Phillips S. Kanada v Seba Foods Limited (Matter No. 18 of 2002) (18 of 2002) [2002] MWIRC 36 (23 July 2002);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI


LILONGWE REGISTRY


MATTER NO. 18 OF 2002



BETWEEN:



PHILLIPS S. KANADA…………………………………..APPLICANT


and


SEBA FOODS (LIMITED)……………………………..RESPONDENT



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

Applicant – Present

Respondent – Present (Represented by Mr. Chinula of Counsel)

George Chapalapata – Official Interpreter



J U D G M E N T


Matters in Issue : Unfair termination of employment.


Introduction:


This is a matter in which the Applicant Phillip Scot Kanada is claiming against the Respondents Seba Foods Limited. The claim is based on a trade dispute of unfair termination of employment which has been denied by the Respondents . The Respondents have said that the Applicant’s employment was terminated as a result of his position of production supervisor being declared redundant.


Survey of Evidence


The Applicant joined the Respondents in 1997 as a n intake sales clerk. He proved very competent to the point whereby he was elevated to the position of production supervisor. His rise can easily be traced through letters of promotion which have been tendered as App Ex 1 and 1(a). Apart from his duties as production supervisor, the Applicant was also responsible for several other things. He was looking after the warehouse as well as recruitment of staff. It is his evidence that all went on well until the 23rd of February, 2001 when he was shocked to be told by his boss Mr. Burgess that his employment was terminated. This really surprised him and he asked the boss as to why he had lost his job, but he was not told the reasons. He then decided to write the Respondents so that they could put it in writing. He tendered the letter as App Ex No.2. He has never received any response to this letter and as such, he did refer the matter to the Ombudsman who later referred him to this Court. The Applicant told this Court that the Respondents paid him all his dues for the years he had been with them but the only unfairness he is blaming them for is the manner in which his employment was terminated. He gave as an example that some of his friends got letters telling them that they were to be laid off as a result of redundancy. But for him, nothing of that sort was written.


In defence, Mr. A. Burgess who is the Managing Director told the Court that the Applicant’ job was terminated as a result of redundancy. Before the redundancy was effected, he called the Production Manager a Mr. Ngwira with whom he discussed the situation at the place of work. After a decision was made to declare the post redundant, he approached Mr. Jere the office Manager to enquire from ministry of Labour as to the entitlements of the Applicant once he was made redundant. The Ministry of Labour accordingly advised them. When time for the pay of February, 2001 was ripe, he called the Applicant to his office and informed him about the sad news. The Applicant was told to go to Mr. Jere’s office in order to collect his dues. Although he collected all his dues, he still felt that he was unfairly treated in the way the termination of his employment was effected. This is why he first complained to the Ombudsman who later on referred him to this Court hence these proceedings.


The Law


Whenever there is a dispute in relation to termination of contract this Court has always first referred to Section 31 (1) of the Republic Constitution which provides:-


“Every person shall have the right to fair and safe labour practices and to fair remuneration.”


The term safe labour practices has now received a lot of interpretation by this Court and there are several decided cases by this Court which do clearly illuminate this point.


The next legal foundation that this Court keeps on referring to is Section 57 of the Employment Act which provides:-


“(1) The employment of an employee shall not be terminated by an employer unless there is a valid reason for such termination connected with the capacity or conduct of the employee or based on the operational requirements of the undertaking.”


Thus the key word in this provision is valid reason. Where the termination is based on operational requirements of the undertaking, the employer is thus expected to justify why the situation is such.


Analysis


Before the Court finally analyses the case, let me put it on record that this Court is highly indebted to Counsel for the Respondents for the submissions that were made in this case. The Court is again very excited that apart from the High Court decision and English case law, Counsel also referred to one of the cases decided by this Court which is the case of Hewitt Gomile –vs- Stansfield Motors Matter No. IRC 75 of 2000 where the Honourable Chairman said:-


“It is clear from the word go that the Applicant was put on redundancy. It was not really termination or dismissal in the normal sense that we use these words. This Court has stressed on times without numbers that Labour Law is not against redundancies. That cannot be the case. After all, in this changing economic environment, redundancies are the order of the day. The global economy is revolving. There is information technology all over the world whereby more people are finding themselves at the receiving end.”


The foregoing quotation shows that redundancy is acceptable as a reason for termination of employment. It is not sufficient however for an employer to allege a need to terminate employment on the ground of redundancy. There is need for the actual reason for the decision in order to establish whether it is a legitimate exercise of management prerogative. Substantive grounds for retrenchment have to be given. These would include economic down run, technological change, reorganization of the enterprise and sale, merger or closure of business.


In this present case, it is rather hazy as to what led to the termination of the Applicant’s employment. There is nothing in writing to show that the reasons were as a result of redundancy. The only pointers that the Court gets are through the correspondence between the Ombudsman and the Respondents. The letter written by Mr. Jere dated the 23rd February, 2001 which is App Ex 4 does not contain any reasons at all. This therefore means that the Respondents already violated the statutory rights of the Applicant as enshrined in Section 57 (1) which requires that there should be a valid reason.


Putting that aside, if one goes through App Ex 3 (a) a letter from the Respondents to the Ombudsman, it becomes even more clearer that the Respondents were claiming that the Applicant by February 2001had become incompetent or had no skills or capacity to operate the machines. If that is the case, then the Respondents are blowing both hot and cold. It therefore means that this was not termination as a result of redundancy but incapacity. Thus there is a clear contradiction. If indeed that was the case, there is no evidence on record to show that he was cautioned about his shortcomings. In the submissions made by Counsel, it was also stressed that the Applicant was unable to make the grade of production manager that Management expected him to attain. That is why Management decided to make the position of production supervisor redundant. The Court finds that the Respondents seem to be confused with the term redundancy. You do not make a position redundant just because the incumbent is failing to meet the required standard. If that is the case, then you do terminate the incumbent’s employment because of incapacity. The Court therefore has difficulties to agree with the Respondents that they had valid reasons in this case. If indeed the Applicant was unable to cope as alleged, they could at least have cautioned him about his shortcomings. That is what is required under the term fair labour practice. The employer has to make the shortcomings of the employee known so that there is room for improvement. If the employee fails to jack up, then the employer has the liberty to institute other remedial steps.


The issue that has troubled the mind of the Court here is the way the Respondents approached the alleged redundancy. There is need for procedural fairness even if one is going on redundancy. Although the decision to “retrench” (and I am using the work retrench including redundancy) is the prerogative of management, it is always fair that there should be consultation with the concerned party before throwing the bombshell. It is not fair that employers should take their employees by surprise. The Applicant in this case was totally ambushed by the news of redundancy. Redundancies if they are genuine are not a secret. The employer has to make the news known to the employee and they can even discuss on how to salvage the situation. But the procedure in this case was extremely unfair. When the Applicant did report for work on the material day, he was invited to the office of Mr. Burgess and told that his job was no more. He was directed to go to the office of Mr. Jere in order to get his dues. This is extremely unfair. The news indeed came like a bombshell. The Applicant was in the employ of the Respondents since 1997. By 2001, he had been there for over 4 years. The Respondents did not even bother to tell him the reasons. The Court cannot believe Mr. Burgess that he verbally informed the Applicant about the reasons for termination yet the letter he was written has none.


At the end of day, the Court finds that the Applicant was unfairly treated both in substance and in procedure. It is thus ordered that he be paid compensation for the unfair termination of employment that he suffered at the hands of the Respondents. As to what he was already paid, I take it that those were payments to which he was entitled as a result of the contractual terms he had with the Respondents. The compensation which he is being awarded herein is as a result of the statutory requirements that are now enshrined in the Employment Act 2000 in particular Section 57.


I would however like to advise the Respondents that they should also provide the Applicant with a certificate of employment which is to be used as his reference when seeking employment. Otherwise, this Court does not find any merit in awarding any compensation because of his failure to secure another job.


On a rather different note, this Court would like to appeal to Counsel in this country that they should be careful when submitting cases in this Court decided in the High Court. For example, there are several case authorities being cited in this Court based on purely breach of contract. This Court does apply in most cases the Labour Relations Act. Even the remedies that the Court can award are clearly stipulated in these Acts. Thus if reliance is put on High Court decisions which purely address issues of breach of contract as construed at Common Law, then they may be very irrelevant in this Court. There should also be care when referring to High Court decisions which have no reference to the Employment Act or Labour Relations Act. For example in the submission Counsel referred to the case of R.W. Thangalimwadzi –vs- David Whitehead & Sons (Malawi) Limited Civil Cause No. 149 of 1992. With due respect, this case was purely referring to Common Law principles and pure fundamental issues on the relationship of master and servant that indeed revolves on mutual trust and confidence.


I do agree that the employer has the right to terminate employment upon giving notice. But there should be more care now with the advent of the Employment Act of 2000 that apart from the contractual terms that one may have in Conditions of Employment, this Act has also created statutory rights which have to be respected by the employer. That is why there is now the concept of fair and unfair termination.


Order for compensation:


Having found that the termination herein was unfair, I do order that the Applicant be compensated with such amount which would amount to one weeks pay for each year of service. The money to be paid immediately through the Court.


DELIVERED this 23rd day of July, 2002 at Lilongwe.







M.C.C. Mkandawire

HON. CHAIRMAN