Machilinga v Commercial Bank of Malawi (IRC 250 of 2003 ) ( of ) [2006] MWIRC 80 (26 June 2006);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI


PRINCIPAL REGISTRY


MATTER NO. IRC 250 OF 2003


BETWEEN:


MACHILINGA……………...……………….……………………………APPLICANT


And

COMMERCIAL BANK OF MALAWI….……………...…………….RESPONDENT



CORAM: R. Zibelu Banda (Ms): Chairperson

Bandawe; of Counsel for the Applicant

Mzumara; of Counsel for the Respondent

Chinkudzu (Ms.); Official Interpreter



JUDGMENT

Dismissal-Justification for Dismissal- Reason-Burden of proof- Employer to show reason-Operational Requirements- Redundancy- Procedure for Redundancy-Consultation-Nature of consultation-Administrative procedure-Form of-Not judicial


Facts

The applicant was employed in 1991. She was dismissed in April 2002. The reason for dismissal was redundancy arising out of a restructuring process within the respondent’s enterprise. The applicant challenged the termination alleging that the reason was not valid as the respondent did not comply with the redundancy procedures. The respondent on the other hand contended that the dismissal was fair, the reason was valid and that it arose out a genuine operational need for the respondent.


Issue

The issue is whether the applicant’s dismissal was fair? a dismissal is fair if it complies with the rules of natural justice as enshrined in the constitution and other relevant legal instruments, like international human rights and labour rights law.


The Law

Reason

Section 31 of the Constitution provides for fair labour practices. Section 43 of the same, provides that any administrative action with a tendency to negatively affect the rights of another must be justified with valid reason and the affected person must be given an opportunity to explain his side or know those reason before any action is taken.


The burden of proving the reason for dismissal is on the employer, see section 61 of the Employment 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.”


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 respond, see Chawani V Attorney General [MSCA Civil Appeal No 18 of 2000 (unreported)].


In the instant case the court heard that the applicant was confronted with a dismissal letter on 5 April 1995. The letter was written on same day and the termination was effective the same day. The reason for termination was redundancy.


It is necessary for purposes of this case to define redundancy and find out whether what happened in this matter was what could be legally termed redundancy. Redundancy is where an employer terminates contract of 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.


Procedure

The Malawi local law does not provide for redundancy procedures but section 31 of the Constitution, provides for fair labour practices. Fair labour practices is not defined in the Constitution but what constitutes fair labour practices can be obtained from general provisions of the Constitution, ILO Conventions, case law, texts and good industrial practice.


The ILO Convention 158, 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 relevant trade unions.



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 consulted with the applicant through the Trade Union that existed at the respondent’s bank. The bank came up with a properly laid out programme after carrying out a study of the staff establishment. The respondent had a workforce of 900 and they intended to reduce the workforce to 700 by end of 2002.


The bank showed that the applicant was moved from one department to another and the explanation from the bank was that they were trying to get alternative employment for her to avert her redundancy. The bank had declared a number of secretaries and typists redundant. An explanation was offered as to why some staff member was retained to carry on duties carried out by the applicant, the reason was that at the time, a year after the applicant’s termination, there was work to be done and this staff member who had escaped redundancy a year before, was considered to take up that position in favour of the applicant who had been terminated for a year.


The applicant knew about the termination through memorandums including the memo on Voluntary Retirement Scheme and communications through Trade Union members on behalf of staff. By the time of the applicant’s redundancy she knew what was going on, it was not a surprise action like the one found in Chiume V SS A Rent A Car [Matter Number IRC149/2000(unreported)]or Madinga V Petroleum Control Commission [Matter Number IRC 176/2001 (unreported)].


This court appreciates that it is not necessary for administrative proceedings to take the form of judicial proceedings where each and every element is put to detailed scrutiny. In Cornelius & others V Howden Africa Ltd t/a M&B Pumps [1998]19 ILJ 921, the labour court held that: It does not matter whether each of the procedural requirements has been meticulously observed. What is required is for all relevant facts to be looked at in the aggregate to determine whether the procedure adopted was fair. One must guard against the rigid imposition of judicial style proceedings in inappropriate situations.


In this matter, the court has considered events that were unfolding at respondent’s bank including the restructuring programme and processes that transpired during this period and finds that the respondent’s conduct could not be held to have been unfair. There was a disclosure of a fact of restructuring, the numbers to be affected, period to take place and every member of staff including the applicant was aware of the process.


Redundancy affects positions therefore it does not matter that the holder of the position is a brilliant employee, as merit, is just one of the criteria used in redundancy cases. Hence the fact that the applicant’s performance appraisal gave her high scores is not alone a factor for not declaring her redundant. Other factors were satisfied as mentioned above that the position was not required in the new organogram.

In terms of employing or transferring another employee to the applicant’s position after one year, the legal definition of redundancy includes temporary cessation of the position, meaning that it is possible for the position to be re establishment, this can happen depending on several factors, for example, where totally new management view the position relevant for specific matters as in Dambuleni V ADMARC [Matter Number IRC 74/2000 (unreported)]or where economic standing of the respondent improves in cases where the redundancy is a result of economic factors or like in this case, where volume of work in the position increases to an extent that a would necessitate recreating and filling the position.


Finding

The court finds that the applicant’s termination was fair as it complied with good industrial practice relating to redundancies. This action is therefore dismissed.


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 26th day of June 2006 at BLANTYRE.



Rachel Zibelu Banda

CHAIRPERSON.




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