Makalani v National Bank of Malawi (IRC 163 of 2001) ( of ) [2006] MWIRC 67 (31 May 2006);




MATTER NO. IRC 163 OF 2001


MAKALANI.………………………………………………. ……………...APPLICANT



CORAM: R. Zibelu Banda (Ms); Chairperson

Chisale; of Counsel for the Applicant

Mitole; of Counsel for the Respondent

Chinkudzu; Official Interpreter


Severance allowance-Whether it is payable where employee resigns-Whether employee resigned-Mutual- Whether termination was mutual-Misconduct-Whether termination was for misconduct-Hearing-Whether there was a hearing.

The background

The applicant had worked for the respondent for close to 27 years in various positions. Around August 2000 the applicant was invited by the Human Resources Manager to discuss some issues of misconduct allegedly committed by the applicant. At the meeting the applicant was advised to resign so that he could receive some terminal benefits instead of appearing before a disciplinary hearing where he was sure to lose his job and all his benefits. The applicant agreed to resign on the understanding that he was to receive his terminal benefits. The respondent accepted the resignation with regret and offered the applicant three months pay in lieu of notice. The applicant is now suing for his severance allowance claiming that the termination was unilateral at the instance of the employer.

The respondent argued that the applicant was advised to resign after he had committed several acts of misconduct. The respondent cited a number of acts of misconduct including getting unauthorized over draft on several occasions, insubordination, dishonesty regarding house loan and reporting for duties while drunk. The respondent argued that the applicant resigned therefore he was not entitled to severance allowance on another hand they urged the court to find that the applicant was dismissed for misconduct. Counsel for the respondent tried her best to argue in her written submissions that the applicant was in fact dismissed for misconduct and that he was given a hearing on 17 August 2000.

Indeed that would have been the ideal course of action to take under the circumstances, unfortunately the witness for the respondent acted contrary and he informed the court what exactly transpired at the alleged meeting: the applicant was given an option to resign and receive his benefits or else face a disciplinary hearing and lose everything.

The Law

Severance allowance is a statutory obligation under section 35 of the Employment Act. It is a lump sum of money that is paid to deserving employees at the termination of employment. There are statutory exclusions to payment of severance allowance under the same provision. Two of these exclusions are where the employee is dismissed fairly for misconduct or where the termination is unilateral by the employee (resignation).

Fair dismissal for misconduct

Section 35(6) (b) of the Employment Act provides that: ‘Subsection (1) shall not apply where the employee is fairly dismissed for a reason related to his conduct’. Fair dismissal in this case means complying with the provisions of section 57(1) and (2) of the Employment Act, in brief, giving the employee the reason (s) for termination, that relate to misconduct and a fair hearing.

In this case the court was given an outline of the applicant’s acts of misconduct over a period of time. However the respondent fell short of the provisions of section 57(2) that require that after a charge is laid, the employee must be given an opportunity to answer to the charge and to defend himself. In the instant matter the applicant was prevented from presenting his case at a hearing because according to the Human Resources Manager who is a representative of management in human resource matters, told the applicant that his case was so bad that the hearing would just endorse his termination. Coming from a Human Resources Manager the implications were that management had already made a decision to dismiss the applicant therefore any hearing at all would have been a sham. It is trite law that an administrative action must be fair and not predetermined; see generally, Khoswe V National Bank of Malawi [Civil Cause Number 718/2002 (unreported)]

The second implication that came out of the meeting between the Human Resources Manager and the applicant was that management could not be bothered with hearing out the applicant, they opted for an easier way out, a short cut: asking the applicant to terminate his own services.


A third implication of the incident is that the acceptance of the resignation and paying out notice pay to the applicant meant that the applicant did not resign because in a resignation it is the person resigning who pays out or serves notice period. Therefore this was not a resignation and the Human Resources Manager should have been well cautious about this.


Further, if the court accepted that this was a resignation after an understanding between the Human Resources Manager and the applicant, then the termination becomes mutual in which case severance allowance becomes payable under section 35(1) Employment Act. Mutual termination is when an employer and an employee for one reason or another reach an agreement to sever the employment relationship for the mutual benefit of both parties.

Whichever way one looks at the scenarios, this is a clear case where the statutory exclusions for severance allowance entitlement under section 35(6) do not apply.

Having found that the termination was unfair, it does not matter whether the applicant had committed a series of acts of misconduct. The only time that the misconduct would be taken into account in a dismissal case is when the court is called upon to determine an award of compensation as it goes to contributory fault, see section 63(2) of the Employment Act.

Order: it is this court’s order that the applicant be paid his severance allowance.

Right of appeal

Any party aggrieved by this decision is at liberty to appeal to the High Court within 30 days of this judgment in accordance with section 65 (2) of the Labour Relations Act.

Pronounced in Open Court this 31st day of May 2006 at BLANTYRE.

Rachel Zibelu Banda