Khawela and Others v Standbic Bank Ltd (IRC 63 of 2004 ) (63 of 2004) [2005] MWIRC 42 (16 May 2005);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI


PRINCIPAL REGISTRY


MATTER NO. IRC 63 OF 2004


BETWEEN:


KHAWELA AND OTHERS….……………………………APPLICANTS


And

STANBIC BANK LIMITED….……………...…………..RESPONDENT




CORAM: R. Zibelu Banda (Ms): Chairperson

Bandawe: Of Counsel for the Respondent

Mulemba: Of Counsel for the Applicants

Ngalauka (Ms.): Court Clerk



JUDGMENT

Dismissal-Justification for Dismissal- Reason-Operational Requirements- Redundancy- Procedure for Redundancy-Right to be heard-Consultation-What constitutes consultation..


FACTS

It was not in dispute that the eight applicants in this matter were employed on various dates by the respondent. It was also not in dispute that these eight applicants were effectively dismissed around 31 December 2003. It was also not disputed that the reason for dismissal was operational requirements of the respondent, which necessitated declaring some positions redundant. The eight applicants held positions of secretaries some of which were declared redundant. What was in dispute was whether there was adequate consultation before the applicants had their contracts of employment terminated.


Counsel for the applicants alleged that his clients were never consulted before the termination. This was unfair labour practice and the basis for this suit. The respondent on the other hand averred that the applicants were adequately consulted through their trade union representatives and that the applicants were aware of the redundancies through various memorandums to that effect posted in the respondent banks’ public notice boards.


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. These provisions were integrated in the Employment Act, section 57 (1) that requires employers to provide reason for dismissal.


In this case there was no dispute that there was a valid reason for dismissal, which, is operational requirements of the respondent bank. The court accordingly finds that there was a valid reason for dismissal.


Procedure

Having found that the respondent had a valid reason to dismiss the applicants, the Court must find whether the process of dismissal conformed with the law. Apart from providing a reason, the process of hearing the other side through consultation or otherwise is an essential component in dismissal cases.

It was held in Polkey V A E Dayton Services Ltd [1987]3 All ER 974 at 983-984; per Lord Bridge of Harwich, that:



“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.”


The Employment Act does not provide procedure for redundancy. To fill the lacuna the Court has applied the procedure provided in the International Labour Organisation (ILO) Convention Number 158 that deals with Termination of Employment at the Initiative of the Employer. Articles 13 and 14 of the Convention provide that before dismissal on ground of redundancy the employer must inform and consult relevant institutions like workers union, government department and the employee(s) to be declared redundant. The information must among others contain the criteria used to select the employee (s) and the period over which the redundancy will be effected.


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. In Freud V Bentall Ltd [1982] IRLR 443 EAT, the court held 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 this matter the respondent’s purported consultation with the applicants was on 15 December 2003, when the applicants were invited one at a time to be informed that the their positions had been declared redundant and that they a had a choice to stop work immediately or to work till the 31st December, which was the effective date of termination.


In the authorities on consultation, it is clear that the envisaged consultation must have the effect of giving the concerned employee an opportunity to make representations on the subject and where possible to find ways of ameliorating the blow brought by termination. Nowhere in this matter was there mention of individual discussions between respondent management and each of the eight applicants prior to the decision to terminate their employment contracts.


The employer must give the redundant employee an opportunity to state her case and offer alternative solution that would reduce the impact brought by termination. It is only in exceptional circumstances that this requirement might be waived. In Dzinyemba and others V Reserve Bank of Malawi [Matter Number IRC 177 of 2001 (unreported)], it was held that “the law does not put it mandatory that whenever there is retrenchment, there should be individual consultations. Where it is practicable the employer may do one on one consultation. In this case there were 600 employees. The individual consultation was therefore not a must”.


This was not the case in the instant matter. It was fairly possible to conduct one on one consultations; there were eight applicants as opposed to about 600 envisaged in Dzinyemba and further, the respondent knew about the requirements for redundancies for over five years as per exhibit ‘RP 3’ on staff rationalization. This should have given the respondent ample time to consult properly and not perform cosmetic consultation as heard in this matter: See generally, Rep V Secretary for Social Services ex p Association of Metropolitan Authorities [1986]1WLR 1.


FINDING

The Court finds that the reason for dismissing the applicants was valid. However, the procedure for declaring the applicants redundant was flawed in law. The right of the applicant to fair labour practice under section 31 of the Constitution as read with Articles 13 and 14 of Convention 158 of the ILO was violated. The dismissal was unfair on technicality.


Assessment of Remedies

The applicants are 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 16th day of May 2005 at LIMBE.



R. Zibelu Banda (Ms.)

CHAIRPERSON.