Ratified treaty¹

Unfair dismissal/ Common law rule that employer can hire and fire at will/ Consideration of duty of National Court to develop underlying law as a coherent system/ Formulation of new rule of law as part of underlying law/ Establishment of a jurisprudential principle based on international law  

The claimant was a worker employed as a carpenter under a written contract with New Britain Palm Oil. Following an argument with his supervisor, during which he allegedly threatened the supervisor with personal violence and damaged the employer’s property, the worker was dismissed for misconduct.

The worker commenced proceedings against the employer, claiming he had been dismissed without good cause and contrary to the principles of natural justice as he had not been granted an opportunity to be heard by his employer before he was dismissed.

The Court noted that all contracts of employment included express and certain implied terms. The Court observed that the rule that had previously applied (as part of the underlying law in Papua New Guinea) was that a right to be heard prior to dismissal was not an implied term of a contract of employment; that is, the common law position was that an employer could hire and fire at will, with or without good reason and without giving an employee the right to be heard.

The Court noted that whilst it was bound by precedent of the Supreme Court in which the “hire and fire at will” rule had been applied, the Underlying Law Act of 2000 obliged it to ensure that the underlying law developed as a coherent system in a manner that was appropriate to the circumstances of the country,²

In this context, the Court stated that, in its view, the “hire and fire at will” rule was no longer considered appropriate to the circumstances of the country.

In making this determination, the Court observed that other countries that had previously adhered to the “hire and fire at will” rule had “abandoned it or substantially modified it by statute”³ and noted:

“That trend is exemplified by an International Labour Organisation Convention to which PNG is a party: ILO Convention No 158, the Termination of Employment Convention 1982. The ILO is a specialized agency of the United Nations. It seeks the promotion of social justice and internationally recognized human and labour rights (…) PNG have been a member of the ILO since 1976. PNG has ratified 26 ILO Conventions, including Convention No 158, ratified on 2 June 2000.

The Termination of Employment Convention applies to all branches of economic activity and to all employed persons. It sets international standards regarding termination of employment at the initiative of employers. It promotes the principles that there should be justification for termination, that a decision to terminate employment must be made fairly and that there be a right of appeal against unjustifiable termination.”⁴

The Court referred to section 117(7) of PNG’s Constitution, noting that no treaty forms part of the municipal law of PNG unless, and then only to the extent that, it is given the status of municipal law by or under a Constitutional Law or an Act of the Parliament. The Court noted that there was no Constitutional Law or Act of the Parliament that gave ILO Convention No. 158 the status of municipal law and so the question of whether its provisions had been breached was non-justiciable.

However, the Court observed in relation to ILO Convention No. 158:

“… its significance lies elsewhere. PNG is a party to it and has an obligation as a matter of international law to make laws to give it effect, except to the extent that its provisions are given effect in some other manner, including by court decisions. If I formulate a rule of law, as a court decision, that gives effect to ILO Convention No 158 I will be helping PNG discharge its international law obligations. I will be developing the underlying law in a manner consistent with those obligations. PNG’s municipal law will be made consistent with international standards.”⁵

The Court determined that the common law “fire-at-will” rule contradicted Article 7 of ILO Convention No. 158 and so “need[ed] to be abolished” in PNG domestic common law.⁶

Having established a jurisprudential principle based on Convention No. 158, the Court held that, in this case, the employer had breached the worker’s contract by not according him a right to be heard. The Court ordered that a trial proceed on assessment of damages to be awarded to the worker.

¹ ILO Termination of Employment Convention, 1982 (No. 158).

² Section 5, Underlying Law Act 2000.

³ Paragraph 123 of the decision. The Court specifically referred to Australia, Canada and New Zealand.

⁴ Paragraphs 124 and 125 of the decision.

⁵ Paragraphs 135 to 136 of the decision.

⁶ Paragraph 137 of the  decision.