Itaye v Malawi Distilleries - Matter No. 25 of 2001 (25 of 2001) [2003] MWIRC 4 (01 January 2003);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI

 

PRINCIPAL REGISTRY

 

MATTER NO. IRC 25 OF 2001

 

BETWEEN:

 

ITAYE ……………………………………………………… APPLICANT

 

-and-

 

MALAWI DISTILLERIES LTD……………………… RESPONDENT

 

 

CORAM:   R. Zibelu Banda (Ms), Deputy Chairperson

                    Ngwira for applicant

                    Hara for the Respondents

                    Ngalauka – Court Clerk

 

 

JUDGMENT

Dismissal- Procedure for dismissal-Opportunity to be heard- Procedure to comply with the law-Remedies-Factors to be considered-Contributory fault.

 

Facts

The applicant was employed as Group Sales Manager by the respondent on 2 January 1997. On 19 December 2000 his contract of employment was terminated for three reasons: offering credit without authority; quoting wrong prices to clients; and failing to meet a deadline. Upon termination the applicant was paid and received all his terminal benefits except issues and his entitlement to use of company car.

 

Assessment of Facts

The applicant testified and he mostly explained what happened in relation to the alleged reasons for dismissal. The respondent brought three witnesses to prove that the applicant had failed to carry out his duties to the satisfaction of the respondent. The following came out clear from evidence:

Offering credit facility without authority

The applicant had extended credit facility without authority to a client who was not creditworthy. The respondent provided credit facility to some of its clients. In the case of Mr. Tembo the client in issue, the respondent had offered him credit terms prior to this incident. Mr. Tembo was however not in good books with the respondent for purposes of further credit. This was the crux of the problem. If Mr. Tembo had paid up within 30 days, the applicant would have been vindicated. This was evident from the pieces and bits of correspondence and communication between the applicant and the Acting General Manager, Ms. Sauti Phiri.

 

Quoting wrong prices

There was no proof that the applicant had quoted wrong prices to a client. The respondent proved that the applicant was responsible for advising clients on any new prices. However, in this case there was no direct evidence to show that the prices quoted to Packaging Industries were provided by the applicant. Even if there was proof that the prices were quoted by the applicant, there was no direct loss to the business of the respondent. The client was distressed, but the respondent was able to explain and correct the situation. The reaction from the respondent to the applicant was blown out of proportion especially considering that clients brought wrong quotations all the time. A witness for the respondent explained that this was not the first time that a client had come with wrong prices and in fact even after the applicant left employment with the respondent, the respondent continued to receive wrong prices. In other words there are several factors that can cause the situation and no single person can be blamed.

 

Failure to meet deadline

The applicant was advised to prepare a list of distributors. He prepared the list and submitted it to the Acting General Manager. The issue of deadline did not come up in any of discussions or reminders. The respondent produced documents and memorandums but none of them had a deadline by which time the list should be submitted. The respondent could not complain about failing to meet a deadline when she herself was vague and failed to properly direct her subordinate.

 

The general assessment of the facts was that the Acting General Manager was inconsistent and failed to give proper guidance to the applicant. Her approach towards the applicant was casual and under normal circumstances she would not be taken seriously. Even in her testimony she struck me as one who failed to take a bold stand and tell an employee in clear and no uncertain terms what she expected and when she expected results.

 

Issues

The court is called upon to decide whether the dismissal was fair or unfair. In determining this question the court must look at the reasons for the dismissal, whether they are valid and justify the respondent’s action. The court must then look at the procedure that was used before, during and after termination.

 

Sources of the Law

The cause of action arose in December 2000, therefore the Employment Act 2000 apply in this case and shall be used where necessary. The Constitution is the supreme law of the land. However, in this case it can only be applied where the Employment Act is inadequate or contain provisions that are inconsistent with the Constitution. Common law and case law shall be used to interpret and support the statutory provisions, since the law in this court is just developing. It is also the practice in common law jurisdictions to illustrate statutory provisions with case law and texts books by renowned authors.

 

While on this point may it be pointed out as obiter that the legal point raised by counsel for the respondent that section 43 of the Constitution does not apply in this case is outdated law and was un called for. Without going into detail may counsel for the respondent read the decision of the Honourable Tembo J. in Chidzulo V. Blantyre  Netting Company ( Civil Cause No. 2188 of 1994 (unreported). This decision clearly puts the issue of interpretation and application of provisions of the Constitution especially provisions in Chapter IV dealing with Human Rights to which section 43 belongs into the right perspective. This decision was upheld by the Malawi Supreme Court of Appeal in MSCA Civil Cause No. 17 of 1995 (unreported). Further, this court has addressed the point in a number of cases including Ngwenya V. Automotive Products Ltd (IRC No. 180 of   2000  (unreported)) One would expect that counsel would be familiar with such precedential decisions especially since they concern interpretation of Constitutional provisions that affect human rights.

 

The point was uncalled for because in this case there was no need to go into the Constitution. The Constitution only proscribes and regulates conduct, in this case fair administrative action. What constitutes fair and unfair administrative action is provided in the Employment Act which is applicable in this case.

 

The Law

Section 57(1) of the Employment Act provides that:

 

“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.”

 

The burden is on the respondent to show that the reason for dismissal was valid. It was thus held in Earl v. Slater and Wheeler, [1973] 1 WLR 51 where the court of appeal held:

 

“It is for the employer to show what was the principal or only reason for dismissal…. and that it was a potentially valid reason…. If the employer fails to discharge this burden, the tribunal must find that the dismissal was unfair.”

 

In the instant case the employer was able to demonstrate and prove the reasons for the dismissal. The court therefore holds that the respondent had reasons for dismissing the applicant. The question is whether the reasons were valid to necessitate the action of dismissal. An answer to this question can be found by considering factors raised in  Polkey  v A E Dayton Services Ltd   [1987] 3 All  ER 974,at 983, where the House of Lords quoted with approval the following factors of Neill LJ sitting in the court of appeal in the same case [1987] 1 All ER 984 at 989:

 

“Where an employee is dismissed for alleged misconduct and he then complains that he was unfairly dismissed, it is to be anticipated that the industrial tribunal will usually need to consider (a) the nature and gravity of the alleged misconduct, (b) the information on which the employer based his decision,(c) whether there was any other information, which that employer could or should have obtained or any other step which he should have taken before he dismissed the employee.”

         

 

In the instant case the second and third grounds of dismissal were not grave in nature to warrant dismissal. The first ground however was serious because the respondent’s business was affected by the loss that was occasioned or anticipated through the credit facility offered to the client. The principal reason for dismissal was therefore potentially valid in nature to entitle the respondent to dismiss. The second point is whether there was any other information that the respondent could have based her decision to dismiss. There was no other information, since the court has decided that the two other reasons were not valid reasons for dismissal. There were no previous warnings against the applicant for incapacity or misconduct.

 

Thirdly was there any other step, which the respondent  should have taken before dismissing? This step is provided in Section 57(2) of the Employment Act, which states that:

 

“The employment of an employee shall not be terminated for reasons connected with his capacity or conduct before the employee is provided an opportunity to defend himself against the allegations made, unless the employer cannot reasonably be expected to provide the opportunity.”

 

The facts were clear that the applicant was not afforded an opportunity to defend himself or explain his side of the story before an impartial committee constituted for that purpose. Affording an opportunity to be heard is wider than a one to one discussion between the offending employee and the supervisor in this case the Acting General Manager. The discussions which the applicant had with the Acting General Manager do not fall under the right provided in section 57(2).

 

The respondent must have conducted an investigation into all the allegations, then constitute a disciplinary hearing where the applicant was allowed representation by a fellow employee or union members or any representative of his choice. The hearing must be fair and not predetermined. In the hearing the allegations must be outlined to the applicant and he must be asked to answer to the allegations separately. The applicant must have been allowed to explain his side and defend himself. A decision would have been reached whether to dismiss or to take other action against the applicant. Other action would include warning, demotion, suspension or other such action other than dismissal.

 

Further, natural justice demands that an employer should make relevant investigations and consultations prior to taking a decision affecting an employee’s employment.  This is because:

 

“Consultation and warnings are relevant in a number of different cases including dismissals for misconduct. An employer is entitled, moreover, to have regard in a misconduct case to the fact that the employee has received a previous warning in deciding whether or not to dismiss. This is so even where, that previous warning related to behaviour which, was different from that which is the potential basis for dismissal.”

(See Edwards M. ed. Dismissal Law; A Practical Guide For Management, 1991, Kogan Page, London at 126 to 127.) Also see Prindella v. Limbe Leaf Tobacco Company (IRC No. 49 of 2000 (unreported))

 

Where the allegation complained of is lack of capacity, the employee must be warned to improve and that if he did not improve by a certain date or time he would be dismissed or demoted or such other action would be taken against him. The employee is also entitled to be provided with training or proper guidance to meet the expectations of the employer before taking the extreme action of dismissal at the first instance of failure to meet employer’s expectations. See Dismissal Law; A Practical Guide For Management supra.

 

Further, section 61 (2) of the Employment Act further provides that

 

“ In addition to proving that an employee was dismissed for reasons stated in section 57 (1), an employer shall be required to show that in all circumstances of the case he acted with justice and equity in dismissing the employee.”

 

In the instant case there was no justice or equity in dealing with the applicant’s dismissal. The case of Prindella v. Limbe Leaf Tobacco supra provides an excellent example of how employers should treat and deal with disciplinary actions in their establishments. The court would recommend that employers borrow a leaf from Limbe Leaf and incorporate the procedure in their code of conduct.

 

Ironically the code of disciplinary procedure applicable for the respondent company in the instant case contain disciplinary procedures but none of the provisions were followed in dealing with the applicant. The respondent failed to provide the applicant with a hearing before an impartial disciplinary committee. The Acting General Manager was an accuser, an investigator and the judge in her own case. She made the decision to dismiss and that decision was rubber stamped by the Group General Manager Industrial Division- PCL in exhibit “RP2” without much ado.

 

Finding

The court finds that the respondent complied with section 57(1) by providing reasons for dismissal. However the respondent failed to comply with section 57(2) and according to section 58 of the Employment Act, a dismissal must comply with section 57 in order for this court to rule in favour of the respondent. In the instant case the respondent failed to comply with procedure (section 57(2)) and hence the court finds that the dismissal was unfair.

 

Remedies

Where the court finds that a dismissal is unfair, it shall endevour to provide a suitable remedy taking all circumstances of the case into consideration. Reinstatement is the remedy that a court must consider first before considering other remedies. See section 63 (2) of the Employment Act .

 

The facts of this case show that the applicant was to a certain extent to blame and contributed to the dismissal through his conduct. Reinstatement is where an employee is put back to his previous position and treated as though nothing had happened. If the respondent had complied with procedure the dismissal could have been fair or other action could have been taken which would still have been to the detriment of the applicant like demotion. Therefore the court finds that reinstatement would not be a just remedy. The next remedy to consider is the remedy of compensation.

 

Compensation

Compensation is an award that is made to a successful applicant in unfair dismissal claim. The award must be just and equitable taking all the circumstances of the case into consideration. The award is aimed at compensating the applicant for loss suffered due to the dismissal. The loss must be a direct result of the conduct of the respondent in dismissing the applicant. The burden of proving such loss is on the applicant. See Norton Tool Company Ltd v. Tewson [1973] 1 All ER 183.

 

Contributory Fault

Where the court finds like in the instant case, that the employee contributed to the dismissal, any compensation to him shall be reduced by a percentage of his contribution. See section 63(4) of the Employment Act that provides:

 

“An award of compensation shall be such amount as the court considers just and equitable in the circumstances having regard to the loss sustained by the employee in consequence of the dismissal in so far as the loss can be attributable to action taken by the employer and the extent, if any, to which the employee caused or contributed to the dismissal.”

 

Also see general guidelines in Dismissal Law: Practical Guidelines For Management, supra, where on page 238 it says:

 

“It is for the employee to show that he has suffered loss and, if he has suffered no loss because the employment would have ended at the same time in any event, there will be a nil award.”

 

Further construction is provided in Croner’s Employment Law Bulletin, (1993), at D15 to D16, where it says:

 

“ If the decision to dismiss the employee was to any extent caused or contributed by the acts of the employee it will reduce the amount of compensation….it is rare to make 100% reduction for contributory fault….this will normally occur where a dismissal has been found unfair merely on procedural grounds.”

 

Assessment of Compensation

The court shall assess compensation in chambers on a date to be fixed.

 

Terminal Benefits

The only dispute on terminal benefits was on issues and use of company car while on notice.

 

Issues

The issues were made available to the applicant at the time of termination of contract. He did not collect at the time. The court orders that due to inflation and devaluation of the local currency it would be economically detrimental for the respondent to provide the issues in kind three years after dismissal. Their market value has since gone up therefore the applicant shall receive the money equivalent of the issues at the time that they were first offered for collection.

 

Company Car

The applicant adduced evidence that he was paid money equivalent in lieu of use of company. He was paid the equivalent of 1000 kilometres per month. The court finds that this was reasonable considering that the applicant was no longer doing work for the respondent. He was using the money equivalent for private business or other business not connected with promotion of the respondents business for which the company car was initially provided. The court therefore orders that the money equivalent paid in lieu of actual use of company car adequately compensated the loss of use of the car.

 

 

Made in Open Court this…day of………………….2003 at LIMBE

 

 

 

R. Zibelu Banda Ms.

DEPUTY CHAIRPERSON