Kapyola & Others v Lonrho Motors Mw Ltd - Matter No. 57 of 2001 (57 of 2001) [2002] MWIRC 7 (01 April 2002);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI

LILONGWE REGISTRY

MATTER NO. 57 OF 2001

BETWEEN:

W. KAPYOLA & 39 OTHERS…………….……….……….APPLICANT

Against

LONRHO MOTORS MALAWI LIMITED……….……RESPONDENT

CORAM:

 HON. M.C.C. MKANDAWIRE, CHAIRMAN

Mr. Isaac Kambuku, Employers’ panelist

Mr. Masasa, Employees’ panelist

Applicants: Present, unrepresented but assisted

by fellow co-employees

(1) Mr. W. Kapyola
(2) Mr. B. Gondwe
(3) Mr. I. Jana
Mr. Nkuna, of Counsel for the Respondent
Mr. Davie Mpakani, Official Interpreter

J U D G M E N T

There are forty Applicants in this case who have brought this matter against the Respondent Lonrho Motors Malawi Limited. These Applicants are represented and assisted by three of their co-employees who are also interested parties in this case. The three are Mr. W. Kapyola the first Applicant, Mr. B. Gondwe the twenty-fifth Applicant and Mr. I. Jana the twenty-sixth Applicant. The names of all the forty Applicants are listed on a separate sheet of paper, which has been attached to the Applicant’s form number one, which contains all the skeleton details of this case. The Respondent are represented by Mr. Nkuna of Counsel. The Applicants have brought trade disputes which can be summarized as follows:-

(a) Dispute on pension benefits
(b) Dispute on terminal benefits
(c) Dispute on Actuaries after the Lilongwe office was sold.

The Applicants therefore pray to this Court for the following relief:-

(i) 10 percent company contribution on pension fund
(ii) Share of Actuaries after Halls was sold Lilongwe branch only.
(iii) Three months notice instead of one-month notice given to them.

The Respondent filed in a response in which they denied liability. They aver that:

(i) The Applicants were each paid in accordance with the rules of existing pension.
(ii) The notice pay paid to each one of them was in accordance with their letters of appointment.

The Applicants were the first to present their side of the story with three witnesses. The witnesses were Mr. W. Kapyola, Mr. B. Gondwe and Mr. I. Jana. Each one of them referred to several documents plus the pension scheme document. Their testimony was rather similar and we have thought it wise to present it as one.

It was common evidence that all the Applicants were employed by Lonrho Motors Malawi Limited and were all working for Halls Cars owned by Lonrho. It is again common evidence that the Applicants were employed on divers dates. Some were employed as early as 1968, others in the 70s, others in the 80s and others in the late 90s. It is again common evidence that all the forty Applicants had their services terminated on 5th July 1998 as a result of Halls Cars being sold off. There are several documents tendered in Court especially by the Respondent which are marked Res Ex No.1. These are documents relating to letters of appointments, letters of termination and certificates of payment of terminal benefits as well as notice pay. These documents are not in dispute.

The evidence from the Applicants was that they were panic days in 1998 due to rumours that Halls Cars was to be sold. There was however no concrete information reaching them as employees of Halls Cars because no official from the Employer’s side was coming upfront to address them on this worrying development. One day in the month of June 1998, at around 3.00 p.m., Mr. Ali from the Blantyre office who works as Sales Manager called at the Lilongwe office with sad news that Halls Cars was sold. Thus Mr. Ali had nothing to do with personnel issues and by 4.00 p.m. of that very day, letters were issued out about termination of services and cheques were issued to the Applicants. After receiving the clearance certificates which contained details of payments, that is when they discovered anomalies. The anomalies are:-

(i) Instead of 3 months notice they were paid one month’s salary in lieu of notice.
(ii) They were only paid 7½% as pension contribution instead of 7½% as their contribution plus 10% of the company’s contributions.
(iii) They were not given any share of the money realized from the sale of Halls Garage.

The Applicants also contended that they were grossly mistreated by the Respondents. Most of them had worked for the Respondent for a lot of years. They therefore thought that the Respondent had unfairly treated them by not even telling them in advance about the pending sell of Halls Cars. They also found that the Respondent had not been transparent with them in the way they handled the pension issue.

The Applicants tackled each item separately. On the issue of notice, they were surprised to see that they had one-month notice. They tendered into Court several letters of termination involving other employees who were given three months notice instead of one. They further observed that some of those employees who were given three months notice were even juniors to some of the Applicants. Whilst appreciating that some of the letters they were tendering referred to matters that occurred before 1998 when the Company was sold, the Applicants however stressed the point that these letters were enough testimony that the Respondent were practicing double standards. The Applicants further gave an example of some employees whose services were terminated with one-month notice. The employees protested on the one-month notice. When the Respondent found that there was growing pressure, they rescinded their decision and instead issued out fresh letters of termination with three months notice instead of one. This, the Applicants said was clear testimony that the Respondents were not serious minded. They were actually capitalizing on the weaknesses of their employees; the Applicants stressed. The letters I have been talking about were tendered as Applicants Ex 1 (a) (b) (c), 4 (a) (b), 5 (a) (b), 6, 7, 8 16. All these exhibits, the Applicants stressed showed the double standards that the Respondents were administering.

The Applicants further said that to their surprise, there were several employees who got three months notice on termination yet they had stolen from the company or had misconducted themselves. They therefore wondered as to why the Respondent were cruel to them yet they had served them honestly up to the time Halls Cars was being sold off. Was this not injustice, they wanted to know.

The next point was on Actuaries. The Applicants said that they did understand the term Actuaries to mean what has been realized after the Company Halls Cars was sold. It therefore meant that they were entitled to a share of the sale of Halls Cars.

On the issue of pension, the Applicants said that as per the Pension Scheme which was in place, the employee contributed 7½% whilst as the company did contribute 10%. In 1998 when the company was sold off; they only got 7½% and they wondered what happened to the 10% plus the compound interest on it. The Applicants tendered the book on Pension Scheme which is App Ex No. 2 in particular Clause 7.7.1 on page 23. The Applicants tendered in Court App Ex No. 15 which was a form that indicates payment of 10% company contribution on pension which was paid to one of their friends who left in 1995. They therefore wondered why this did not apply to them. They also tendered in Court the pension benefits booklet which is App Ex 13.

The Applicants finally hinted on the terminal benefits that were paid to them. The Applicants said that they were paid one week pay for each year of service up to 5 years completed, then 2 weeks pay from years 6-10 and 3 weeks pay above 10 years, whereas some of their friends who had left the service before were paid as follows:-

          (1) 2 weeks pay for each year of service up to 10 years.

(2) 3 weeks pay for each year of service for over 10 years.

They therefore wondered as to why there was such a difference in the absence of any cogent explanation. Such was the evidence from the Applicants.

The Respondent did not call any witness to testify. They instead decided to rely on affidavits of two of their senior officers who are Mr. H.A. Mbawala former Personnel Manager and Mr. George Austin Jaffu former trustee of the Lonrho Group Pension Scheme. These affidavits are marked as Res Ex III (a) and III (b) respectively.

I am mindful of the fact here that Rule 18 (1) (a) of the IRC Procedure rules allows evidence on affidavits. This rule provides:-

"Without prejudice to Section 71 of the Labour Relations Act, the IRC may permit the parties together with or in lieu of other evidence to –
(a) adduce evidence by way of affidavits."

In the affidavit of Mr. Mbawala, it is denied that the Applicants were entitled to three months notice. Their entitlement was one-month notice as contained in the letters of appointments. In the affidavit of Mr. Jaffu, it is deponed that following the termination of their employment, all employees under Halls Cars Limited had to withdraw from the Group Pension Scheme in accordance with Rule 5.11.1 of the Group Pension Scheme Rules, and that each one of them was paid pension withdrawal benefits as outlined in Rule 5.11.1. and that it is clear from Rule 5.11.1 that the claimants were not entitled to the employer’s contribution on leaving the services of the employer.

Finally, Mr. Jaffu deponed that the claimants’ termination of service did not entitle them anything more as the scheme was still going on.

It is therefore clear from these two affidavits that the Respondent are denying liability basing on the letters of appointments and clause 5.11.1 of the Pension Scheme. These documents shall be put on the microscope as we analyze the case as a whole.

We shall approach the case in the sequence which the Applicants had followed. The first issue is in relation to the notice pay.

We have looked at the letters of appointments in relation to the Applicants. We however make an observation here that some of the letters of appointments for some Applicants are not available. The majority are however exhibited. These letters of appointment were issued on different dates and years. The letters had a clause stating that the Applicants acceptance of the offer of employment will be subject to the Rules and Conditions of Service applicable as amended from time to time and such other circulars and memoranda as may be in force and applicable to them.

It is clear from the evidence on record that since employment, most of the Applicants have been operating on these same letters of appointments. Some of these Applicants had risen through the ranks but it would appear that nothing really changed on their Conditions of Service. Ordinarily, change in status on the job also corresponds with change of conditions of service. For example, if one was employed as a mere counter salesman and later on gets elevated to the rank of Sales Supervisor, one would expect that this promotion would also be accompanied with more attractive conditions of service. Such conditions of service would, may be lead to more leave days, just as an example. We also observed that most of these Applicants had been working for the Respondent for quite a very long time. One can therefore not comprehend that they were all still pegged at one-month notice.

What has further complicated the matter for the Respondent is the way they had treated other employees when it came to termination of services. There were several letters of termination of services tendered in this Court. As was already observed, some of these terminations were based on purely disciplinary grounds. But there were others based on similar grounds. Others were based on incapacity. We were very interested to look at letters such as App Ex I (c) which was termination on the ground of redundancy. There are also App Ex 5 (a) and 5 (b) which are also termination letters on the ground of redundancy.

In all these terminations, the employees were given three months notice by the same Respondent. What we further observed on App Ex 5 (a) and 5 (b) was rather disturbing and very difficult to believe that such a reputable employer like Lonrho would have been engaged into. At first, the Respondent had written App Ex 4 (a) and 4 (b) which only contained one-month notice. After protests from the concerned employees, the Respondent changed from one-month to three months. What a dramatic change. We found that here was an employer who was full of inconsistencies and full of unfair labour practice. How does an employer change like a chameleon? Our conclusion was very simple. The Respondent had no real labour policy. They could deal with their employees as it pleased them. They took advantage of this sell out and put the Applicants on one-month notice thinking that the whole chapter was closed. We looked at this act by the Respondent to have been tantamount to unfair labour practice. This Court in looking at unfair labour practice stresses more on unfairness as opposed to unlawfulness. It is concerned with practices which might be lawful (such as lawful termination of employment) but are deemed unfair. The Industrial Relations Court is, accordingly, a Court of equity rather than a Court of Law.

Thus the argument put by the Respondent here that the terminations of the Applicants services were based on their letters of employment cannot hold water here. It might have been lawful, that we do accept. But the bottom of the matter is, was it fair? We do not think so. Why were other employees who were mere watchmen being given three months notice. We have employees who had perpetrated fraud against the Respondent who were given three months notice. We have employees who were incapable of performing their duties who were given three months notice. We have employees who had protested about one month notice and new letters were issued out to them with three months notice.

Here we have forty employees who had rendered their services without any fault at all. They were given one-month notice. This cannot be described as fair labour practice as enshrined in Section 31 of our Republic Constitution. We therefore order that all the Applicants should be paid such an amount that would amount to three months notice. We order that since they were already paid one-month notice, the calculations should only be for two months each.

We would now move to the issue of Actuaries. We observed that the Applicants here had missed the point. The term Actuaries is not referring to what was realized after the sale of Halls Cars. This is a technical term in the field of pension. An Actuary is an expert who advises on what shall be paid from the pension fund. Even if the term Actuary meant what the Applicants had understood it to mean, we would have found problems to appreciate why the Applicants could have deserved a share. They were not shareholders in Halls Cars. We therefore dismiss this item in its entirety.

The next point to be considered is in relation to the pension issue. The Applicants indeed tendered a document which is an example of an employee who was paid 10% as company contribution. There was indeed no contradiction of this payment by the Respondent. This document was a sign that the Respondent had paid out its contribution to one of the employees. The example might be only one but it speaks for itself. It cannot therefore be denied that the Respondent had effected such payment before as shown on App Ex 15. This Court has been referred to two documents in relation to the pension issue. The first document is App Ex No. 13 which is the Lonrho Group Pension Scheme (Malawi) Explanatory Booklet. The other document is the Lonrho Group Pension Scheme (Malawi) Interim Trust Deed. The Respondent in the affidavit of Mr. Jaffu have heavily relied on clause 5.11.1. This clause has been referred to in paragraphs 12, 13 and 14 respectively. It is therefore imperative to reproduce the contents of this clause which is headed as:

‘LEAVING SERVICE’

5.11.1 "f a member leaves the service of an Employer before normal Retirement Date for a reason other than ill-health (where Rule 5.4 applies) or retirement (where Rule 5.3 applies); he may receive in cash his accumulated contributions plus an additional percentage of his accumulated contribution calculated according to the following table ----"

There is of course a table which should not really bother us here because it is not in issue.

We have again paid attention to the relevant paragraph in the Explanatory notes on pension which is Ex 13. The relevant paragraph is paragraph 15 which reads:-

"What Happens if I Resign From Service?"

The answer is in the following terms:-

"If you leave the service of an employer you will receive a lump sum equal to a full refund of all your own contributions to the Scheme together with interest at the rate of 3% per annum compound.
You will also receive an additional percentage of your contributions plus interest, depending on the number of years you have completed under the scheme. The additional percentage is as follows:-"

We note that the table is exactly like the one under para 5.11.1 of the Pension Trust Deed.

A look at clause 5.11.1 will reveal that this clause is covering instances whereby the employee on his/her own volition leaves employment. This will refer to instances like resignation. The leaving should be at the employee’s own volition or initiative. The booklet further fortifies our observation because it answers the questions as to what happens once an employee resigns. This booklet is part of the information on the Pension Scheme ran by the Respondent. We found that the application of clause 5.11.1 to the situation at hand was misconceived. The Applicants did not resign from service. They were literally forced to have their services terminated as a result of the sell off of Halls Cars. There should thus be a distinction here. Clause 5.11.1 was and is dealing with a situation where the employee resigns and consequently leaves employment. We do not think that this clause is relevant to the current situation that we have before us. It was a misapplication of the clause. The Respondents did not have a relevant clause in their Pension Scheme and as such, decided to take chances. The presence of App Ex 15 where an employee in 1995 was paid both his contribution and company’s contribution does vindicate that the Applicants had a valid point. We therefore order that each one of the forty Applicants be paid such amount that would amount to the Company’s (Respondents) contributions for the entire period that the Applicants were on the Pension Scheme from 1985. The quantum for each one of them to be assessed by the Registrar of the Industrial Relations Court.

The final issue is in relation to calculations of terminal benefits. The evidence that surfaced is to the effect that the Applicants were underpaid. To their surprise, their colleagues got a better package. For example, they got 2 weeks pay for each year of service up to 10 years. Then 3 weeks pay for each year of service above 10 years. An example here is on App Ex 1 (c) of Mr. M.M. Banda whose benefits were paid at 2 weeks pay for each completed year up to 10 years and 3 weeks pay for each year completed over 10 years. This evidence was not at all controverted.

We found that the Respondent had double standards. They were not consistent at all in the way they approached issues. They portrayed such a picture that they were in the habit of discriminating their employees. This is a Court which stresses more on equity than lawfulness. We found that there was no fairness in paying some employees more and others less. We therefore order that all the Applicants be treated equally. They should be paid two weeks pay for each year of service up to 10 years. Then they should be paid three weeks pay for each year completed above 10 years. The Registrar to assess the amounts of course minus what they already got.

The issue of informing the Applicants at 3.00 p.m. and then cheques being issues out has greatly exercised our minds. The Respondent had no respect for the labour rights of the Applicants. The conduct was very unfair. They did not at all sit down with the Applicants to explain the situation. They had no regard at all to fair labour practices. We wholly condemn them on this and we feel that the awards we have made are enough lesson already. We therefore do not make any order on this item since it was not specifically pleaded.

DELIVERED this ------------- day of April 2002 at Lilongwe.

Signed: --------------------------------------------------------------

M.C.C. Mkandawire

Signed: ---------------------------------------------------------------

Mr. I. Kambuku

Signed: ---------------------------------------------------------------

Mr. Masasa