Fmb fails to escape penalty
The High Court in Lilongwe has dismissed an appeal First Merchant Bank (FMB) filed to overturn an Industrial Relations Court (IRC) ruling for the bank to compensate some 14 employees for unfair dismissal.
On December 13 2012, IRC found that FMB’s failure to consult the employees before retrenching them in May amounted to unfair dismissal.
But the bank was not satisfied, thus filed an appeal which Judge Fiona Mwale found wanting and dismissed on September 9 with costs.
“In conclusion and for all I have argued, this appeal further fails on the ground that there was no consultation. The lower court therefore did not err in making the orders for compensation appealed against,” she concluded.
In its appeal through lawyer Modecai Msiska, the bank argued that Malawi law, the Employment Act in particular, does not provide for consultation in retrenchments or redundancy.
The 14 employees through lawyer Alan Chinula did not take issue with this provision but argued based on FMB’s own conditions of service which provided for the same.
Chinula’s arguments also weighed based on a binding Supreme Court ruling which imported International Labour Organisation (ILO) provision for the need for employers to provide sufficient reasons to employees singled out for redundancy.
“The appeal therefore fails on the ground that lower court erred in law in applying Article 13 of ILO Convention 158 to find that the appellant was obliged to consult the Respondents before effecting the termination,” said Judge Mwale.
The IRC ordered FMB—one of the banks listed on the Malawi Stock Exchange (MSE)—to compensate the applicants with an amount meant to have been assessed on January 21 2013.
The bank fired 19 people without notice although only 14 sued for compensation and the court is due to assess the amount FMB should compensate the employees.
According to FMB own conditions of service, this would have been avoided if the bank followed section 23.4 of the rules which sets out procedures for redundancy or retrenchment.
The section says before retrenchment, the company will ensure that consultation with the concerned employee will be held; employees to be made redundant/retrenched will be advised reasons for the being singled out; date when redundancy/retrenchment will be effected and benefits which will be given, including pay for days worked, pay in lieu of leave, pay for overtime where applicable, pension contributions as specified in pension rules, transport to home of origin or settlement and ex-gratia payment to be advised by the bank at the time.
When the 19 were retrenched, their severance was calculated based on their weekly payments.
In calculating compensation, the court is guided by the Employment Act and Labour Relations Act, according to human rights lawyer Crispin Sibande.
He said in an interview that the court basically considers the agreement between the employer and employee in awarding and assessing compensation for unfair dismissal.
“In general, the court will look at the existing relationship terms between the employer and employee before the termination of employment. The court will examine the employment letter, the contract of employment, the Conditions of Service existing at the organisation or company, the periodic instructions/circulars issued by management, the agreed benefits, whether the contract was fixed term or open, issues of pension and other matters the court can deduce from the evidence submitted before it,” he said.
He added: “The court will also look at other relevant laws such as the Constitution of Malawi, international conventions which apply to Malawi, previous judgements and comparable foreign case law where necessary. In all cases, the court will get assistance from the evidence submitted before it in terms of determining how much compensation should be paid to an employee who has been found to have been unfairly dismissed,” he added.
Documents we have seen show that there was no consultation between employees and the employer before they were handed retrenchment letters on May 11 2012.
In fact, the only time they were called to a meeting was when they were being given their retrenchment letters which they were made to read and sign immediately.
This, in the judgment of a three-member IRC panel headed by Jack N’riva, deputy chairperson of the court, was enough evidence of unfair dismissal.
Lawyer for the retrenched employees Chinula said it is difficult to say exactly how much the fired employees would be rewarded.
“Employers should not be making such bad decisions on their employees. It’s bad and our Ministry of Labour is not particularly proactive,” he observed.
Head of human resources at FMB Prescott Nkhata, who signed retrenchment letters, said was not aware of the judgment, “but I am not authorised to speak to the press”.
In a separate interview, FMB managing director Dheeraj Dikshit said the bank had not received the judgment “therefore we cannot comment on anything we have not seen”.
