Most employment in Papua New Guinea is oral. Division 3 of Part III of the Employment Act (Chapter 373) governs it in three sections, and together they produce a structure that surprises people on both sides.
Section 16 — the contract runs for the wage period
Notwithstanding any agreement to the contrary, an oral contract of service shall be deemed to be for the period by reference to which wages are paid.
So the contract period is set by the pay cycle:
| Wages calculated and paid | Deemed contract period |
|---|---|
| Daily | One day |
| Weekly | One week |
| Fortnightly | One fortnight |
| Monthly | One month |
“Notwithstanding any agreement to the contrary” means the parties cannot fix a different period by saying so. If wages are paid fortnightly, the oral contract is a fortnightly contract, whatever either side calls it.
Section 78 controls how long a wage period may be. It is not open to an employer to stretch the oral contract by paying, say, quarterly. See how often wages must be paid.
Section 17 — it renews itself
Each party to an oral contract that expires under section 16 shall, immediately on the expiration of the contract, be deemed to have entered into a new oral contract for a further period of the same duration and subject to the same terms and conditions — unless:
(a) notice to terminate under section 34 has previously been given and (i) the period of notice has expired, or (ii) payment of wages instead of notice has been made; or
(b) the contract has been summarily terminated by either party for lawful cause.
Two consequences follow, and they point in opposite directions.
- For the employee: the job does not quietly lapse at the end of each pay period. It rolls on, on the same terms, until somebody ends it in one of the two permitted ways. An employer who simply stops offering work has not ended the contract — it has renewed.
- For the employer: the terms roll over too. A wage rate, an allowance or a practice that applied in one period continues into the next unless it is properly varied. Terms cannot be changed by presenting a new arrangement at the start of a pay period; a variation needs agreement.
Section 17 says the same terms and conditions. An employer who wants to reduce a rate, change the hours, or move the employee to a different occupation must either agree the change or give notice and offer a new contract. Imposing the change unilaterally leaves the old terms running — and the shortfall recoverable as unpaid wages under section 96.
Section 15 — the record, and who wins without it
Because nothing is signed, the Act requires the employer to write the terms down anyway:
- Section 15(1) — the employer shall, at the time of the engagement, make a written record of the terms and conditions.
- Section 15(2) — where a dispute arises and the employer fails to produce that record, the employee’s statement of the terms is conclusive evidence of them, unless the employer satisfies the Secretary or an Arbitration Tribunal under the Industrial Relations Act otherwise.
The record must contain the section 14 particulars. Combined with the wages register under section 83 and the wages statement under section 82, it is the documentary backbone of an oral engagement.
Ending an oral contract
- Notice under section 34 — one day, one week, two weeks or four weeks, depending on length of service, and the same for both parties.
- Payment instead of notice — section 35(2), available to either party once notice has been given.
- Mutual agreement — section 35(1).
- Summary termination for lawful cause — the section 36 grounds.
Anything else leaves the contract renewing under section 17.
Casual workers arrive here too
Under section 10(1), a casual worker employed by the same employer for more than six days in any one month is deemed to be an oral contract employee under this Division. From that point sections 15, 16 and 17 apply, and so does the notice regime.
- Identify the wage period — that is your contract period.
- Ask for the section 15(1) record at engagement, and keep a copy.
- Keep your own note of the rate, hours, start date and any allowances.
- Keep every pay statement.
- If terms change, ask for the change in writing — section 17 renews on the same terms.
- If work simply stops being offered, say in writing that you remain ready and willing to work, and ask whether notice is being given.
Sources
- Employment Act (Chapter 373) — ss 10, 14–17, 34–36, 78, 82, 83, 96
- Industrial Relations Act — PacLII 1986 Revised Edition
- Bar v Kora [2008] PGNC 17; N3290
- Kinaram v Vanimo Forest Products Ltd [2011] PGNC 137; N4413
Before relying on anything here, read the current text of the Employment Act (Chapter 373) and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.