Analysis | NATION

Magistrate Dismisses Union Application On Retirement Age, Gratuity Payment

The union had submitted that the insurance organisations “do not have a ‘retirement clause’ in their respective collective agreements. The union was unsuccessful in its attempt to remove the unlawful retirement provision from the collective agreement between the union and the employer.
19 Sep 2019 15:56
Magistrate Dismisses Union Application On Retirement Age, Gratuity Payment

Analysis:

The issue of retirement age in the private sector, in many cases, has been left entirely to the discretion of the employers.

But in some workplaces where collective agreements exist between employers and trade unions, there are been ongoing discussions on the issue.

One group of collectives says 55, second says 60 but others are open. It means the workers keep working as long as they are medically fit to continue and they are able to perform to expectations and set targets.

In some workplaces with set retirement ages, workers are allowed to keep working because their service is valued by the employers.

A ruling delivered yesterday by the Employment Relations Tribunal sets a precedent on retirement age and gratuity payment in a collective agreement in the private sector.

Resident Magistrate in Suva, Indula Ratnayake, dismissed an application by the Fiji Bank and Finance Sector Employees Union against the New India Assurance over the two issues.

The union had submitted that the insurance organisations “do not have a ‘retirement clause’ in their respective collective agreements. The union was unsuccessful in its attempt to remove the unlawful retirement provision from the collective agreement between the union and the employer.

The union further submitted that the employer had not agreed to discuss its proposal to include an additional clause in the agreement to entitle the workers for gratuity benefit as mentioned in a letter dated October 5, 2016, marked ‘U3’. The union claimed compensation in the form of gratuity since the employer terminates employees who attain the age of 55.

But the employer submitted that gratuity “is not an entitlement under statutory law or under the collective agreement. It further submitted that this dispute “does not fall within the definition of a trade dispute.

Retirement Age

Mr Ratnayake said: “The union claims that terminating employment based on age is unlawful.

“Clause 15 of the Collective Agreement between the Union and the Employer signed on July 11, 2000 marked ‘Ul ‘ reads as follows.

‘The Employer may at its discretion retire its employees from service upon reaching fifty-five (55) years of age.

“I will not decide on the lawfulness of this ‘retirement clause’ for the following two reasons.

“ The log of claims for 2016 marked ‘U3 ‘, which is relevant to this matter, does not contain  a claim  to amend  and/ or to remove  the  ‘retirement clause’  from ‘Ul’ collective agreement. “However, I note that the claims for years 2007, 2008, 2009 marked  respectively  as ‘UT, ‘US’  and ‘U9’  propose  to amend  this  ‘retirement clause’.

“The claim of the Union, as per ‘Part B (a)’ of ‘U3’, is for gratuity entitlement for workers who will retire from employment. The Tribunal will have to necessarily consider this claim in a setting where the ‘retirement clause’ exits.

“Nonetheless, since the Union made extensive submissions, both oral and written, claiming that the retirement clause is lawful, I make the following comments for the purpose of completeness.

“Parties have the freedom to contract. This freedom is restricted in many ways. For example, an unlawful contract term will not be validated merely because it was agreed upon by the parties. The legality of the impugned ‘retirement clause’ could be discussed against this background.

“ERA recognises ‘age’ as a prohibited ground of discrimination.

“As per sec. 77 (1) (d) of ERA, an employer must not cause a worker to retire subject to an employment contract imposing a retirement age, if that worker is qualified for work of any description.

“The provisions of the ERA do not invalidate a contractual term for containing a retirement age. In fact, the above section refers to and recognises. ‘employment contracts  imposing a retirement age ‘,  The  ordinary  meaning  of the aforesaid provision  suggests  that it would capture an instance where the employer triggers a retirement clause on a worker who is qualified to work despite reaching the age of retirement. But, that provision cannot be deemed to nullify retirement clauses in general, unconditionally.

“It appears that the architects of ERA desired ‘age – discrimination’ to be decided based on the nature of the alleged discrimination encountered by a given worker, while considering the qualification of that worker to continue in work

“Apart from ERA, the Constitution of the Republic of Fiji and the Human Rights and Anti• Discrimination   Commission   Act of 2009 (HRADCA)   contain   provisions   preventing ‘unfair’ age – discrimination.

“Section 26 (7) of the Constitution affords an opportunity to the victimiser to demonstrate that the different treatment is not unfair in the circumstance.

“Similarly, sec. 20 (1) of HRADCA allows the respondents to take up the defence that age is a genuine occupational qualification.

“Therefore, a claim based on ‘age – discrimination’, brought under the Constitution or under the HRADCA, would not have the capacity to invalidate a retirement clause in general, but would provide effective relief to a worker who is allegedly discriminated based on age.
Gratuity entitlement claim

“The relevant workers are not entitled for gratuity under statutory law of the country or under the relevant collective agreement.

“The union did not satisfy me that these workers would be entitled for gratuity under any other basis.”

Suva lawyer Damodaran Nair represented New India Assurance while Salesh Naidu, union’s general secretary represented the union.

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