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Termination of Employment by Payment of Wages in Lieu of Notice: Taake v Broadcasting and Publications Authority (Case Note) [2006] JSPL 4; (2006) 10(1) Journal of South Pacific Law

TERMINATION OF EMPLOYMENT BY PAYMENT OF WAGES IN LIEU OF NOTICE: TAAKE V BROADCASTING AND PUBLICATIONS AUTHORITY[∗]

ANITA JOWITT[∗][∗]
INTRODUCTION

This case addressed the issue of whether an employer, who is unhappy with an employee’s performance, can terminate an employee instantly by giving wages in lieu of notice, and thereby avoid procedures related to termination for serious misconduct.
It is a short case, but it addresses an important issue. The issue has come up in other Pacific jurisdictions as well and has led to some confusing case authority.^[1] As Chief Justice Millhouse notes in this case, such a practice ‘is so common, indeed so universal a practice’ that cases which clarify the law in this area are to be welcomed. It is not the only recent authority on this point. The 2004 Tongan case of Weibenga v Uta'atu^[2] deals with the issue in a similarly clear manner. However, Taake v Broadcasting Publications Authority has the advantage of having very simple facts and therefore being very concise.

FACTS

Taake was employed by Broadcasting and Publications Authority (BPA) as a driver. He had a written contract. In the translated English version the relevant clause stated:

10. Termination of Contract

a. This agreement (may) be brought to an end by the employer or the employee if one of them give notice for a period of 1 week to end the agreement. This agreement can also come to an end if the doctor reports that the employee is unfit to carry out the work.

b. The employee can be dismissed for doing any wrongful acts or go beyond the expected behaviours such as:

1. Drunk while on duty

2. Late to work

3. Failure to report any accident caused to the vehicles by a driver who is on duty. Checked or examined the vehicle before using and report any damages to the Transport Officer.

4. The CB must be on every time for any communication with BPA

5. Comply with the speed limits

6. Compliance with route of the bus which has been decided.

Any decision carried out for [BPA] the Chairman of the Board must be notified about it immediately. The employee may complain to the Board.

Minutes of the BPA management meeting on 20 October 2004 stated that on 15 October 2004 Taake negligently rammed the back of the BPA mini-bus into a tree. A number of other complaints about his performance were also noted. There was no dispute as to the truth of those claims. Management therefore decided to terminate Taake’s employment as of 20 October 2004.
The Chief Justice accepted the defendant’s evidence that the payday following Taake’s termination, 29 October, Taake was given a net payment of $79.30. On the subsequent payday, 12 November, Taake was paid a further $47.20. This was apparently 10 days pay. The Chief Justice did not enquire into the exact amount of the payment, instead stating, ‘Whether he was paid as much as that I have not calculated but without calculation it looks clear that he was paid at least seven days’ wages.’ As Taake had been paid more than one week’s wages, and the notice period required in the contract was only one week, there was no question of underpayment for the notice period.

ARGUMENTS FOR THE PLAINTIFF AND THE DEFENDANT

The judgment does not provide much detail on the arguments of the plaintiff or the defendant, instead just providing the gist of each parties’ case. The plaintiff argued that as he was dismissed for wrongful misconduct, clause 10(b) applies. This would give the plaintiff the right to appeal the decision to the Board. He claimed $54,163 in damages. This figure was ‘based on the assumption that he had six working years left... [and] included $5,000 for damages to reputation’.
The defendant argued that it was not a termination because of misconduct. Instead, it was a termination by notice under clause 10(a), with wages being paid in lieu of notice.

DECISION

The Chief Justice decided in favour of the defendant, stating:

Instead of giving the plaintiff notice for one week the defendant paid him at least a week’s wage in lieu of notice. To give the proper amount of wages in lieu of notice and terminate employment immediately is so common, indeed so universal a practice, that I regard the defendant as having acted in accordance with clause 10(a) of the contract. The defendant can, under such contract as it had with the plaintiff, always sack an employee and avoid possible action for wrongful dismissal by paying a week's wages. Clause 10(d) (sic) is then of no effect.

While it was not necessary for him to do so as he had found for the defendant, the Chief Justice also considered what the appropriate damages award would have been if he had found for the plaintiff. He noted that ‘there are so many imponderables’, such as the chance of a terminated employee falling ill or dying, or finding a new job, and that all these things need to be taken into consideration. So, rather than a straight mathematical calculation based on the number of working years the terminated employee has left, ‘It is a case of “wielding the broad axe”. It is impossible to find a precise figure for damages.’ In this case the Chief Justice would have assessed damages to be $10,000.

Discussion

This decision is to be welcomed for clarifying the question of whether an employer can opt for termination by payment in lieu of notice rather than getting involved in a potentially messy termination for serious misconduct. The answer is an unequivocal “yes”.
Throughout the University of the South Pacific (USP) region^[3] most employment contracts^[4] can be terminated “at will”. There is no need for an employer to give reasons for termination just so long as the proper length of notice is given. Instant termination can also be carried out in the event the payment of wages in lieu of notice is provided. This legal principle should be clear, and the judgment of Chief Justice Millhouse confirms that arguments to the contrary are simply non-issues. Maybe this case will help to stop lawyers from continuing to overlook this fixed legal principle.