Mandinga v Petroleum Control Commission (IRC 176 OF 2001 ) (NULL) [2004] MWIRC 21 (23 December 2004);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI


PRINCIPAL REGISTRY


MATTER NO. IRC 176 OF 2001


BETWEEN:


MADINGA…………………...……………….……………………………APPLICANT


And

PETROLEUM CONTROL COMMISSION……………...…………..RESPONDENT





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

Ngwir;a of Counsel for the applicant

Nkhono; of Counsel for the respondent

Nyabanga (Ms.): Court Clerk



JUDGMENT

Dismissal-Justification for Dismissal- Reason-Burden of proof- Employer to show reason-Operational Requirements- Redundancy- Procedure for Redundancy-Consultation.


Facts

The applicant was employed on 1 April 1995 as Human Resources Manager later as Administration Manager for the respondent. His services were terminated by letter of 17 October 2001. The reason for termination was redundancy. The applicant challenged the termination alleging that the reason provided was a mere sham to carry out unfair dismissal. The respondent on the other hand contended that the termination was in line with a restructuring process that was being carried out at the time. They averred that the dismissal was not unfair.





Issue

The Court was called upon to determine whether the dismissal was unfair. A dismissal is unfair if there was no valid reason for the dismissal and where in the case of redundancy the applicant or his representative was not consulted.



THE LAW

Reason

Section 31 of the Constitution guarantees every person the right to fair labour practices which entail the right to know the reason for dismissal as provided in section 43 of the Constitution. The burden of proving the reason for dismissal is on the employer, see section 61 of the Act and Earl V Slater & Wheeler (Airlyne) Ltd [1973] 1WLR 51at 55, where it was held that:


“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.”


The Employment Act provides in section 57 that an employee shall not have his services terminated unless there is valid reason for that termination connected with his capacity or conduct or based on operational requirements of the undertaking. The provision makes it mandatory that there must be a valid reason for dismissal.


In section 43 of the Constitution, it is provided that every person shall be furnished with reasons for any administrative action that adversely affects him. The reasons must be furnished before that action is taken so that the affected person can defend himself, see Chawani V Attorney General [MSCA Civil Appeal No 18 of 2000 (unreported)].


In the instant case the court heard that the applicant woke up one morning to find a letter in his mailbox. The letter was advising him of a recommendation made by the Appointments and Disciplinary Sub-Committee of the Board held the previous day to declare the applicant’s position redundant and replace it with another position- that of Personnel Officer. The applicant was not aware that his position was no longer required at the respondent commission until this time. The reason for termination therefore came as a shock to him. He concluded that it was a sham to victimize him.


In response the respondent said the commission was in the process of reorganization and at one of the meetings by the committee aforementioned, it was “ recommended” that the applicant’s position be declared redundant.


Section 61 of the Employment Act places the burden of showing reason for dismissal on the employer. The applicant need just allege that there was no valid reason. In this case the employer cited redundancy as reason for dismissal.


It is therefore necessary for purposes of this case to define redundancy and find out whether what happened at the commission was what could be legally termed redundancy. The Employment Act does not provide for redundancy but operational requirements which term means the same. However the Act has no definition for operational requirements or what must happen where an employer intends to dismiss on the basis of its operational requirements.


Redundancy is where an employer terminates contract of an employment because the employee’s position no longer exists or is to be temporarily or permanently scrapped off due to operational needs of the employer. These situations are very common not only in Malawi but throughout the industrialized world.


The problem is that some employers have used the lacuna in national law on what constitutes fair termination on basis of redundancy, to carry out unfair dismissal. Section 31 of the Constitution, provides for fair labour practices. What constitutes fair labour practices can be obtained from Employment Act, Labour Relations Act, the Constitution, ILO Conventions, case law, texts and good industrial practice.


The ILO Convention Concerning Termination of Employment at the Initiative of the Employer ratified by Malawi in 1986 is a good source of the law on redundancy. In Ngwenya and another V Automotive Products Ltd [IRC Matter Number 180 of 2000 (unreported) at 7,] the Chairman of the court held that:


“ …..section 211(1) of the Constitution provides….(that), any International agreement ratified by an Act of Parliament shall form part of the Law of the Republic if so provided for in the Act of Parliament ratifying the agreement. This is a Constitutional provision which mandates the courts to have recourse to International Labour Standards of the ILO ratified by Malawi.”


The ILO Conventions can be used to interpret national law where there is a lacuna in national law. The chairman in the Ngwenya case supra, at 9, explained that:


“……labour courts use International Labour Standards to assist them in understanding and interpreting national legislation and to decide on matters of equity and fairness. In these cases ILO Standards do not so much serve as legal basis on which questions (of law) can be decided, but serve as a tool to clarify issues on which national law is unclear or ambiguous.”


Article 13 of Convention No. 158 Concerning Termination of Employment at the Initiative of the Employer provides that:

  1. When the employer contemplates termination for reasons of an economic, technological, structural or similar nature, the employer shall:

    1. “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;

    2. 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.”


Article 14 of the same convention provides that competent authority should be notified of the contemplated terminations in the same manner as in Article 13. Competent authority in the case of Malawi could be the Ministry of Labour and Vocational Training.


Indeed the practice so far in Malawi is that when companies contemplate restructuring that would involve termination of employment, they notify the Ministry of Labour and Vocational Training. (See the Policy Statement on Retrenchment and Recruitment Procedures and Practices of March, 2000.) In this statement companies and employers are advised to inform the Ministry of Labour and Vocational Training well in advance of any intended or planed retrenchments, redundancies, mass dismissals of employees en-masse. The information that is required to accompany the notification includes:


“The rationale and justification for such intentions; the time frame within which the exercise would take place; and a systematic modus operandi of how the exercise will be carried out”;


In the instant case none of these were complied with by the respondent. No information was given on the nature of restructuring that was taking place or indeed who else was on the list of termination. Although the respondent averred that other employees were dismissed at various stages, this could not vindicate them as they did not follow the practice and procedure on redundancies. The court must therefore decide basing on the information whether the dismissal was based on redundancy?


What is redundancy?

An employee who is dismissed is taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to:


  1. the fact that the employer has ceased, or intends to cease, to carry on the business for the purpose of which the employee was employed by him, or has ceased or intends to cease to carry on that business in the place where the employee was so employed, or

  2. the fact that the requirements of that business for employees to carry out work of a particular kind or for employees to carry out work of a particular kind in the place where they were so employed, have ceased or diminished or are expected to cease or diminish.” See Croner’s Employment Law Bulletin, April 1994, at D160.


In the instant case there is no justification for abolishing the position of Administration Manager. The minutes making the recommendation fall short of addressing this issue. In fact it seems it was only the applicant’s senior position that was scrapped off and replaced. The replacement’s terms of reference or job description were not made available to compare with nthe applicant’s. It is the court’s view that the reason for terminating the contract of the applicant was not redundancy. Redundancy was a cover up for some reason which the respondent was obliged to reveal.


The court finds therefore that there was no valid reason for dismissal. The respondent failed to discharge the burden of showing any valid reason for dismissal.


In the case that indeed the respondent genuinely dismissed the applicant for grounds of redundancy, the next test for determining fair termination is whether the respondent consulted the applicant to warn him of the redundancy before-hand and to discuss whether there could be other alternatives to dismissal. This process is what in labour and employment circles is termed ‘procedure’.


Procedure

Where an employer has a valid reason for dismissal, the general rule is that, the reason must be communicated to the employee so that he can say something in relation to that reason. In redundancy situations the process is referred to as consultation.

It was thus put in the English Court of Appeal in Polkey V A E Dayton Services Ltd [1987]3 All ER 974 at 983-984; per Lord Bridge of Harwich:



“An employer having prima facie grounds to dismiss ……will in the great majority of cases not act reasonably in treating the reason as sufficient reason for dismissal unless and until he has taken the steps, conveniently classified in most of the authorities as ‘procedural’, which are necessary in the circumstances of the case to justify that course of action.”


See, also Bristol Channel Ship Repairers V O’ Keefe [1972]2 All ER 183.

The requirement to consult is crucial in all redundancy cases because the consultation process brings out information pertaining to why the applicant and not someone else should be declared redundant; who made the decision; what information did he or they base their decision on; what period would be required to carry out the redundancy and whether there is any way of averting dismissal. It was held in Freud V Bentall Ltd [1982] IRLR 443 EAT that:



“Consultation is one of the foundation stones of modern industrial relations practice. In the particular sphere of redundancy, good industrial relations practice in the ordinary case requires consultation with the redundant employee so that the employer may find out whether the needs of the business can be met in some other way than by dismissal and, if not, what other steps the employer can take to ameliorate the blow to the employee.”


In the instant case the respondent did not show the Court that they consulted the applicant. They discussed the issue of declaring the applicant’s position redundant in secrecy, the applicant was not aware of the redundancy affecting him until on the day of the dismissal. He could not offer any alternatives to dismissal nor did the respondent offer the applicant any alternatives to dismissal especially considering that in the same minutes the respondent was recommending the increase of staff in certain departments and indeed introduction of other more senior positions.


Finding

The court finds that the applicant’s termination was unfair because the respondent did not comply with the law in effecting the termination.


Assessment of Remedies

The applicant is entitled to a remedy under section 63 of the Employment Act. The matter shall be set down on a date to be fixed for assessment of an appropriate remedy.


Pronounced in Open Court this 23rd day of December 2004 at LIMBE.



R. Zibelu Banda (Ms.)

DEPUTY CHAIRPERSON.