THE HIGH COURT OF MALAWI
CAUSE NO. 3828 OF 2000
HON. JUSTICE A.C. CHIPETA
Counsel for the Plaintiff
Counsel for the Defendant
By Originating Summons based
on Sections 31 of the Constitution and 35 of the Employment Act the plaintiff
seeks a number of declarations and Orders consequent on the defendant’s
termination of his employment with it. The
Originating Summons is duly supported by an affidavit to which are annexed
exhibits “GDK1” to “GDK5”. The defendant having acknowledged service
of this Originating Summons filed and served an affidavit in opposition
buttressed by exhibits “TZN1" and “TZN2.”
It subsequently followed this up with a supplementary affidavit in
opposition carrying with it exhibits “TZN3" to “TZN5". It is then that I heard arguments from both sides on the
The undisputed facts of the case are that the defendant company employed the plaintiff as from 18th September, 1985. Following that appointment the plaintiff worked with that company until 7th September, 2000 when he was declared redundant. By then his salary had risen to K4,100.00 per month from the initial K285.00 per month he had started work with. Obviously on termination of employment some payments between the contracting parties become due for settlement. In the case at hand, the parties are only at cross-purposes as regards one and only one payment. It is that payment that has triggered this case and landed the parties in court.
Act No. 6 of 2000 is the new
Employment Act which came into force on 1st September, 2000.
It replaces the Employment Act of 1964, (Cap. 55:02) of the Laws of
Malawi. At the time the plaintiff
herein was terminated from his employment the law in force was that in the
current Act which had then just been in operation for only one week.
At the center of the present
dispute is Section 35 of this new Act. The
said Section 35 addresses the question of severance allowance on termination of
employment as is the case here. The
law is coached in plain and unequivocal language, but in applying it to the
facts of this case the plaintiff gets one result while the defendant gets a
different result and they have completely failed to compromise on this.
The question for consideration is who is right and who is wrong in the
circumstances of this case.
Sub-Section (1) of Section 35
of the Employment Act provides that on termination of employment, an employee
shall be entitled to be paid by the employer at the time of termination, a
severance allowance as per the First Schedule.
According to the said Schedule any employee who is terminated after
serving for between one and four years, is entitled to severance allowance of
the equivalent of two weeks wages for each completed year of continuous service.
As regards any employee who is terminated after serving for at least ten
years the rate of calculating the severance allowance due increases to double
the rate mentioned earlier i.e. it rises to the equivalent of four weeks wages
for each completed year of continuous service.
This far what has been paid to
the plaintiff under the head severance allowance after a querry from him is a
sum of K9,461.54 only. It
represents that allowance paid at the rate of two weeks wages for each completed
year of service for a period of five years from 1995 to 2000. The plaintiff feels cheated in this regard and claims that he
was in fact supposed to be paid at the rate of four weeks’ wages for a period
of fifteen years from 1985 to 2000. In
his calculation therefore the payment he so far managed to wrestle out of the
defendant falls short of the legitimately due amount by K52,038.46 and, inter
alia, that is the sum he seeks to recover.
From what has been deponed in
the affidavits in opposition and from the contents of the various exhibits
attached, it has been argued on behalf of the defendant company that pursuant to
an agreement struck on 3rd June, 1998 between the company, as represented by a
Director, and Members of Staff (including the plaintiff), the company
subsequently paid long service awards to staff members.
It is clear from exhibit “TZN1" that the long service awards
covered all long serving employees, including the plaintiff, up to the end of
1994. The rate of payment of these
awards was one week’s pay for each completed year of work served by an
employee for the first five years and for employees who had served beyond that
period the rate then increased to two weeks pay for each of the additional
years. “TZN1" further shows
that as from 1st January, 1995 the concerns that had led to claims by employees
for the awards in question would be taken care of by the revised pension
contribution by the company from 5% to 10%.
The same exhibit also made it plain that terms and conditions of service
were not changing and that as regards pension, each employee would still be
entitled to it from the date of his initial entry into the scheme.
In this matter the defendant
company’s argument was that the payments made under the 1998 agreement in
respect of Long Service Awards should be taken to be severance allowance for the
period up to the end of 1994. For
this reason the defendant company feels that its obligation therefore remains
one of paying severance allowance from 1995 to the date of termination only and
no more and that in pressing for full severance allowance for fifteen years it
is the plaintiff who is trying to defraud the company.
I have heard learned Counsel for the two sides argue and counter argue on
the subject and as I rule I bear all their arguments in mind although I will not
repeat them here.
I have taken ample time to
study all the documents presented before me.
I have equally given lengthy and sober consideration to the arguments
advanced by both sides. I have next
tried to match all these against the material Section 35(1) herein and its First
Schedule. I am in the end, all in
all, convinced that the defendant company, in this case, is simply seeking to
evade its obligations under the new Act.
It is plain from the repealed
Employment Act, 1964, which was the law in operation at the time of the
agreement for and payment of Long Service Awards that the concept or even the
reality of severance Allowance was nowhere catered for.
There is no way therefore it can be logically or legally argued that in
agreeing to and paying Long Service Awards the defendant company was
coincidentally dealing with the subject of the then non-existent severance
I equally cannot comprehend
argument that somehow the defendant should be taken to have been complying in
advance with payment of an allowance that was going to be payable under a law
yet to be enacted. Besides, even if
it was possible to comply with legislation in advance, which it is not, the
rates and periods applicable in the case of Long Service Awards differ quite
markedly from the rates and periods covered under the schedule Section 35(1)
refers to. It then bogs the mind
how with such disparities the one payment can be said to be in lieu of the
Further than this, besides the
fact that in the employment law applicable in Malawi there was then no severance
allowance payable under the relevant Act at the time of the Long Service Awards
herein, Section 35(1) of the Employment Act, 2000 makes it clear that this
allowance is payable on termination of employment. The agreement regarding Long Service Awards was clearly
suggestive of the fact that by so receiving the Awards, employees were not
having their services terminated and starting employment afresh.
Even if Section 35(1) had existed then, in the absence of termination of
service, severance allowance could not have become due and payable.
On the other hand, however, exhibit “TZN1” also indicates that the
Awards were addressing some anomaly in the pension scheme, which anomaly from
1st January, 1995 henceforth was going to be resolved by the employer’s
increased contribution to the pension scheme.
If that payment was resolving this particular problem, I do not see how
it could now be available to accommodate severance allowance which is a
different phenomenon altogether for pension.
The fair thing to say here is
that when the defendant company was terminating the employment of the plaintiff,
under a law that was only one week old in force, it was under obligation to pay
him severance allowance in respect of his entire period of continuous service.
It is obvious that at the material time the defendant was actually
ignorant of the fact that a new obligation had thus come its way.
It is indeed so confessed in paragraph 7 of the first affidavit in
opposition, and this explains the fact that even the first K9,461.54 was only
paid more than a month after the termination and only after a demand had been
made. The impression one gets from
the scenario in this case is that since the new law sort of brings about a
burden the defendant was not aware
of before, as far as possible therefore, the defendant is trying its best to
avoid paying any more money than it has so far already done to the plaintiff,
hence the attempts to explain this allowance away through reference to Long
Service Awards and the attempts to reduce its period of liability.
I see no merit in the arguments of the defendant company and accordingly
dismiss the same as being worthless. The
period over which this allowance is due and payable is fifteen years and the
applicable rate is four weeks wages for each completed year of service.
Of course with the existing part-payment the defendant company has only
an outstanding balance of K52,038.46 to pay under this head, and this sum cannot
just be wished away.
Severance allowance under
Section 53(1) of the employment Act, 2000 is payable within seven days of the
termination of employment. In this
case termination occurred on 7th September, 2000 and so the deadline for its
payment was 14th September, 2000 as indeed argued by the plaintiff in this case.
Indicators per exhibit “GDK3” are to the effect that even the
part-payment of K9,461.54 was paid something like one month after the expiry of
this deadline. The K52,038.46 just
pronounced to be outstanding is in fact now a little more than six months
overdue. I cannot agree more with
the plaintiff that the resistance the defendant has demonstrated against this
statutorily payable allowance and the consequent in ordinate delay in payment of
the same not only amount to an infringement of the plaintiff’s right to fair
labour practices under Section 31 of the Constitution of the Republic of Malawi,
but also qualify the plaintiff to an order for interest on this severely delayed
The plaintiff’s case is to my
mind fully made out as outlined in his Originating Summons.
I accordingly declare as follows:-
(i) that the defendant has infringed the plaintiff’s right to fair labour practice under Section 31 of the Constitution, and
that the defendant is in breach of a statutory duty under
Section 35(1) of the Employment Act, 2000 in failing to pay him full
severance allowance this far.
I further order as
(i) that the defendant pay to the plaintiff the full outstanding severance allowance in the sum of K52,038.46, being 4 weeks salary for every completed year of service for 15 years after taking into account the K9,461.54 already paid herein.
(ii) that the defendant also do pay to the plaintiff interest at bank lending rate from 14th September, 2000 on the outstanding amount, the day it was last due for payment, and
(iii) that the defendant stand condemned in the costs of this action.
in Chambers this 23rd day of March, 2001 at Blantyre.