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Tuesday 18 December 2018
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OWTU lives on… maybe not

My friend and colleague Diana Mahabir-Wyatt recently published an article in another daily newspaper titled OWTU Lives On.

It is her view that Paria Fuel Trading Company and Heritage Petroleum Co would become the natural successors to Petrotrin. If her conclusions are correct, then indeed OWTU will live on, as successorship in an industrial relations sense has to do with the preservation of bargaining rights for a trade union. This principle was clearly established by the Industrial Court in Trade Dispute 14/2003 Banking Insurance and General Workers Union v Eastern Commercial Lands Ltd.

Accordingly, such declaration of successorship would ensure that the OWTU’s certified recognised majority status with Petrotrin will automatically transfer to both new companies. Also, her conclusions would mean that all existing terms and conditions of employment, as enshrined in the various collective agreements including wages and salaries between Petrotrin and the OWTU will continue to be in effect.

I have come to a different conclusion and believe that her treatment of both the jurisprudential principles surrounding successorship, as well as the nature of the operations of these two new companies, were severely limited and this allowed her to fall into error.

The internationally accepted test commonly known as the 'triple substantial' principle is what the Industrial Court applies in determining if successorship exists. On this, Mahabir-Wyatt is right when she speaks to the three conditions that must exist before such a determination can be made. These are that:

• the new company is doing or producing substantially the same thing

• it is using substantially the same methods in its processes

• it is using substantially the same workers.

However, if one of those three substantials is not in place then successorship will not arise. It is useful therefore to understand, that the word "substantial" is interpreted in its ordinary sense by the court and can therefore be taken to mean “being of considerable importance, size or worth”.

So, let me explain why my views differ from Mahabir-Wyatt’s by starting with an examination of the previous operations of Petrotrin and overlaying this on the operations of the new entities.

In a 2015 publication by Petrotrin, in compliance with Sections 7, 8 and 9 of the Freedom of Information Act, the company confirmed that its operations were concerned entirely with exploration and production, and refining.

All other positions were therefore administrative and sales support for which we need not be overly bothered for this analysis. From an operations perspective therefore, Petrotrin’s primary business was managing and operating its refinery and the exploration and production of crude oil. As a matter of fact, and not surprisingly, these two areas engaged more than two-thirds of the entire workforce.

But the refinery is now closed. In its place, Paria Fuel Trading Co will be primarily engaged in the importation, storage and sale of imported fuels. Therefore, Paria cannot be deemed as doing substantially the same thing that Petrotrin did. Paria will not be refining crude oil and manufacturing fuels for sale and distribution nor will it be engaged in crude oil exploration and production.

Further, it is very possible that although Paria will be engaging some former Petrotrin workers, particularly those who may have Gantry operations experience, it is very doubtful that those numbers will be substantial in anyway. The conditions for successorship therefore do not exist.

Let us look now at Petrotrin’s exploration and production operations just prior to its closure. As we are all aware, somewhere around 2005 Petrotrin implemented a strategy of 'farm out and lease out' with respect to its exploration for and production of crude oil. The company records will show that its Trinmar operations only produced 15,000 barrels of oil per day, through its direct operations.

However, the company had available just over 40,000 barrels per day which means about 65 per cent of its local production was realised through the farm out and lease out operations. This strategy allowed the company to outsource and contract-out production operations, to a variety of independent exploration companies from which Petrotrin bought 100 per cent of their daily production.

Further, the methods and technology used in exploring and producing crude oil at both its Trinmar operations as well as by its independent contractors, were antiquated and outdated, mostly using old equipment.

I am informed that the Heritage Petroleum Company will be mostly engaged in direct production and exploration to the extent that it intends to produce 80 per cent of its crude oil through its direct operations. The new company will therefore be upgrading and modernising its equipment and will introduce contemporary exploration techniques and will move completely away from existing outdated methods.

Heritage will therefore not be using substantially the same methods in its operations for its crude oil production and it will also now be doing something Petrotrin never did which is, the exportation of crude oil. Additionally, it would not be doing substantially the same thing Petrotrin did as the latter’s operations also included an active refinery which is non-existent in Heritage.

I therefore conclude that it will almost be impossible for the OWTU to successfully sustain a successorship claim for any of these two new companies. I support these conclusions with the findings of our Industrial Court in TD 25/1984 Amar’s v CWU. It was held in this case that Amar’s was not the successor primarily because its production methods, upgraded equipment and relatively new workforce were different from its predecessor.

Notwithstanding my conclusions, the OWTU may indeed live on but it will be severely crippled. Its survival would depend on organising the workforce of these new entities and going through the rigours of applying for new recognition status. I truly wish them well.

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