Zamaere v Sucoma Limited (MATTER NO. 157 OF 2001) (NULL) [2002] MWIRC 27 (20 February 2002);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI


MATTER NO. 157 OF 2001



BETWEEN:




MRS. W.P. ZAMAERE……………………………………..APPLICANT


-and-


SUCOMA LIMITED…………………………..…………RESPONDENT



CORAM: HON. M.C.C. MKANDAWIRE, CHAIRMAN

Mr. Joster Mwazani Chisale of Counsel for the Applicant

Mr. Ralph Kasambara of Counsel for the Respondent

Mr. Lora – Official Interpreter



R U L I NG


Summary of Matters for decision


  1. Irregular execution – warrant of execution far too much – application through Motion to set it aside.


  1. Industrial Relations Court not to award costs Section 72 of the Labour Relations Act (LRA) – statutory collection charges – Are they costs?


  1. Application to re-hear Summary Judgment proceedings – Effect of Employee’s Entitlement to other payment in relation to Severance allowance – Section 35 of the Employment Act.



The genesis of this ruling can well be traced from the ruling of this Court issued to the parties herein on the 30th of November 2001 from the Lilongwe Industrial Relations Court. In that ruling, I had ordered as follows:-


“I therefore do not award any costs in this case. I therefore order that the Respondent should pay out the severance allowance to the Applicant as prayed for. The Respondent should deduct any tax that is lawfully levied if any. I would advise here that before they do that, they should liaise with the Malawi Revenue Authority as to whether such an allowance attracts any tax.”


After that ruling, the applicant’s Counsel on the 17th of December 2001 obtained a warrant of execution for the sum of K1,849,124.10. This warrant of execution was issued by the Registrar of the Industrial Relations Court. A bailiff of the High Court immediately went to execute on the Respondent. On the 19th of December 2001, some two days after the warrant of execution was issued, the respondent’s Counsel obtained before the Deputy Registrar of the High Court an order of stay of execution of the warrant of execution pending an appeal to the High Court. Two days later, the Applicant obtained before the same Deputy Registrar of the High Court an order vacating order of Stay of execution of the 19th of December 2001. Thus by virtue of this order of the 21st of December 2001, the Applicant had authority to proceed with execution accordingly. There is something interesting here which I need to point out. Whilst as the Respondent had obtained a stay order on the 19th of December 2001a day after the order of stay of the 19th December, the Respondent obtained yet another stay order now before the Chairman of the Industrial Relations Court in Lilongwe. Thus the Respondent had two orders of stay from two different courts. The Deputy Registrar of High Court having vacated his order of stay on the 21st of December 2001 meant that there was still an order of stay from the Industrial Relations Court. From the totality of the facts on hand, the bailiff of High Court after the order of stay was vacated by the Applicant went back to re-execute. In the course of this re-execution, that is when the bailiff of the High Court got word through the under Sheriff Mr. Mlauzi that the previous day, he had been served with an order of stay issued by the Industrial Relations Court Chairman in Lilongwe.


It is from this background that the Respondent have brought up two Motions which were later on consolidated into one Motion. But in arguing the Motion, the Respondent’s Counsel raised three important issues these are:-


  1. That the warrant of execution issued by the Applicant was full of irregularities.


  1. That the second or subsequent execution was irregular and that it amounted to trespass.


  1. That the Respondent would like to be re-heard on the issue of Severance allowance since there is now new evidence that the Respondent has an in service death benefit scheme that pays out more than the severance pay.


The Applicant has filed in an affidavit in opposition. I shall be referring to some of those pertinent issues as time goes.


Both Counsel referred me to a lot of legal provisions especially from the Rules of the Supreme Court popularly known as the white book. There was also reference to the Legal Education and Legal Practitioners Act in particular to the schedule, which deals with legal practitioners (Scale and Minimum Charges) (Amendment) Rules, 1999. There was also reference to Halsbury’s Laws of England (3rd Edition) Volume 34 especially the part which deals with irregular and wrongful warrants of execution. I really found the legal gymnastics from both Counsel very interesting and imaginative.


In the first place, let me point out on the onset that the Industrial Relations Court has got its own Procedure Rules which have to be followed to the letter. Unless the IRC procedure Rules do not specifically provide for, this Court has to seek guidance from nowhere else but from these Rules. This case has raised some anxious moments in my mind and I seize this as a very great opportunity to set down the parameters of the IRC in relation to the other Courts so that there is no deliberate confusion in future. The IRC has got its own Registrar who is appointed pursuant to Section 69 of the Labour Relation Act 16 of 1996. The day-to-day operations of the IRC are governed by the IRC (Procedure) Rules, 1999. In these Rules, Registrar means the Registrar of the IRC appointed in terms of Section 69 (1) of the Labour Relations Act. The Registrar of the IRC performs both administrative and judicial functions. I have said so because at one moment, there was a challenge in this case through affidavits filed by the Respondent’s Counsel that the warrant of execution issued by the Registrar of the IRC was invalid because the Registrar of the IRC has got no jurisdiction in this area. Although this issue was later on not pursued, but for the benefit of other Court users, let me settle the matter once and for all. Section 75 of the Labour Relations Act deals with the issue of enforcement of orders of the IRC. It provides:


“Any decision or order of the IRC shall have the same force and effect as any other decision or order of a competent Court and shall be enforceable accordingly.”


Then there is Rule 6 (e) of the IRC (Procedure) Rules which provides:-


“Without prejudice to the general duty of being responsible for the administrative function of the Court, the Registrar shall –

(e) issue such process or documentation as may be necessary for a party to enforce any decision or order of the Court in terms of Section 75.”


It is pursuant to this rule that the Registrar of the IRC had issued out a warrant of execution against the Respondent on the 17th of December 2001. Thus that warrant of execution was lawfully issued. The execution of the warrant has of course to be done by the Sheriff of Malawi. This is the position and it should not be deliberately misunderstood.


The next point worth clarifying in this case is the issue of appeals against the decision of the Industrial Relations Court. This is covered in Section 65 of the Labour Relations Act which provides:-


“(2) Subject to subsection (3) decisions of the Industrial Relations Court may be appealed to the High Court on a question of Law or jurisdiction within thirty days of the decision being rendered.


(3) The lodging of an appeal under subsection (2) shall not stay the execution of an order or award of the Industrial Relations Court, unless the Industrial Relations Court or the High Court directs otherwise.”


It is therefore very clear from the foregoing statutory provision that a specific order has to be obtained from either the Industrial Relations Court or the High Court. My understanding of this provision and the practice that obtains elsewhere is that is can only be the Chairperson or Deputy Chairperson of the IRC or a Judge of the High Court in Chambers who can grant such direction. I have again deliberately seized this opportunity to propound the jurisprudence of the IRC so that the Court users are not left confused.


There is one observation that I have to make in this case which needs to be pointed out on the outset lest the confusion continues. The Respondent went to the High Court for a stay of execution of the warrant issued by the Registrar of the IRC. It really puzzles this Court as to why the Respondent chose to go to the High Court for a stay of execution yet the IRC has its own Registrar who deals with such issues. The IRC (Procedure) Rules are very clear that the Registrar under these rules means the Registrar of the IRC appointed pursuant to Section 69 (1) of the Labour Relations Act. For purposes of the proper administration of matters filed in the IRC, it should be made very clear here that the Registrar of the High Court or his subordinates like the Deputy or Assistant Registrar do not come on the scene. These judicial officers only come on the scene when matters have been appealed to the High Court. Even if that is the case, such an appeal has to be dealt with in conformity with Rule 27 of the IRC (Procedure) Rules which provides:-


“An appeal in terms of Section 65 (2) shall be dealt with in terms of Order XXXIII of the Subordinate Court Rules made under the Courts Act”.


It is thus very important for Counsel to have followed the procedure of appeal as laid down. If this practice does continue that a warrant issued in the IRC has to have stay obtained in the High Court before the High Court Registrar yet there are officers in the IRC to entertain such applications, then there is bound to be a lot of confusion in this Court.


The next step which the Respondent took was to obtain another order of stay in the IRC on the 20th of December 2001. Because of this confusion which was of their own making, the IRC granted a stay of execution not knowing that the Deputy Registrar would vacate an order of stay that he had granted a few days ago. You can thus see for yourselves the type of confusion which the Respondent had created by going to this Court and later on going to that other Court. It can really create a mess. My advice therefore is that let matters which are before the IRC be completely processed there. Parties can only go to the High Court when they are seeking a relief which the IRC cannot grant. That would indeed harmonize the operations of this very young Court.


Having said that, let me now delve into the issues at hand. The first issue concerns the tax that I had ordered in my ruling to be deducted if any. From the wording of my ruling of the 30th of November 2001, I had made it clear that the Respondent should deduct any tax that is lawfully allowed if any on this severance allowance. I further ordered that the Respondent should liaise with the Malawi Revenue Authority (MRA) to seek advice as to whether severance allowance attracts any tax. The onus therefore was on the Respondent to iron out all these issues on tax. The Respondents who are ably represented by Counsel did not do that in time. Thus by the time the Applicants had issued the warrant of execution; they had no option but to put a figure that was itemized in the ruling and this is K1,849,124.10. If the Respondents were serious minded, they could have expedited their enquiries with MRA and thereafter advise the Applicant. The Applicant issued out a warrant of execution after two weeks from the date of ruling. All this time, what were the Respondents doing? Coming to the issue of costs, I am aware that the Labour Relations Act discourages award of costs in Industrial disputes. Section 72 of the Labour Relations Act provides:-


“(1) Subject to subsection (2), the IRC shall not make any order as to costs.


(2) The IRC may make an order as to costs where a party fails to attend, without good cause, any conciliation meeting convened under this Act, or where the matter is vexatious or frivolous.”


Unlike in the ordinary courts or common Law courts where costs follow the event, orders for courts in the IRC are very restrictive. There is a special reason why costs are discouraged in the IRC and one has to understand the evolution of Labour Law. One of the most important factors why costs are discouraged is that the award of costs orders may well discourage parties and particularly individual employees, from approaching the IRC.


The word costs as used in the Labour Relations Act should be construed to mean party to party costs such as attendance fees, waiting, trial, time spent on researching the law, receiving instructions from client, stationery etc. These are such costs that usually come for assessment before the Master or Registrar. The statutory collection charges referred to in this matter are not the type of costs that we are talking about. In order to buttress this, a look at Rule 22 of the IRC (Procedure) Rules would assist to further elaborate that the costs we are talking about do not include statutory collection charges. Rule 22 states:-


“(1) Costs shall be taxed by the Registrar in accordance with the scale employed by the High Court for the time being.


(2) Costs taxed by the Registrar shall be subject to review by the Chairperson or Deputy Chairperson on application by one or more of the parties on notice to all other parties within 14 days of such taxation.”


Thus it is clear that if these costs are to be taxed it should indeed be the party-to-party costs. One does not tax statutory collection charges. I therefore find that the inclusion of the Statutory Collection Charges is in order.


The next point for consideration is in relation to the issue of the execution being irregular because it was for too much. I am aware that Counsel for the Respondent referred to a lot of Rules from the White Book (Rules of the Supreme Court) in relation to the procedure and interpretation of an irregular execution. He also referred at length to the Halsbury’s Laws of England (Third Edition). It was indeed very fascinating for this Court to read for itself as to what an irregular execution is. There was heavy debate between the two parties as to whether the execution was irregular or wrongful. You can therefore see for yourself as to how legalistic these two parties were in trying to argue their case.


I would like to stress one point here which may be of help to both parties and also of help to other potential users of this Court. One of the most distinguishing features between this Court and the ordinary courts is that this Court stresses more on equity than being legalistic. That is why in most jurisdictions, Industrial Relations Courts or Labour Courts are referred to as courts of equity. This is indeed a very key feature of this Court. Legalism should not be the order of the day. Thus when the two parties were deeply involved in a debate as to what is “irregular” or “wrongful” execution, I found that they were being more legalistic.


It is because of this legalistic approach that matters in these ordinary courts take ages before they can be concluded. For example, the Respondent’s representative was advancing an argument that the entire execution be set aside just merely because the warrant had included a figure that was higher than what they thought it should have contained. If I do follow that philosophy, then this Court shall not achieve the goals and objectives for which it was established. It will very soon resemble the ordinary Courts.


I in turn therefore looked at the demands of equity more than legalism. In this first execution, the Respondents had the responsibility to find out from the MRA on the tax payable on the Severance allowance which they did not accomplish until when after 17 days the Applicant decided to enforce the decision of the Court. The Respondent were themselves to blame. They did not utilize the opportunity that this Court had given them. Today they should not come to this Court and claim that their colleagues had executed far too much. There is a saying which goes as follows: “He who seeks equity should come with clean hands”. Certainly the Respondent are not coming with clean hands here. I do not therefore find any fairness here in setting aside the execution. The application on this point falls away.


The other point relates to the second execution. I take it that by the time the bailiff of High Court went for the second time, she was operating on a lawful order from the Court. There have been issues of course raised that the Respondent have a head office in Limbe and operations are done in Nchalo where the chattels are. I take it that we should not be very pedantic on whether she went to head office or Nchalo. This is neither here nor there. The second execution had its own misfortunes. The Respondent had now obtained an order of stay in the IRC in Lilongwe. It would appear that the bailiff was not aware of this order until the Under Sheriff spoke to her. Immediately the Under Sheriff spoke to her about the stay from the IRC in Lilongwe, one would expect that her second execution should have halted then and there. All I would say is that if at all she went ahead in defiance of that order, then she was operating without any authority. The Respondent can pursue that matter with the Sheriff of Malawi to who these bailiffs report. But to saddle the responsibility on the Applicant would be going a bridge too far.


Finally, there is the issue of re-hearing the matter. The Respondent aver in their affidavit that there is new evidence that the Respondent has an in-service death benefit scheme that pays out more than the Severance pay. They further state that the law did not envisage a situation whereby the employer is supposed to pay both death benefits and severance pay.


It is therefore their prayer that this matter on summary judgment be re-heard and that the Court should also take into account the statement of reply by the Respondent which would be filed.


I have studied the affidavit in support of this application to re-hear the matter for Summary Judgment. The affidavit has raised an interesting point in relation to payment of Severance allowance. I am aware that this matter on Severance allowance has been a subject of controversy in the industrial field.


The issue that has been raised by the Respondent therefore is very pertinent and the Court has the duty to give a proper direction on this issue. I will first look at the historical background to Severance allowance and then look at the new legislation on Severance pay. If need arises, I will order for the re-hearing of the matter. If not, then that will be the end of this matter.


The historical background to Severance pay in as far as statutory entitlement to Severance pay is concerned dates back to 1976 through the introduction of the Wages and Conditions of Employment (Severance Pay) Order, 1976. This order was made pursuant to Section 5 of the Regulation of Minimum Wages and Conditions of Employment Act, which was later on amended in 1976 and 1990. In that order, the following points are noteworthy:


  1. the order did not apply to public servants;


  1. an employer was exempted from paying severance pay –


    1. Where an employee earned an income of more than K2,000 per annum;


    1. to apprentices and casual and seasonal employees;


    1. where the employee had been summarily dismissed;


    1. where compensation had been paid pursuant to the Workers Compensation Act;


    1. an employee had refused an offer of re-employment or renewal of contract; or


    1. if an employee earned a pension calculated at more than one-tenth of his entitlement as Severance pay subject to two provisions.





The new Employment Act 2000 has put a new statutory provision on Severance pay which is Section 35 of the Act. For avoidance of confusion I hereby reproduce the section extensio. It says:-


“(1) On termination of contract, by mutual agreement with the employer or unilaterally by the employer, an employee shall be entitled to be paid by the employer, at the time of termination, a Severance allowance to be calculated in accordance with the first Schedule.”


In relation to the case at hand since the claim for Severance allowance has been lodged by the surviving wife to the deceased husband (former employee), it would be good to reproduce the provision of Section 35 (7) of the Employment Act which says:-


“(7) Where the contract of employment is terminated by reasons of the death of the employee, the severance allowance shall be paid to the surviving spouse of the deceased employee or, in the absence of such spouse, to such other dependent relative as the Labour Officer may decide.”


A dissection of Section 35 clearly shows that the Employment Act 2000 entitles an employee to be paid by the employer a severance allowance. Basically, the Act seeks to compensate for loss of office according to length of service. I have thus caused a post-mortem examination of Section 35 under the following heads so that we are not engaged into deliberate misunderstanding; excluded employees termination, and the effect of payment of severance allowance on the employees’ entitlement to other payments.


  1. EXCLUDED EMPLOYEES


In terms of Section 35 (6) of the Employment Act, severance allowance is not payable where the employee, at the time of termination of the contract of employment-




    1. was serving a probationary period;


    1. was fairly dismissed for reasons related to his conduct;


    1. unreasonably refused an offer or re-employment with one or more of the partners; or


    1. entered, after dissolution of a partnership, into employment of the personal representative etc of the deceased employee.


In the premises, unlike under the Wages and Conditions of Employment (severance pay) order, severance allowance entitlement under the Employment Act extends in principle to-


  1. public servants, except members of the armed forces, the prison service or the police;


  1. apprentices; and


  1. casual and seasonal employees.



  1. TERMINATION


In terms of Section 35 (1) of the Employment Act, no entitlement to severance allowance arises unless and until the contract of employment has been terminated either by mutual agreement or unilaterally by the employer. Thus unilateral termination by the employee does not fall within the purview of Section 35 (1).


  1. EFFECT OF PAYMENT OF SEVERANCE ALLOWANCE ON THE EMPLOYEE’S ENTITLEMENT TO OTHER PAYMENTS


Section 35 (5) of the Employment Act provides that the payment of severance allowance does not affect the employee’s entitlement, if any, to payment in lieu of notice or to compensatory or special award under Section 63 of the Act. This Section therefore requires an art of interpretation.


Parliament, having expressly indicated that payment in lieu of notice, compensatory award and special award are not to be affected by the payment of severance allowance, ought to be understood that it never intended that payment of severance allowance should not affect the employees’ entitlement to other payments, such as pension, gratuity or other terminal benefits. In other words, a contract of employment that provide that payment of severance allowance shall affect the employee’s entitlement to terminal benefits does not violate the letter and spirit of the Employment Act. What the Employment Act has put in place is a minimum statutory requirement on severance allowance. It is up to the employer to make sure that their contract of employment documents are harmonized with the requirements of the Employment Act. This duty put on the employer is already put in Section 69 of the Employment Act which provides:-


“(1) Every Contract of Employment entered into prior to the coming into force of this Act shall, notwithstanding that its terms are not in conformity with this Act, continue to have effect until the expiry of three months from coming into force of this Act.


    1. An employer who is a party to a Contract of Employment to which subsection (1) applies shall be responsible for causing the contract to comply with this Act.


    1. After the expiration of three months from the coming into force of this Act, an employer who is a party to a contract of employment to which subsection (1) applies shall not have any rights hereunder until subsection (2) is complied with.


    1. An employee who is a party to a contract of employment to which subsection (1) applies shall, in the case of failure by the employer to comply with subsection (2), be entitled to a fair value of any service rendered by him to the employer as a Labour Officer may, on the matter coming to his notice, assess and certify in writing the amount to which the employee is entitled to under this subsection.


Provided that the Court may vary and set aside the certificate of the Labour Officer and itself assess the fair value of the services rendered by the employer.”


From the above statutory provision, it means that contracts entered into before the Employment Act, 2000 were given three months validity period within which the employer was duty bound to re-organize such contracts so that they are in conformity with the Employment Act. Thus if an employer did not harmonize the contract of employment within three months after the coming into force of the Employment Act, such an employer loses his/her rights until subsection (2) is complied with.


The fact of the matter therefore is this: Severance allowance under Section 35 of the Employment Act is payable as a minimum statutory requirement. It does not matter whether the employer has an in-house arrangement like insurance policy of its employees. In other words, these other internal or in-house arrangements do not affect payment of severance allowance. This severance allowance is payable as an entitlement pursuant to Section 35. But payment of other benefits may be affected by payment of severance allowance. All will depend on the terms on the contract of employment.


Such being the case, I do not think that the discovery of new evidence in relation to the existence of an in-house policy shall have any bearing on the payment of severance allowance. If at all the employee or the surviving dependants also request for payment of these other benefits then one has to go the drawing board and ascertain whether the employer had complied with Section 69 (2) of the Employment Act. This Section is very important for employers because once they do not comply with it, they will find themselves pressurized towards a tiny corner whereby ending up making double payments.


I therefore order that the severance allowance should be paid as already ordered in my previous ruling. Since there was execution, I order that the Sheriff fees and expenses should be paid. But to be fair to both parties, I do order that the Sheriff fees be calculated on such a sum which is arrived at after the deduction of any tax payable if any. I order that this be done within 7 days from the date hereof.


MADE this 20th day of February 2002.






M.C.C. Mkandawire

CHAIRMAN