Simango v Blantyre Newspapers Ltd (IC 229 of 20033 ) (229 of 20033) [2007] MWIRC 32 (11 May 2007);

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IN THE INDUSTRIAL RELATIONS COURT OF MALAWI


PRINCIPAL REGISTRY


MATTER NO. IRC 229 OF 2003


BETWEEN:


SIMANGO…………………………………………………..……………...APPLICANT


-and-

BLANTYRE NEWSPAPERS LTD…………..…...………………...…RESPONDENT


CORAM: R. Zibelu Banda (Ms); Chairperson

Ngwira; of Counsel for the Applicant

Mwantisi; of Counsel for the Respondent

Gowa; Official Interpreter


RULING

  1. Employment law-Employee- Person-Performing work or services for another person- Remuneration- Reward- Relationship- Of economic dependence-Obligation to perform duties

  2. Independent contractor-Whether or not a person is an employee or an independent contractor-Three tests- control- integration- economic reality


Background

The applicant was by letter of 9 September 2002, exhibit AP 1, offered to work as Consultant Editor for the respondent. Terms and conditions of this employment included, remuneration at a rate of MK50 000-00 per month; three eight hour working days per week; medical aid; house allowance; transportation; annual leave of 15 days per annum and termination clause included payment of gratuity and three months notice. The applicant accepted the offer by affixing his signature.


In a letter dated 30 June 2003, exhibit RP3, the respondent wrote a letter to the applicant terminating employment. In that letter they referred to a demand made by the applicant asking for better terms and conditions. According to that letter the respondent could not accommodate such demands and therefore they found it fit to terminate the applicant’s contract. The applicant challenged the termination for lack of valid or any reason at all. He prayed for damages for unfair dismissal and wrongful dismissal.


The respondent in its defense contended that the applicant was not an employee of the respondent and therefore he could not claim damages for unfair dismissal. They referred to the contract as a consultancy and that according to them a consultancy is different from a contract of employment. The respondent in order to support their view referred to the fact that the applicant worked only three days a week and that therefore this was not a normal contract of employment. Further that the offer of employment was made to Mass Media Centre, a company.


The Issue

The court was asked to determine the preliminary issue of whether or not the applicant was in an employment contract with the respondent or was an independent contractor?

The Law

Section 3(b) of the Employment Act defines employee as: “any person, who performs work or services for another person for remuneration or reward on such terms and conditions that he is in relation to that person in a position of economic dependence on, and under an obligation to perform duties for, that person more closely resembling the relationship of employee than that of an independent contractor”.


Factors to consider under section 3(b) are that the person must be under a legal obligation to perform work and that the person receiving the services must be under an obligation to remunerate the person working and that it must be shown that the person who offers his work depends on the person providing work economically.


In determining whether a person was an employee or independent contractor, a court must ordinarily look to the intentions of the parties. The intention of the parties can be expressed orally or in written form. In the instant case the wishes of the parties were expressed in a document referred to earlier as AP1. The defendant referred to other communications made orally between the applicant and other members of management. The court did not have the benefit to hear from those other members of management as to what was said relating to terms and conditions in addition to or limiting those terms and conditions that were reduced to writing. It is a basic principle of contract that parties will consider written terms as forming conditions of a contract unless a contrary intention is shown.


In this case as alluded to earlier, although the respondent referred to some unwritten clauses, these were not proved. Further there was no evidence to show that the respondent had at any time before acceptance revoked the offer. It is trite that acceptance can not be revoked. Once the offer is accepted, the contract is complete and neither party can revoke. A binding contract was created on 25 September 2002 when the applicant accepted to work for the respondent on terms and conditions stipulated in the offer letter.


The court must now determine the question whether the contract so signed was one of services or for services? The simple answer is found in AP1. The applicant was contracted to work for the respondent for remuneration. He subjected himself to the terms and conditions of employment in as far as the performance of his work was concerned. In this regard, the respondent provided work and the applicant was obliged to perform that work. For instance, the applicant was supposed to report for duties three days a week and was required to produce something for the benefit of the respondent. In return the respondent was to pay a salary and provide other employment related benefits like house allowance and annual leave. These factors constituted an employment contract see generally, Kachika v Longwe [Matter No. IRC 195/2003 (unreported)] and Chisowa v Ibrahim Cash and Carry [Matter Number IRC 259/2003 (unreported)].


It was a condition of the contract that the applicant should work three days in a week. The respondent used this fact to deny the existence of an employment contract. However, in a free market and with the principle of freedom to contract, any party can decide on any terms and conditions as long as they are not illegal, or offend public policy. Therefore the fact that the applicant reported for duties only three days a week did not affect the contract of employment.


The only limitation to hours of work is provided in section 36(1) of the Employment Act. It limits an employee’s working time to not more than 48 hours per week. It would therefore be a violation of employment laws for an employer to demand from an employee work for more than 48 hours in a week. Of course parties can agree to work for more than 48 hours a week as long as the additional hours are paid for as overtime. Therefore there is no law that prohibits a party to a contract of employment from negotiating for any lesser hours of work at any particular time.


Counsel for the respondent had also sought to show that the contract was between Mass Media Centre as a consultant and the respondent. They wanted the court to find that the applicant was an independent contractor. However, the conduct of the respondent in its offer and termination is inconsistent with that proposition. The common law has developed three tests for establishing whether or not a person is an employee or an independent contractor.


These are first, the control test, where Lord Thankerton, in Short v J& W Henderson Ltd (1946) 62 TLR 427, looked at whether the putative employer had control over selection of his servants; the right to control the method of doing the work; and right of suspension and dismissal. If these were answered in the affirmative and the worker received remuneration, a contract of employment exist. See also Sime v Sutcliffe Catering Scotland Ltd [1990] IRLR 228. Did the respondent in this case exercise any control over the applicant’s work and conditions? The answer is definitely in the affirmative.


The second test is the integration test. Denning LJ in Bank voor Handel en Scheepvaart NV v Slatford [1953]1 QB 248, considered whether the worker was part and parcel of the employer’s organization. In this test, under a contract of service (employment) a person is employed as part and parcel of the business with all the associated burdens of administrative costs and overheads like medical aid, pension, leave, transport and gratuity. In a contract for service (independent contractor) although a person works for the organisation, his work is not integral to the business but only accessory to it. Can it be said in the instant case that producing a newspaper as editor constituted part and parcel of Blantyre Newspapers Ltd? The answer is obviously in the affirmative.


The last test is the economic reality test which is a composite of the above elements. It was enunciated in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497. In the case the contract between the appellant company did not provide for hours of work, holiday times and the workers could hire someone else to perform the work and they were paid according to the amount of work actually done. His Lordship McKenna J., decided that the workers were independent contractors.


In the instant case assuming that Mass Media Centre owned by the applicant was an independent contractor, the respondent would have to make the above distinctions and show that the contract between them and the applicant was one for services. In which case the applicant would not receive a salary, would not be entitled to benefits like leave, transport, gratuity etc as these are benefits applicable to employees. Further the respondent would have to show that the applicant’s work was not part and parcel of Blantyre Newspapers Ltd but just an accessory. The respondent was also obliged to show that the applicant was in business on his own accord, controlling when and how he wanted to do the work and whether or not he performed the work personally or hired workers. Counsel for the respondent did not show that the applicant was an independent contractor. In fact, even where a contract refers to a worker as an independent contractor, the court can on the facts find a contract of employment, see, Market Investigations Ltd v Minister of Social Security [1969]2 QB 173.


Finding

Having found that the hours of work did not affect the employment contract, and that the terms and conditions of contract in AP1 and the subsequent conduct of parties satisfied the elements set out in section 3(b) of the Employment Act, the Court finds that a binding contract of employment existed between the applicant and the respondent.


Order

The Court orders that the matter if not settled out of court, must proceed to full hearing in the Industrial Relations Court in accordance with the requirement for sitting with panelists. A date shall be communicated to parties for hearing on the substantive issue of whether or not the termination of employment was fair?


Right of appeal

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



Made this 11th day of May 2007 at BLANTYRE.



Rachel Zibelu Banda

CHAIRPERSON.