IN THE INDUSTRIAL RELATIONS COURT OF MALAWI
MATTER NO. IRC 117 OF 2000
KACHINGWE . APPLICANT
GROUP COMMODITY BROKERS LTD RESPONDENT
CORAM: R. Zibelu Banda (Ms.), Deputy Chairperson
Changa for Respondent (Accountant)
Ngalauka, Court Clerk
Dismissal Law-Justification for dismissal- Reasons for dismissal- Redundancy- Procedure for redundancy- Compensation- Heads of compensation.
The applicant was employed by the respondent on 1 February 1999 as an Accountant. His services were terminated on 25 February 2000 for what the respondent termed restructuring of the organization. The respondent admitted that the contract of employment of the applicant was terminated because the company was going through restructuring. The Managing Director Mr. Sing decided that the position of Accountant was no longer required. However after his death, new management felt that there was still need for an Accountant at the company and they employed one.
The issue for court to decide is whether the reasons for termination were valid and whether the termination was fair. The applicant submitted that the termination was unfair. The respondent submitted that the company had a right to decide that a position was no longer necessary and terminate the contract of whoever was holding that particular position.
Restructuring, reorganization and retrenchments are issues, which are governed by law because they affect rights and interests of employees. An employer cannot just decide to terminate the contract of an employee citing restructuring as a reason without giving that individual an opportunity to be heard on the issue or to prepare for the loss of employment.
Section 43 of the Constitution states:
Further, the constitution in section 43 provides that:
Every person shall have the right to-
a) lawful and procedurally fair administrative action, which is justifiable in relation to reasons given where his or her rights, freedoms, legitimate expectations or interests are affected or threatened; and
b) be furnished with reasons in writing for administrative action where his or her rights, freedoms, legitimate expectations or interests if those interests are known.
In the instant case the applicant was not aware of the restructuring that was supposed to have been taking place or intended to take place or its justification. He was presented with a letter of termination without prior knowledge of the restructuring. The law requires that employees must know the reasons for any administrative action that is likely to adversely affect them. The reasons must be given prior to making the decision to terminate so that the employees could have an opportunity to defend their rights or in cases of restructuring, to allow them an opportunity to discuss the situation and suggest ways of minimizing the impact.
The applicant was entitled to be treated at all times with justice and equity. The respondent was under an obligation to follow a fair procedure leading to the termination. In the instant case, the Ministry of Labour and Vocational Training has from as far back as 1994 been issuing policy statements on procedures for restructuring and similar company reorganizations (See the Press Release: Labour Retrenchment and Recruitment Procedures and Practices ( 1994.)) The employer must justify any restructuring with relevant information supplied to the government and to its employees.
The above requirements are standard good industrial procedures in restructuring which are applied internationally and appear in then International Labour Organisation (ILO) Convention Number 158 Concerning Termination of Employment at the Initiative of the Employer.
Article 13 of the said Convention states as follows:
1. When the employer contemplates termination for reasons of an economic, technological, structural or similar nature, the employer shall:
a) provide the workers representatives concerned in good time with relevant information including the reasons for the terminations contemplated, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out;
b) give, in accordance with national law and practice, the workers representatives concerned, as early as possible, an opportunity for consultation on measures to be taken to avert or minimize the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment
The intention of these procedures is to protect the rights and interests of employees. It is to prevent employers from conducting mass dismissals whenever it suits them without due to regard to the welfare of those whose livelihood depends on employment. Any employer who contravenes such practice and law is committing an industrial offence and cannot get away with it.
The respondent failed to comply with Constitutional principles when making its decision to terminate the employment contract of the applicant. The respondent also failed to comply with laid down international labour standards before carrying out the alleged restructuring. Further, the respondent failed to adhere to restructuring guidelines provided in the policy statement. The court finds that the restructuring was unfair and that it did not constitute a valid ground for dismissal.
An applicant who proves that a dismissal was unfair is entitled to a remedy. There are a number of remedies that can be awarded. In the instant case the applicant asked this court for compensation.
Compensation is a lump sum of money that is awarded to a successful applicant for the wrong done to him. The award must be just and equitable and must arise from the loss suffered due to the dismissal. A court has wide discretion in making the award. The discretion however must be exercised judicially and equitably. A court is not allowed to dream up a figure without showing how it was arrived at. This calls for the applicant to adduce evidence to prove his loss. The court must be satisfied that then loss is attributable to the action of the respondent in dismissing the applicant. See Norton Tool Company Ltd v. Tewson 1All ER 183.
Assessment of Compensation
The court shall assess compensation on a date to be fixed and both parties shall be required to attend the assessment. Any evidence documentary or otherwise, that may be used in the assessment should be brought to court on the appointed date.
The applicant alleged that he was entitled to 20 litres fuel per week for his car. He produced exhibit AP4 to prove his claim and stated that he was never supplied with this fuel during his employment with the respondent. A careful assessment of AP4 and respondents explanation, show that the fuel was supposed to be filled into the tank (of the car) There was no mention of getting money equivalent of the fuel. In fact the respondent had a company fuel pump where cars used at the company got fuel. It therefore made sense that the applicant was entitled to have his car refueled with 20 litres fuel every week and not receive money equivalent. Apparently the applicant never took his car for the fuel at the company fuel pump. His explanation for the failure was unsatisfactory and the court finds that the applicant is not entitled to any money in lieu of fuel.
2) Efficiency Bonus
As per the contract of employment, produced as AP1 the applicant was entitled to efficiency bonus on condition that he performed his work efficiently with 100% attendance rate. It was put in evidence that he did not receive this bonus in January and February. The respondent told court that the applicant had absented himself from work for 11 days without permission. The applicant stated that his absence was due to illness. He produced a medical report to support his contention. The so-called medical report lacked authenticity. It had no date and the contents were rather suspicious. The court disregarded this document and in the absence of any other explanation from applicant, believed the respondent that the applicant had no excuse for not reporting for duties for 11 days. His claim for efficiency bonus is therefore dismissed.
3) House Allowance
The applicant claimed that he was not paid house allowance for January and February. He produced AP5 to prove his claim. This document relates to February and it shows that the applicant was not paid K715.00 being his house allowance for that month. There is no other proof to show that he did not receive house allowance for January. In cases of specific claims, the burden is on the claimant to prove the specific sums claimed. The court cannot make awards for specific sums without convincing supporting evidence especially where the sum is in dispute. The court orders that the respondent pay the applicant K715.00 being house allowance for February.
The respondent counter claimed the equivalent of 11 days salary from applicant for absenteeism without excuse. The court found that indeed the applicant had been absent from work without permission and any valid excuse. However, it is rather too late for the respondent to claim this money at this time. The respondent was responsible for paying the applicant his dues. The respondent had all the opportunity to deduct the sum from the applicants salary or from terminal benefits at the time of termination of employment. The respondents conduct smacks of malice, to punish the applicant for taking them to court. This cannot be allowed in this court. The respondent forfeited this money when they failed to claim it at the time that the event occurred or soon thereafter. The respondent did not show that it was not possible to claim this money at any time before the matter came to court. The court can therefore not assist the respondent. The respondent is not barred from instituting this claim by way of enforcement of a debt in a civil court. The counter claim is dismissed.
Pronounced in Open Court this ..day of ..2003 at LIMBE.
R. Zibelu Banda (Ms.)