IN
THE HIGH COURT OF MALAWI

PRINCIPAL
REGISTRY

CIVIL
APPEAL NUMBER 50 OF 2004

BETWEEN:

DHL
INTERNATIONAL LIMITED …………………………………
APPELLANT

AND

AUBREY
NKHATA …………………………………………………
RESPONDENT

CORAM: TWEA,
J

Kalua, of Counsel for
the Appellant

Chipembere, of Counsel
for the Respondent

Mdala, Recording
Officer

JUDGMENT

This
is an appeal from the assessment of compensation by the Chairperson
of the Industrial Relations Court.

In
this case the appellant is a former employee of the respondent. It is
no record that some matters arose within the appellant
company. The
appellant then summoned the respondent and demanded his resignation.
The respondent refused to resign on the ground
that there was no
issue to answer to. The appellant then wrote the respondent
purporting to acknowledge his resignation and making
him an offer,
without prejudice, of an ex-gratia payment. It was further stipulated
that the respondent must agree to certain terms,
including that he
must not accept employment with any of the appellants competitors for
12 months. The respondent resisted this,
until he was informed that
if he did not accept the terms and conditions of his purported
resignation, payment of his benefits
would be effected. The
respondent then accepted to resign underprotest and brought this
action before the Industrial Relations
Court.

Suffice
it to say that on the day appointed for hearing the appellant’s
Counsel did not appear. The Court granted leave for the
respondent to
prosecute his case. The Court proceeded to deliver judgment on merit.
It took into account the defence proffered
by the appellant and found
it wanting. Judgment was given in favour of the respondent. The
appellant was adjudged guilty of unfair
dismissal.

From
then onwards there had been several appeals of all colour and manner.
The parties appealed both to the High Court and the Industrial

Relations Court. this caused a lot of confusion as the learned
chairman of the Industrial Relations Court, Justice Mkandawire,
as he
then was, noted.

To
add insult to injury, on the date appointed for assessment of the
award the appellant Counsel, again, was absent. The Court assesses

the award. However, the award was such that the precise calculation
thereof depended on the parties. Foreseeably there was no agreement

on this. As a result the appellant, justifiably there are was no
agreement on this. As a result the appellant, justifiably and

sometimes unjustifiably, delayed payment, tried to renegotiate the
award, appeal or settle out of Court, and changed lawyers, all
to the
chagrin of the respondent. What is clear, however, is that the
appellant was dissatisfied with the award and that this was

compounded by conduct of its previous lawyers.

I
must point out that in this case the appellant is a big multinational
cooperation. The respondent is individual who depended on
his
employment. The Court should have borne this in mind when making
awards. There is a big power imbalance between the parties.
The
multinational Cooperation or, indeed, a financially stronger party
may justifiably delay payment while making comparison of
awards in
other jurisdictions, or unjustifiably delay, to gain time, to the
detriment of the individual. Be this as it may, at
the end of the
day, the appellant told this Court that it will appeal against the
award of compensation only. With this in mind,
I dismiss all other
attendant appeals and cross appeals on record.

The
ground of appeal now before me allows me to holistically examine the
award of compensation in the light of the Employment Act
2000 and the
Labour Relations Act, 1996.

To
begin with, this court takes cognisance of the rationale of the
aforementioned Acts. The Employment Act is-

“An
Act to establish, reinforce and regulate minimum standards of
employment with the purpose of ensuring equity necessary for

enhancing industrial peace, accelerated economic growth and social
justice and for matters connected therewith and incidental
there
to.”

On
the other hand, the Labour Relations Act is-

“An
Act to promote sound labour relations through the protection and
promotion of freedom of association, the encouragement of
effective
collective bargaining and the promotion of orderly and expeditions
dispute settlement, conducive to social justice
and economic
development.”

These
Acts are premised on our constitution which enshrines the Bill of
Rights, and in most respects domesticates the International
Labour
Instruments to which Malawi is a party. In other words, they have
changed the approach to labour relations. They oblige
all of us to
have regard to the human rights, including freedom of association,
workers participation and equity. Central to this,
is industrial
peace, advancement of social justice and economic development.
Equity entails into account. To this end the Industrial
Relations
Court which has been granted original jurisdiction over labour
disputes; section 64 of the Labour Relations Act is mandated
to
conduct trial in an informal fashion and without strictly complying
with rules of evidence otherwise applicable in civil cases;
Section
71 of the Labour Relations Act and Rule 18 of the Industrial
Relations Court (Procedure)(Rules. These provision reflect
of the
imbalance of power between the employer and employee which hitherto
existed under the common law and from the direct application
of
contractual rights.

In
the course of the hearing and also during arguments for and against
the appeal several cases were referred to. I wish to acknowledge

specifically the cases of Dr. B.S.
Chawani vs The Attorney General MSCA 18 of 2000.
This case was followed in Council of
the University of Malawi vs. Urban Mkandawire MSCA 38 OF 2003.
The case of MacPherson Nelson Magola vs
Press Corporation Limited civil cause No. 3719 of 1978.
which was followed by the lower court in this case and that of
Malawi Review Authority vs Everton Brayor Mpaso Civil Appeal 59 of
2004. Finally the case of
Ernest F. Mtingwi vs. Malawi Revenue Authority Civil Cause No. 3389
of 2004. these cases are a
illuminating as they are confusing. In my assessment of the cases I
find that they can all be distinguished.

The
case of Chawani and
those that have followed it are based on the common law approach to
employment and contractual obligations. The case of Magola
and Others were also based on the
common law but the High Court had attempted to fuse the current
Employment Act 2000 in interpreting the rights.
The Court based its
view on an English Act that has since been repealed. It is pertinent
to note that in these cases, the Courts
have not come up clearly on
how or why they ignore the current Employment Act, when computing
awards. Lastly in the case of Mtingwi
the Court relied heavily on the
interpretation of the Constitution in trying to interpret the
Employment Act. The problems raised
by these various cases is well
articulated in the case of Mpaso. It is clear from the judgment of
Chipeta, J., that the approach
of the lower court leaves much to be
desired, but he stopped short of interpreting or proffering a the
proper approach in deciding
what would be “just and equitable in
the circumstances”. The case of Maso however, leaves no doubt that
the applicable law
as far as contracts and contracts of employment
are concerned is as interpreted by the Malawi supreme Court of Appeal
in the Chawani
case.

This
however, is as far as the case authorities go. As I said earlier I
find that these cases can be distinguished. I will now attempt
to
shed some light on the proper approach. Before I go any further, I
want to acknowledge the finding of the lower court in respect
of the
intent of the new law. I had mentioned earlier that the intent of the
new law is to address the imbalance between the employer
and employee
that has existed hitherto. The lower court said: at page 3 –

“Of
course the objective of such compensation is not to make the
employee richer overnight or leave him or her poorer. At the same

time, the court should not aim at punishing the employer. What the
court will strive at is to strike a balance, which should
leave both
parties happy and feel that justice has been done.”

To
begin with, it must, at all times, be acknowledged that the new Acts
have moved away from the common law approach which is based
on
contractual rights. They are based on human rights and equity in
employment relationship. I begin with the definition of
“remuneration”
and “wages” in Section 3 of the Employment
Act.

“Remuneration”
means the wage or salary and any additional benefits, allowances or
emoluments whatsoever payable directly or
indirectly, whether in
cash or kind, by the employer to the employee and arising out of the
employee’s employment.”

On
the other hand:

“Wages
means all earnings, however designated or calculated capable of
being expressed in terms of money and fixed by mutual agreement
or
by law, which are payable by virtue of a written or unwritten
contract of employment by an employer to an employee for work
done
or to be done or for services rendered or to be rendered.”

It
should be noted that the Labour Relations Act and the Employment Act,
2000 do not define “salary” or “pay”. This notwithstanding,

these words do appear now and again in the said Acts. The General
Interpretation Act, too does not define “salary” or “pay”.

The only conclusion that one can draw from this is that “salary and
“pay” bear the extended meaning of “remuneration”
and “wages”
and that these words are largely. Where they are used in conjunction;
for example, Section 31 (i) (e) and 34 (3)
of the Employment Act,
the Court must endeavour to give the intended meaning. In this
respect, it is important to have regard to
Section 69 of Employment
Act which provides for transition. It is clear from this section that
the duty to make a contract, that
existed before the new Act,
confirmable lies on the employer. In case of default the employer
loses his or her rights, but not
the employee. It was never the
intent of Parliament that there be two regimes of labour laws. This
is clear from Section 2 of the
employment Act, which stipulates that
the Act applies to the private sector and Government and any public
authority or enterprise.
The only exception being Police and Prison
Services and the Malawi Defence Forces. The Court must therefore,
harmonise the shortcomings
in the new law and give effect to the
intent of Parliament in order to enhance industrial peace, social
justice, accelerant economic
growth and development and promote
orderly and expeditions settlement of disputes.

It
is pertinent to note that a contract of employment may be terminated
according to Section 27 by notice from either party. The
notice
periods are stipulated in Section 29. this notwithstanding, either
party is allowed to waive the right to notice of termination
under
section 30 (1).

Section
35 of the employment Act stipulates that where the employment is
terminated by mutual agreement or unilaterally by the employer,
the
employee is entitled to receive severance allowance in accordance
with the First Schedule of the said Act. Under Section 35
(5) payment
of severance allowance is payable notwithstanding payment of notice
pay under Section 30 or compensatory or special
awards under section
63 subject to subsection 6.

In
the present case therefore the respondent was entitled to receive
notice pay, where he did not serve any notice period, and also,
he
was supposed to receive severance allowance in accordance with
section 35 (1). Such payments are not ex-gratia as the appellant
put
it. He is entitled to them according to the law.

Further,
the lower court found that the appellant was liable for unfair
dismissal. The Employment Act in Section 63 provides specific

remedies for unfair dismissal. The said remedies may stand alone or
together. These are reinstatement, reintegration or an award
of
compensation. Subsection 2 enjoins the Court to first consider the
award of reinstatement or reintegration subject to some stated

conditions before considering the award of compensation. In the
present case the Court did not make any specific finding as to
why
the remedies were not appropriate. It should have done so.

I
have considered the approach of the lower court to the award if
compensation. I noted that the approach was not properly articulated.

The proper approach is as espoused by this court in Mpaso’s case.
Section 65 (4)requires the court to make an award of compensation

that is “just and equitable in the circumstances”. When making
such a decision it must take into account three factors:-

• Loss
  sustained by the employee consequent upon dismissal;

• 
  Whether the loss can be
  attributed to the action of employer; and
  

• The
  extent of the employees’ contribution to the dismissal.

Subsection
5 therefore gives the mandatory minimum that the court may award.
Depending on the findings of the court in respect of
the three above
factors, if may adjust the scale upwards in respect subsection 5.

I
bear in mind the findings of my brother Judge in Mpaso’s case where
the interpretation of section 63 (5) was raised. While I
agree with
the Judge’s view that as long as the Curt does not make an order
below what is stipulated in the said subsection,
then the order is
not necessarily wrong. I hasten to say, however, that whenever the
Court is exercising its discretion to move
away from the minimum
threshold, it must give reasons. The decision of the Court should not
be arbitrary at all. It is not open
to the Court to award any sum as
it wants. The Court must award such sums as would, by law, be
allowed. It should be clear, on
the record, to the employee,
employers and all why the Court decided to enhance the award from the
minimum stipulated in Section
65 (5).

In
the present case, the lower court followed the Magola
case and some English case authorities.
It listed several heads under which compensation may be awarded.
These included immediate
loss of salary, loss of fringe benefits,
house allowance, utilities, mobile phones, guard allowances, pension
contributions and
future earnings. From a glance, these heads reveal
that the Court misled itself on this issue.

It
is clear that the splitting of the head ignores the basic tenets of
the definition of “remuneration” and “wages” herein
before
referred. Had the trial Court directed its mind to the said
definitions, it would have found that such earnings or allowance
are
included in “remuneration” or “wages”. They should not be
treated separately. The proper approach therefore is that
“all
earnings”, in the wider sense of the definition of “remuneration”
or “wages” that accrue to the employee directly
or indirectly
from the employer which are, or capable of, being expressed in terms
of money are calculable as “wages” in accordance
to the First
Schedule, and as “pay” in section 63 (5) of the Employment Act.
As, I said in the case of C. Malunga vs
Air Malawi Limited Civil Cause Number 1194 of 2002,
the employer and employee must agree on what can be computed as cash
directly or indirectly.

In
the present case I have considered the circumstances of the case. I
find that the respondent did not contribute to the dismissal
in
anyway. All he did was to insist on proper and consultative
management when the company’s returns showed a decline. Further
I
find that the loss sustained by the respondent can all attribute to
the actions of the employer. The respondent was treated in
a very
high handed manner, humiliated, and unjustifiably, and at no
advantage to himself at all, stopped from engaging in similar

employment for 12 months. It is common knowledge that the more a
person stays out of employment, especially at the age of the
respondent, and is forced to claim his or her rights in the court,
the more difficult it is to secure alternative employment. I
will,
therefore, take this into account.

In
the present case the respondent had been in the employ of the
appellant for slightly over five years. It is my view, that unlike

the requirement of the Fist Schedule, that one must have served
continuously for a complete year, section 65 (5) has no such
requirement.
The computation of his compensation would therefore, be
under section 65 (5) (b); “two weeks pay for each year of service
for
an employee who has served for more than five years but not more
than ten year.”

Let
me make two other clarifications. In this case, and others on which
the award in this case was based, there was an award of
“immediate
loss”. In my view this is not allowed under the law as it stands.
An employee is entitled, on termination, to notice
pay and severance
allowance, which payments are statutory and not discretionary. Such
payments must be effected within seven days
in accordance with
section 53 (1) of the Employment Act. It is clear that the law did
not intend an employee should suffer unnecessary
financial hardships.
An award of “immediate loss” therefore, is not part of our law.
Further this court criticized award of
“future earnings” in the
case of Mpaso.
Clearly this is not part of our law as it stands

In
the final analysis therefore, I set aside the award made by the lower
court. I substitute therefore the following order-

that
the respondent is entitled to payment in lieu of notice. Such
payment is calculable according to meaning in section 30 of
the
Employment Act and also as interpret in the case of C.
Malunga vs Air Malawi Limited, Civil Cause Number 1194 of 2002.
That if the notice pay that he received was only in respect of the
pay cheque, then all other benefits capable is being expressed
in
cash, which were excluded, are calculable and payable.

that
the respondent is entitled to severance allowance at two weeks wages
each. This will be calculable according to the finding
by Kapanda,
J., in the case of E.K. Thomson vs
Leyland Daf (Malawi) Limited, Civil Cause Number 919 of 2003.
That is that he is entitled to two weeks wages for each completed
year seriatim. In that case my brother Judge agreed with the

Chairperson of the Industrial Relations Court that the final year is
not a multiplier. Be this as it may wages must be calculable

according to the definition of “wage” in the Employment Act.

that
the respondent is entitled to his pension contributions plus 10% of
the appellants contributions in accordance with the conditions
of
service: APEX 12.

That
the respondent is entitled to compensation for unfair dismissal. As
I said earlier, the respondent was in his sixth year
of service. He
is entitled to 2 week pay for each year of service in accordance
with section 63 (5) (b). the pay is calculable
in accordance with
the definition of “remuneration” in the Employment Act. It
shall, again be paid for each year seriatim.
I do not find, in this
respect, any reason from departing from the finding inThomson’s
case (supra).

Lastly
I have considered the factors that the Court has to take into
account when awarding compensation. In my view, the respondent
did
not contribute to the dismissal and all the loss suffered was as a
result of the appellant’s action. The respondent acted
reasonably
when he called on his superior to take a consultative or inclusive
approach in combat the Company’s decline in earnings.
He was
victimized for that. He was treated in a high handed manner,
humiliated and, at no benefit to him, forced not to take
up
employment of a similar nature for 12 months. The conduct of the
appellant was not only oppressive but intended to frustrate
and
intimidate those who would wish to advocate for workers
participation in improving performance in the industry. It is my

view that victimizing employees for standing up to incompetent
management is contrary to section 57 (3) of the Employment Act.
In
this respect therefore, I will make an additional award to the
respondent for the 12months he was forced not to be in comparative

employment in accordance with section 63 (5) of Employment Act. I
award the respondent a further 2 weeks pay for each month he
was
kept out of employment – that is 12 months.

All
monies so far paid to the respondent shall, after calculations, be
deductible. The appellant and respondent should calculate
and agree
on the sums due within 21days of this order. Should they fail the
award will be assessed by the Registrar of the High
Court.

The
appellant is condemned to costs.

Pronounced
in Chambers
this 17^th
day of October, 2006 at Blantyre.

E.B.
Twea

JUDGE