Banda (W S) v Cusmarcos Invest. Ltd - Matter No. 81 of 2001 (81 of 2001) [2002] MWIRC 5 (15 March 2002);




MATTER NO. 81 OF 2001


WORLD S. BANDA…………………………………..……APPLICANT





Applicant, present/unrepresented

Mr. Likongwe of Counsel, for the Respondent

Mr. Davie Mpakani – Official Interpreter


Matters in issue: Severance allowance pursuant to Section 35 of the Employment Act. An employer resigning from employment is he/she entitled to severance allowance.

This matter has been brought by Mr. World S. Banda the Applicant against Cusmarcos Investments Limited the Respondents. In the Applicant’s statement of claim, the Applicant seeks a relief that he should be paid adequate long service benefits for the 15 years that he had worked for the Respondents. The Applicant disclosed in his statement of claim that he was paid K5,000 only which he takes to be far much inadequate.

The Respondents filed in a response. The Respondents aver that the Applicant did resign on his own through a letter dated the 2nd of April 2001. The Respondents further aver that pursuant to Section 35 (1) of the Employment Act, the Applicant is not entitled to any severance allowance. The K5,000 that was paid to him was a mere ex-gratia .

I should now delve into the facts of this case. The Applicant got employed by the Respondents on the 21st of October 1985. On April 2001, the Applicant wrote the Respondent in the following fashion:

W.S. Banda Clerk

Cusmarcos Investments

P O Box 578


2nd of April 2001

The Managing Director

Cusmarcos Investments

P O Box 578

Lilongwe – Head Office

Dear Sir


I have been given a one-month notice from 2nd of April 2001 to the 30th of April 2001 this month. The REASON is this that our Church Executive of the Full Gospel Church of God appointed me to fill a position of Regional Evangelist. This was announced last Sunday on 1/04/2001. Therefore I thank God for this that it’s much better to serve God in full time.

I am yours faithfully

W.S. Banda


The Applicant said that as a result of this letter, he was given leave pay. Both documents are tendered as App Ex 1 and App Ex 2 respectively.

On the 30th of April 2001 the Respondent paid the Applicant K5,000 as ex-gratia payment. This payment is reflected on App Ex 3. As a result of this payment, the Applicant said that he was aggrieved because the payment was far too low. He tendered in Court App Ex 4 and App Ex 5 which he said represented the correct formulas for ex-gratia payment as advised by Ministry of Labour. He also tendered in Court App Ex 6 which is the New Employment Law on payment of severance allowance. He therefore said that as per the New Employment Act, he was entitled to a balance of K31,875:00 as severance allowance.

The Respondent had one witness too. He is Mr. Mathews Thawe who is a building foreman. He told the Court that all he knows is that the Applicant who was a site clerk resigned in the year 2001. He gave one month’s notice and after serving the notice, he was paid his dues and off he left.

The Court is mindful of the fact that the Applicant during cross-examination by the Respondent’s Counsel openly admitted that he resigned on his own. He even put his resignation into writing as exhibited in App Ex No 1. I am aware that the letter he wrote was not as clear as one would expect. But I am aware that English is not our mother language as such, people like the Applicant cannot express themselves in such clearer terms as he had done. But the fact of the matter is that the Applicant resigned on his own volition. He had received a call of God which is rather irresistible. I therefore have to look at what the law on severance allowance says. The relevant provision here is Section 35 (1) of the Employment Act. 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, severance allowance to be calculated in accordance with the first schedule."

Thus Section 35 (1) of the Employment Act entitles an employee to be paid by the employer a severance allowance on the occurrence of either termination by mutual agreement or unilaterally by the employer. Section 35 (1) does not entitle an employee who does unilaterally terminate the contract. In this instant case, the termination was at the initiative of the Applicant who even wrote a letter to the Respondent that he was to follow the call of God.

As per the requirement of the law pursuant to Section 35 (1) of the Employment Act, the Applicant is not at all entitled to severance allowance.

The Applicant further raised the issue of ex-gratia payment. The term ex-gratia is self-explanatory. It means a token of thanks. There is of course no hard and fast rule on ex-gratia payment. Ex-gratia payment is at the instance of the employer. The Employment Act does not at all cover ex-gratia payments. If an employee has on his own initiative resigned from employment, that employee should already have weighed the advantages and disadvantages of doing so. He or she cannot later on saddle the employer with the blame. In this instant case, the Respondents out of sheer goodwill decided to pay K5,000 as ex-gratia. This money is now being challenged by the Applicant to be inadequate. The Applicant has based his arguments on two letters which the Ministry of Labour had written to the Respondents in April and May 1996 respectively in relation to a former employee Mr. Paul Wyson. These letters are App Ex 4 and 5. The contents of these letters are to the effect that the Ministry of Labour was making a recommendation that the Respondents had to consider an ex-gratia payment to Mr. Paul Wyson of 2 weeks pay for each year of service.

Mr. Wyson had worked for 13 years. I take it that these letters of recommendation by the Ministry of Labour have no legal force. They were just mere recommendations and they were and are not binding on the employers. I am also mindful of the fact that these recommendations might have been meaningful in 1996 when the Minimum Wages and conditions of Employment (Severance Pay) Order 1976 were operational.

The Applicant’s case is a 2001 matter and the New Employment Act has changed the whole formula and terms for payment of severance allowance. This in actual fact has in turn affected what might have been a reasonable recommendation then on ex-gratia payment. I therefore find that the Applicant cannot dictate the parameters here as to whether the K5,000 ex-gratia was adequate or not.

I do dismiss this application. Each party to meet its on costs.

DELIVERED this 15th day of March 2002 at the Lilongwe Industrial Relations Court.

M.C.C. Mkandawire