IN THE HIGH
COURT OF MALAWI

PRINCIPAL
REGISTRY

CIVIL CAUSE NO.
3828 OF 2000  

BETWEEN:

L. 
ALUFANDIKA.........................................................................PLAINTIFF

and

ENCOR  PRODUCTS 
LIMITED.............................................DEFENDANT  

CORAM:
HON. JUSTICE A.C.
CHIPETA

Kainja, of Counsel
for the Plaintiff

Nkuna, of Counsel for
the Defendant

Chaika (Mrs),
Official Interpreter

RULING

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 matter.

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 allowance.

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 other.

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 severance allowance. 

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

                  
(ii)         
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
follows:- 

                  
(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.

Pronounced in
Chambers this 23rd day of March, 2001 at Blantyre.

A.C. Chipeta

JUDGE