2013 Case of Note: KFC Case Illustrates Need for Labour Law Reform

2013 Case of Note: KFC Case Illustrates Need for Labour Law Reform

In March 2013, the Chief Justice issued a decision in the case of Kentucky Fried Chicken (Bermuda) Ltd v Minister of Economy Trade & Industry and the Bermuda Industrial Union [2013] Bda LR 19 (381 KB PDF). Kentucky Fried Chicken (Bermuda) Ltd. (“KFC”) sought judicial review of the Minister of Economy Trade & Industry’s (the “Minister”) decision to refer KFC’s dispute with the Bermuda Industrial Union (“BIU”) to binding adjudication under the Trade Disputes Act 1992 (the “Act”). The Chief Justice refused KFC’s application citing the Court’s limited ability to review such references and only in “extreme cases”.

In addition, the decision considered the Tribunal’s powers, clarified that the Tribunal is not bound by the Minister’s terms of reference and is autonomous. The Tribunal cannot, however, make a binding determination dealing with future terms and conditions of the employment relationship. This case demonstrates that the Courts are in no position to assist with resolution of labour disputes; those disputes are left for the Tribunal, but that the Tribunal has no power to bind the parties for the future. This is an area in need of reform. Thankfully, the formation of the Labour Laws Reform Committee, of which MJM’s Alan Dunch is Chair, has been tasked for a wholesale review of Bermuda’s labour laws in 2014.

On 15 April 2008, KFC and BIU entered into a collective bargaining agreement (the “CBA”) for a period of not less than 3 years and continuing thereafter but after 14 January 2011, 3 months’ notice of termination of modification could be given by either party. On 1 February 2011, KFC gave formal notice of the desire to modify the CBA. Negotiations between the parties went on through until September with no resolution. On 9 September 2011, KFC wrote to the BIU providing notice to terminate the CBA with effect 3 months’ from the date of the letter. On 4 October 2011, the BIU wrote to the Department of Labour and asked for mediation. On 15 December 2011, KFC issued a memorandum to all staff advising them that the CBA had come to an end, new terms were being drawn up and they would be in line with the Employment Act 2000. A meeting was hosted by the Department on 27 March 2012 to seek resolution, but was unsuccessful. On 12 April 2012, KFC’s attorneys wrote to the Department and, amongst other things, advised that a restructuring of KFC’s business was taking place and its operations would be carried about by a newly formed subsidiary. All KFC employees were to be transferred to the new subsidiary and new statements of employment would be provided for review and signature.

Following on from this background, the Minister wrote to the parties on 23 April 2012 asking them to outline the scope of the dispute, having already given an indication that she was contemplating referring the dispute to arbitration. On 3 May 2012, a notice was published which confirmed the reference to the Labour Dispute Tribunal and outlined certain terms of reference. On 23 May 2012, KFC filed an application for leave to seek judicial review of the Minister’s decision to refer and on 25 May 2012, the Chief Justice granted leave without a hearing thereby staying proceedings which had been issued by the BIU against KFC.

KFC’s key arguments were that the terms “labour dispute” under the Act did not include the issue of whether or not the CBA was still binding on the parties and was therefore not a referable dispute. Constitutional arguments were also raised by KFC suggesting that the reference to the Tribunal was depriving KFC of its right to have its contractual rights determined by the Court and its contractual and economic right to freely negotiate its own contracts. KFC also took issue with the appointment of one of the Tribunal members alleging apparent bias.

The Court cited its limited ability to review such references with the Chief Justice saying, “Save in extreme cases, the courts are not competent to challenge the policy judgment of the Minister that a labour dispute sufficiently engages public interest to warrant a reference to a tribunal under the Act”. Further, the Chief Justice indicated that the Tribunal itself is the “appropriate forum for the precise parameters of the issue to be determined to be worked out”. The Court made clear that the Minister has no power under the Act to determine the matters to be dealt with by the Tribunal. In addition, the Court did not accept KFC’s suggestions that the Tribunal has “draconian” powers, but rather it has the power to determine existing or past dispute between the parties and that is all. The Tribunal cannot, however, make a binding determination which has “the effect of imposing a new bargain on the parties as regards future terms and conditions of employment”.

This case highlights the unsatisfactory state of Bermuda’s labour laws and the need for reform. It will no doubt be one of the cases considered by the Labour Laws Reform Committee as part of their review of this area of jurisprudence next year.