Heiner v Giant Clothing Ltd (IRC 229of 20033) (NULL) [2004] MWIRC 77 (06 April 2004);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI


PRINCIPAL REGISTRY


MATTER NO. IRC 292 OF 2003


BETWEEN:


HEINER………….…………..…...…………………………. APPLICANT


-and-


GIANT CLOTHING LIMITED.........................................RESPONDENT



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

Mwala of Counsel for Applicant

Makhambera of Counsel for respondent

Sidhu, assisting Counsel for the respondent

Ngalauka Court Clerk



JUDGMENT

  1. Contract-Employment-Fixed Contract-Specific Period of Time-Failure to Renew-Dismissal-Justification for Dismissal-Reason-Right to be Heard.
  2. Contract- Offer and Acceptance-Withdrawal
  3. Contract-Terms of Contract-Notice Period-Party Alleging toProve on Balance of Probabilities.


FACTS

The applicant was employed as Production Manager on a fixed term contract that was expiring in December 2003. In accordance with the provisions of the contract, the applicant was informed that his contract would not be renewed. The applicant challenged this termination and averred that this was unfair termination. Further, the respondent had given a draft contract for the next period, that is, 2004, to the applicant for his perusal. The applicant signified his wish to continue in the employ of the respondent for another contract period. He also indicated that he would have wished for his wife to stay in South Africa so that she could be close to one of their children who was in school there. The respondent withdrew the offer to renew the contract without giving any reason for such withdrawal. The applicant challenged this withdrawal as unfair. He asserted that the withdrawal of the contract was based on his marital status, that is, because his wife could not be with him in Malawi. The respondent averred that they were not under any legal obligation to give the applicant another contract after the expiry of the existing fixed contract. The applicant also alleged that he was entitled to six months notice period. The respondent disputed this claim and contended that the applicant was entitled to three calendar months’ notice period.


ISSUES

There were three issues for the Court to determine. Firstly the Court was called upon to determine whether by not renewing a fixed contract that was expiring at the end of December 2003 constituted unfair dismissal.


THE LAW

The short answer to this question is found in section 28 as read with section 29 and section 57 of the Employment Act and not in section 35 that deals with severance allowance as submitted by Counsel for the respondent. For purposes of this case and for better reference section 28(3) reads as follows:


“Where the purpose or effect of a contract of employment that is purported to be for a specific period of time...is the filling on a lasting basis of a post connected with the normal and permanent activity of an undertaking, it shall be deemed to be a contract of employment for an unspecified period of time.”



In the instant case the respondent through Mr. Hugh Thomas, told Court that the post of Production Manager was a post connected with the normal and permanent activity of the respondent’s undertaking. In his own words Mr. Thomas informed Court that:


“ The applicant was Production Manager. He was controlling production of the factory. We were not phasing out the position. We still require a Production Manager. We acquired the services of [another] Production Manager.”


Further through exhibit “AP1” it came out clear that the respondent had decided to give the applicant another contract. It was only later withdrawn not because the operational requirements of the respondent company did not need the position of Production Manager but because the respondent did not want to maintain the applicant in its employment.


The above show this Court that the post of Production Manager, which the applicant held was very crucial. According to the respondent the applicant was responsible for over-seeing production of the factory. It was a core office without which the company would not operate effectively. Therefore any submissions that the operational requirements of the respondent company did not need the services of a Production Manager are without foundation and frivolous.


The purpose or effect of the applicant’s contract of employment was the filling on a lasting basis of a post connected with the normal and permanent activity of the respondent’s company. Therefore in terms of section 28(3) of the Act the Court finds that this was a contract of employment for an unspecified period of time. The Court shall therefore treat the contract between the applicant and respondent as a contract for unspecified period of time.


A contract for unspecified period of time can be terminated by either party upon giving the other party notice in accordance with section 29 of the Act. The contract can only be terminated fairly by following the provisions under the Constitution and section 57 of the Employment Act.


The Constitution in section 31 guarantees every employee the right to fair labour practices. Fair labour practices entail the duty on the employer to give an employee it intends to dismiss a reason for the intention, see section 43 of the Constitution, which states that:


“Every person shall have the right to lawful and procedural 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..”


The employee must know why an adverse action is intended to be taken against him and the applicant must be able to say something for himself and in his own defence.




The Supreme Court of Appeal in Dr B S Chawani v The Attorney General (MSCA No. 18 of 2000, per Tambala JA, held that:


“The purpose of section 43 is clearly to ensure transparency in decision making where the decision is likely to infringe the rights, freedoms, interests or legitimate expectations of others. The section was also intended to enable persons affected by administrative actions to have adequate opportunity to defend themselves effectively. A person would be able to present a good and effective defence to an administrative action when he knows the reason supporting the action.”


This Constitutional provision was incorporated into Section 57 of the Employment Act, which 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 of proving the reason for dismissal on a balance of probabilities is on the employer; see section 61 of the Act. In Earl v. Slater and Wheeler, [1973] 1 WLR 51 at 55 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 respondent told Court that they had no legal obligation to give the applicant any reason for dismissal. Obviously because the respondent was under the mistaken belief that this was a specified contract that terminated with lapse of time.


The respondent might be wondering what the intention of the legislature was in providing for contract of employment for specified period of time if as in this case a Court can reverse and find that the contract was for unspecified period of time. An answer to such question is that the legislature was trying to avoid incidents like the one in the instant case. There are genuine contracts of employment for specified time. However the legislature had the foresight to protect some innocent employee who might fall into the trap of entering into fixed contract that was in fact mere sham.


People’s right to employment under section 29 of the Constitution would be an illusory if employers craftily drafted employment contracts that automatically terminated through lapse of time. Employers would choose sometimes for unconstitutional and invalid reasons which employees to maintain and which ones to dispose of. Section 28(3) is aimed at preventing such unfortunate developments.


The respondent was under legal obligation as demanded by the Constitution, Employment Act and common law to provide a reason before terminating the applicant’s contract. The reason would have negated any views held by the applicant that he was actually discriminated against on the basis of his marital status.


FINDING

Since the respondent did not comply with legal requirements before terminating the contract of employment of the applicant, the Court finds in accordance with section 58 of the Act that the termination was unfair.


Secondly, the applicant asked the Court to find that he was entitled to a fresh contract of employment for 2004. Having found that the 2003 contract was a contract for unspecified period of time, the issue of 2004 contract falls out.


Thirdly, as an alternative claim, the applicant asked the Court to find that he was entitled to six months notice period for the 2003 contract. The applicant was required to prove on a balance of probabilities that he was entitled to notice period of six months. However, the Court was not convinced that this was a mutual agreement. It was neither reduced into writing nor was it acted upon by actual giving the six months notice to any of the employees. This claim therefore fails.


The matter shall be set down on a date to be fixed to assess an appropriate remedy under section 63.


Pronounced in Open Court this 6th day of April 2004 at LIMBE.




R Zibelu Banda (Ms.)

DEPUTY CHAIRPERSON.