IN THE INDUSTRIAL RELATIONS COURT OF MALAWI
MATTER NO. IRC 300 OF 2006
NAMIJINGO .. . APPLICANT
CHITAKALI TEA ESTATE . . ..RESPONDENT
CORAM: R. ZIBELU BANDA (MS); CHAIRPERSON
NICK CHIFUNDO KAJOMBO; EMPLOYEES PANELIST
AIMAN M MALIJANI; EMPLOYERS PANELIST
Mpando; of Counsel for the Applicant
Gwazantini; of Counsel for the Respondent
Gowa; Official Interpreter
Employment-Terms and Conditions- Who determines- Parties agree- orally or in written documentation
Burden on employer to produce written particulars of terms and conditions of employment
Terminal benefits-Money paid out after termination of contract
Notice pay-Including all other benefits-Severance allowance-Pension or gratuity where applicable
The applicant was effectively employed by the respondent on 1 April 2001 through a letter dated 23 April 2001 marked as exhibit AP1. It stated that a contract of employment would follow. The employment was confirmed after a probation period of six months was successfully completed on 1 October 2001. The applicants salary was raised to MK 300 000 per annum effective 1 November following this confirmation in appointment. The contract of employment containing terms and condition of employment was never signed.
The applicant however derived his terms and conditions from the general terms and conditions applying to staff of the respondent and also from some verbal and written communication. AP5 was exhibited as one such document where some fringe benefits were outlined. The applicant alleged that this was a contract for a fixed period of time, to run for three months. While the respondent alleged that the contract was for unspecified period of time.
The respondent terminated the contract effective 31 October 2002. Reasons for the termination were not an issue in this matter. The main issue was in relation to terminal benefits. The respondent paid the applicant equivalent of three months salary in lieu of notice; accrued leave pay; water allowance; electricity allowance; fuel allowance; telephone allowance; cellphone allowance and accommodation. All these benefits were calculated for a three months period. The applicant contended that this was not enough. He demanded to be paid benefits covering the whole of the un-expired of contract. This was because he reasoned that if the contract did not provide for a notice clause then it could only be terminated upon expiry of the contract period, i.e. three years.
The applicant brought the action to seek the courts determination whether there was a valid fixed term contract between the applicant and respondent and whether if there was a valid contract after termination the respondent paid out to the applicant his terminal dues in full and according to law?
Assessment of Facts
The court found that the respondent employed the applicant through a letter exhibited as AP1. In that letter the respondent promised that a formal contract of employment would follow containing the terms and conditions of employment. The applicant commenced work on the understanding that he was on a fixed term contract according to some verbal communication. Other terms and conditions of employment were communicated to the applicant through written memorandums. One such memorandum was exhibited as AP5. Providing for the following: accommodation; electricity; water; milk; firewood; telephone; cellphone; fuel; education; club; bonus; watchmen; garden boy and house boy. The money value of these benefits were not indicated on the memorandum.
A dispute arose after the respondent unilaterally terminated the applicants contract. They paid him terminal benefits as exhibited in letter of termination. However the applicant contended that the terminal benefits were inadequate, arguing that under the laws since he was under a fixed term contract that had no notice clause for termination he was entitled to benefits for the whole of un-expired period of the contract. The respondent on the other hand averred that there was no contract between the parties and in the alternative should the court find that there was a contract, the respondent argued that they had paid the applicant all his dues but severance allowance for one year and pension to calcualted.
The court must point out that since the applicant did not have any issues with the reason and the circumstances of the termination, it is assumed that the termination although instigated by the respondent was mutually acceptable by the applicant. It was not contested. The court was not called upon to determine whether the termination was fair or unfair.
Whether there was a Contract of Employment?
Section 27 of the Employment act provides that it is the duty of every employer to give each employee a written statement of particulars of employment. In this case, the court heard in evidence that the respondent did not comply with this provision. In the absence of any written particulars of employment from the respondent to the applicant, the respondent cannot be heard to be saying that there was no contract between themselves and the applicant. The obligation was on them to produce the statement containing the vital terms and conditions of employment, see; Chisowa v Ibrahim and Cash N Carry [Matter Number IRC 259 of 2003 (unreported)]. The court holds therefore that there was a verbal contract of employment, which was augmented by written memorandums containing terms and conditions.
Whether the Contract was for a Fixed Period of Time?
In the written memorandums there was no clause on whether the contract was for unspecified period of time or for a fixed period of time. The applicant alleged that the contract was for a fixed period of time commencing on 1 April 2001 expiring on 31 March 2004. The respondent on the other hand argued that the contract was for unspecified period of time. None of the parties had any valid contract to substantiate their assertions. However since the burden of adducing a written contract of employment was on the respondent, the court believes the applicant that his was a contract for a fixed period of time. The respondent had no basis for disputing this fact. The court therefore finds that the contract between the applicant and the respondent was for a specified period of time.
Whether Terminal Benefits were fully Paid?
This being a unilateral termination at the initiative of the employer, the applicant was indeed entitled to be given terminal benefits. The nature of the benefits would largely depend on the reason and circumstances of the termination. In this case the court was not informed the reason nor the circumstances leading to termination. The court was informed that this was not an issue in this matter.
This being a contract for a specified period of time and in the absence of any clause on notice of termination between the parties, the court resorted to the Employment Act. Section 29(3) provides that the minimum period of notice in respect of a contract of employment for a specified period of time shall be fourteen calendar days. The court finds therefore that in law the applicant was entitled to be paid an equivalent of 14 days salary in lieu of notice and all other benefits that he was entitled to under the contract for the same period of 14 days.
It is in other words not correct that where a notice period is not provided for in a fixed contract of employment, the employee must be paid up to the end of the contract even where he does not complete the term. This interpretation would be absurd as it would have the effect of preventing parties to a contract of employment from pulling out of the contract at any time before the end of the term. Allowing such a scenario would be turning a contract of employment into a contract of servitude. It would also result in unfair labour practice to an employer who may be prevented from dismissing employees on fixed contract even where such employees had committed acts of misconduct or were not able to perform (incapacity).
The court finds that there was a contract of employment for a fixed period of time between the applicant and the respondent. The court further finds that the applicant was in the absence of any notice provision under the contract entitled to equivalent of fourteen days notice and severance allowance as terminal benefits. The respondent conceded that they owed the applicant severance allowance and pension. The applicant argued that he was not on pensionable contract and the court agreed with him above.
The respondent is ordered to calculate and pay the applicant all his benefits under the contract as enunciated above less what was already paid. The notice period for calculating these benefits is fourteen calendar days. The respondent must also pay severance allowance for one year at a rate of MK12500-00. This order is with immediate effect.
Any party aggrieved by this decision has the right of appeal to the High Court within 30 days of this decision. Appeal lies only on matters of law and jurisdiction and not facts: Section 65 (2) of the Labour Relations Act.
Pronounced this 7th day of November 2007 at BLANTYRE.
Rachel Zibelu Banda
Nick Chifundo Kajombo
Aiman M Malijani