. Their position was thus congruent with that of the defendant in the McArdle case. There is, however, a more fundamental point. If a fixed-term worker who obtains an entitlement to a contract of indefinite duration by operation of law ceases to havelocus standiunder the Act, a complaint alleging a contravention of either s9 (1) or 9(2) could never be maintained. Such a result could not have been intended.
Redress
Section 14 of the Act provides that a Rights Commissioner (or the Court on appeal) may order one or more of the following by way of redress for a contravention of the Act: -
(a)declare whether the complaint was or was not well founded;
(b)require the employer to comply with the relevant provision;
(c) require the employer to re-instate or re-engage the
employee (including on a contract of indefinite duration);
(d) require the employer to pay to the employee compensation
of such amount (if any) as is just and equitable having
regard to all the circumstances, but not exceeding 2 years
remuneration in respect of the employee’s employment;
It seems perfectly clear to the Court that the only reason why the Claimants were made compulsorily redundant was because the Respondent regarded them as employed on foot of a contract from month-to-month. They were thus regarded as fixed-term employees to whom the commitment against compulsory redundancy did not apply.
In these circumstances the Court regards an order for the reinstatement of the Claimants on a contract of indefinite duration, in accordance with s14(2)(c ) of the Act, as the most appropriate remedy in this case.
In ordering this form of redress the Court is influenced by the fact that the Claimants had given satisfactory service in the position which they held and the evidence is to the effect that there are currently vacancies within the unit, in which they were formerly employed.
DETERMINATION:
The appeal herein is allowed. The Decision of the Rights Commissioner is set aside and substituted with a finding that the Claimants’ complaints alleging a contravention of s 9(1) of the Act are well founded.
The Court directs that the Respondent reinstate the Claimants on a contract of indefinite duration, in the positions which they previously held, with effect from 30th June 2007.
Signed on behalf of the Labour Court
Kevin Duffy
20th March, 2008.______________________
JMcCabe.Chairman
NOTE
Enquiries concerning this Determination should be addressed to Jonathan McCabe, Court Secretary.