IN
THE INDUSTRIAL RELATIONS COURT OF MALAWI

MATTER NO. 157 OF 2001

BETWEEN:

MRS. W.P. ZAMAERE……………………………………..APPLICANT

-and-

SUCOMA
LIMITED…………………………..…………RESPONDENT

CORAM: HON.
M.C.C. MKANDAWIRE, CHAIRMAN

Mr. Joster Mwazani Chisale of
Counsel for the Applicant

Mr. Ralph Kasambara of Counsel for the Respondent

Mr. Lora – Official Interpreter

R U L I NG

Summary of Matters for decision

1. 
   Irregular execution – warrant of execution far too much –
   application through Motion to set it aside.

   
   

2. 
   Industrial Relations Court not to award costs Section 72 of the
   Labour Relations Act (LRA) – statutory collection charges – Are
   they costs?

   
   

3. 
   Application to re-hear Summary Judgment proceedings – Effect of
   Employee’s Entitlement to other payment in relation to Severance
   allowance – Section 35 of the Employment Act.

   
   

The genesis of this ruling can well be traced from the ruling of
this Court issued to the parties herein on the 30^th of
November 2001 from the Lilongwe Industrial Relations Court. In that
ruling, I had ordered as follows:-

“I therefore do not award any costs in this case. I therefore
order that the Respondent should pay out the severance allowance to
the Applicant as prayed for. The Respondent should deduct any tax
that is lawfully levied if any. I would advise here that before
they
do that, they should liaise with the Malawi Revenue Authority as to
whether such an allowance attracts any tax.”

After that ruling, the applicant’s Counsel on the 17^th
of December 2001 obtained a warrant of execution for the sum of
K1,849,124.10. This warrant of execution was issued by the Registrar
of the Industrial Relations Court. A bailiff of the High Court
immediately went to execute on the Respondent. On the 19^th
of December 2001, some two days after the warrant of execution was
issued, the respondent’s Counsel obtained before the Deputy
Registrar of the High Court an order of stay of execution of the
warrant of execution pending an appeal to the High Court. Two days
later, the Applicant obtained before the same Deputy Registrar of the
High Court an order vacating order of Stay of execution of
the 19^th
of December 2001. Thus by virtue of this order of the 21^st
of December 2001, the Applicant had authority to proceed with
execution accordingly. There is something interesting here which I
need to point out. Whilst as the Respondent had obtained a stay
order on the 19^th of December 2001a day after the order of
stay of the 19^th December, the Respondent obtained yet
another stay order now before the Chairman of the Industrial
Relations Court in Lilongwe.
Thus the Respondent had two orders of
stay from two different courts. The Deputy Registrar of High Court
having vacated his order
of stay on the 21^st of December
2001 meant that there was still an order of stay from the Industrial
Relations Court. From the totality of the facts
on hand, the bailiff
of High Court after the order of stay was vacated by the Applicant
went back to re-execute. In the course of
this re-execution, that is
when the bailiff of the High Court got word through the under Sheriff
Mr. Mlauzi that the previous day,
he had been served with an order of
stay issued by the Industrial Relations Court Chairman in Lilongwe.

It is from this background that the Respondent have brought up two
Motions which were later on consolidated into one Motion. But
in
arguing the Motion, the Respondent’s Counsel raised three important
issues these are:-

1. That the warrant of execution
   issued by the Applicant was full of irregularities.

   
   

2. That the second or
   subsequent execution was irregular and that it amounted to trespass.

   
   

3. That the
   Respondent would like to be re-heard on the issue of Severance
   allowance since there is now new evidence that the Respondent
   has an
   in service death benefit scheme that pays out more than the
   severance pay.

   
   

The
Applicant has filed in an affidavit in opposition. I shall be
referring to some of those pertinent issues as time goes.

Both Counsel referred me to a lot of legal provisions especially from
the Rules of the Supreme Court popularly known as the white
book.
There was also reference to the Legal Education and Legal
Practitioners Act in particular to the schedule, which deals with
legal practitioners (Scale and Minimum Charges) (Amendment) Rules,
1999. There was also reference to Halsbury’s Laws of England
(3^rd
Edition) Volume 34 especially the part which deals with irregular and
wrongful warrants of execution. I really found the legal gymnastics
from both Counsel very interesting and imaginative.

In the first place, let me point out on the onset that the Industrial
Relations Court has got its own Procedure Rules which have
to be
followed to the letter. Unless the IRC procedure Rules do not
specifically provide for, this Court has to seek guidance from
nowhere else but from these Rules. This case has raised some anxious
moments in my mind and I seize this as a very great opportunity
to
set down the parameters of the IRC in relation to the other Courts so
that there is no deliberate confusion in future. The IRC
has got its
own Registrar who is appointed pursuant to Section 69 of the Labour
Relation Act 16 of 1996. The day-to-day operations
of the IRC are
governed by the IRC (Procedure) Rules, 1999. In these Rules,
Registrar means the Registrar of the IRC appointed in
terms of
Section 69 (1) of the Labour Relations Act. The Registrar of the IRC
performs both administrative and judicial functions.
I have said so
because at one moment, there was a challenge in this case through
affidavits filed by the Respondent’s Counsel
that the warrant of
execution issued by the Registrar of the IRC was invalid because the
Registrar of the IRC has got no jurisdiction
in this area. Although
this issue was later on not pursued, but for the benefit of other
Court users, let me settle the matter once
and for all. Section 75
of the Labour Relations Act deals with the issue of enforcement of
orders of the IRC. It provides:

“Any decision or
order of the IRC shall have the same force and effect as any other
decision or order of a competent Court and shall
be enforceable
accordingly.”

Then
there is Rule 6 (e) of the IRC (Procedure) Rules which provides:-

“Without prejudice
to the general duty of being responsible for the administrative
function of the Court, the Registrar shall –

(e) issue
such process or documentation as may be necessary for a party to
enforce any decision or order of the Court in terms of
Section 75.”

It is pursuant to this rule that the Registrar of the IRC had
issued out a warrant of execution against the Respondent on the 17^th
of December 2001. Thus that warrant of execution was lawfully
issued. The execution of the warrant has of course to be done by
the
Sheriff of Malawi. This is the position and it should not be
deliberately misunderstood.

The next
point worth clarifying in this case is the issue of appeals against
the decision of the Industrial Relations Court. This
is covered in
Section 65 of the Labour Relations Act which provides:-

“(2) Subject to subsection (3) decisions of the Industrial
Relations Court may be appealed to the High Court on a question of
Law or
jurisdiction within thirty days of the decision being
rendered.

(3) The lodging of an appeal under subsection (2) shall not
stay the execution of an order or award of the Industrial Relations
Court, unless the Industrial Relations Court or the High Court
directs otherwise.”

It is
therefore very clear from the foregoing statutory provision that a
specific order has to be obtained from either the Industrial
Relations Court or the High Court. My understanding of this
provision and the practice that obtains elsewhere is that is can only
be the Chairperson or Deputy Chairperson of the IRC or a Judge of the
High Court in Chambers who can grant such direction. I have
again
deliberately seized this opportunity to propound the jurisprudence of
the IRC so that the Court users are not left confused.

There is one observation that I have to make in this case which needs
to be pointed out on the outset lest the confusion continues.
The
Respondent went to the High Court for a stay of execution of the
warrant issued by the Registrar of the IRC. It really puzzles
this
Court as to why the Respondent chose to go to the High Court for a
stay of execution yet the IRC has its own Registrar who deals
with
such issues. The IRC (Procedure) Rules are very clear that the
Registrar under these rules means the Registrar of the IRC appointed
pursuant to Section 69 (1) of the Labour Relations Act. For purposes
of the proper administration of matters filed in the IRC, it
should
be made very clear here that the Registrar of the High Court or his
subordinates like the Deputy or Assistant Registrar do
not come on
the scene. These judicial officers only come on the scene when
matters have been appealed to the High Court. Even if
that is the
case, such an appeal has to be dealt with in conformity with Rule 27
of the IRC (Procedure) Rules which provides:-

“An appeal in terms of Section 65 (2) shall be dealt with in
terms of Order XXXIII of the Subordinate Court Rules made under the
Courts
Act”.

It
is thus very important for Counsel to have followed the procedure of
appeal as laid down. If this practice does continue that
a warrant
issued in the IRC has to have stay obtained in the High Court before
the High Court Registrar yet there are officers in
the IRC to
entertain such applications, then there is bound to be a lot of
confusion in this Court.

The next step which the Respondent took was to obtain another order
of stay in the IRC on the 20^th of December 2001. Because
of this confusion which was of their own making, the IRC granted a
stay of execution not knowing that
the Deputy Registrar would vacate
an order of stay that he had granted a few days ago. You can thus
see for yourselves the type
of confusion which the Respondent had
created by going to this Court and later on going to that other
Court. It can really create
a mess. My advice therefore is that let
matters which are before the IRC be completely processed there.
Parties can only go to
the High Court when they are seeking a relief
which the IRC cannot grant. That would indeed harmonize the
operations of this very
young Court.

Having said that, let me now delve into the issues at hand. The
first issue concerns the tax that I had ordered in my ruling to
be
deducted if any. From the wording of my ruling of the 30^th
of November 2001, I had made it clear that the Respondent should
deduct any tax that is lawfully allowed if any on this severance
allowance. I further ordered that the Respondent should liaise with
the Malawi Revenue Authority (MRA) to seek advice as to whether
severance allowance attracts any tax. The onus therefore was on the
Respondent to iron out all these issues on tax. The Respondents
who
are ably represented by Counsel did not do that in time. Thus by the
time the Applicants had issued the warrant of execution;
they had no
option but to put a figure that was itemized in the ruling and this
is K1,849,124.10. If the Respondents were serious
minded, they could
have expedited their enquiries with MRA and thereafter advise the
Applicant. The Applicant issued out a warrant
of execution after two
weeks from the date of ruling. All this time, what were the
Respondents doing? Coming to the issue of costs,
I am aware that the
Labour Relations Act discourages award of costs in Industrial
disputes. Section 72 of the Labour Relations Act
provides:-

“(1) Subject
to subsection (2), the IRC shall not make any order as to costs.

(2) The IRC may make an order as to costs where a party fails to
attend, without good cause, any conciliation meeting convened under
this Act, or where the matter is vexatious or frivolous.”

Unlike
in the ordinary courts or common Law courts where costs follow the
event, orders for courts in the IRC are very restrictive.
There is a
special reason why costs are discouraged in the IRC and one has to
understand the evolution of Labour Law. One of the
most important
factors why costs are discouraged is that the award of costs orders
may well discourage parties and particularly individual
employees,
from approaching the IRC.

The word costs as used in the Labour Relations Act should be
construed to mean party to party costs such as attendance fees,
waiting,
trial, time spent on researching the law, receiving
instructions from client, stationery etc. These are such costs that
usually
come for assessment before the Master or Registrar. The
statutory collection charges referred to in this matter are not the
type
of costs that we are talking about. In order to buttress this,
a look at Rule 22 of the IRC (Procedure) Rules would assist to
further
elaborate that the costs we are talking about do not include
statutory collection charges. Rule 22 states:-

“(1) Costs
shall be taxed by the Registrar in accordance with the scale employed
by the High Court for the time being.

(2) Costs taxed by the Registrar shall be subject to review by the
Chairperson or Deputy Chairperson on application by one or more
of
the parties on notice to all other parties within 14 days of such
taxation.”

Thus
it is clear that if these costs are to be taxed it should indeed be
the party-to-party costs. One does not tax statutory collection
charges. I therefore find that the inclusion of the Statutory
Collection Charges is in order.

The next point for consideration is in relation to the issue of the
execution being irregular because it was for too much. I am
aware
that Counsel for the Respondent referred to a lot of Rules from the
White Book (Rules of the Supreme Court) in relation to
the procedure
and interpretation of an irregular execution. He also referred at
length to the Halsbury’s Laws of England (Third
Edition). It was
indeed very fascinating for this Court to read for itself as to what
an irregular execution is. There was heavy
debate between the two
parties as to whether the execution was irregular or wrongful. You
can therefore see for yourself as to how
legalistic these two parties
were in trying to argue their case.

I would like to stress one point here which may be of help to both
parties and also of help to other potential users of this Court.
One
of the most distinguishing features between this Court and the
ordinary courts is that this Court stresses more on equity than
being
legalistic. That is why in most jurisdictions, Industrial Relations
Courts or Labour Courts are referred to as courts of equity.
This is
indeed a very key feature of this Court. Legalism should not be the
order of the day. Thus when the two parties were deeply
involved in
a debate as to what is “irregular” or “wrongful” execution, I
found that they were being more legalistic.

It is because of this legalistic approach that matters in these
ordinary courts take ages before they can be concluded. For example,
the Respondent’s representative was advancing an argument that the
entire execution be set aside just merely because the warrant
had
included a figure that was higher than what they thought it should
have contained. If I do follow that philosophy, then this
Court
shall not achieve the goals and objectives for which it was
established. It will very soon resemble the ordinary Courts.

I in turn therefore looked at the demands of equity more than
legalism. In this first execution, the Respondents had the
responsibility
to find out from the MRA on the tax payable on the
Severance allowance which they did not accomplish until when after 17
days the
Applicant decided to enforce the decision of the Court. The
Respondent were themselves to blame. They did not utilize the
opportunity
that this Court had given them. Today they should not
come to this Court and claim that their colleagues had executed far
too much.
There is a saying which goes as follows: “He who
seeks equity should come with clean hands”. Certainly the
Respondent are not coming with clean hands here. I do not therefore
find any fairness here in setting aside the execution.
The
application on this point falls away.

The other point relates to the second execution. I take it that by
the time the bailiff of High Court went for the second time,
she was
operating on a lawful order from the Court. There have been issues
of course raised that the Respondent have a head office
in Limbe and
operations are done in Nchalo where the chattels are. I take it that
we should not be very pedantic on whether she
went to head office or
Nchalo. This is neither here nor there. The second execution had
its own misfortunes. The Respondent had
now obtained an order of
stay in the IRC in Lilongwe. It would appear that the bailiff was
not aware of this order until the Under
Sheriff spoke to her.
Immediately the Under Sheriff spoke to her about the stay from the
IRC in Lilongwe, one would expect that
her second execution should
have halted then and there. All I would say is that if at all she
went ahead in defiance of that order,
then she was operating without
any authority. The Respondent can pursue that matter with the
Sheriff of Malawi to who these bailiffs
report. But to saddle the
responsibility on the Applicant would be going a bridge too far.

Finally, there is the issue of re-hearing the matter. The Respondent
aver in their affidavit that there is new evidence that the
Respondent has an in-service death benefit scheme that pays out more
than the Severance pay. They further state that the law did
not
envisage a situation whereby the employer is supposed to pay both
death benefits and severance pay.

It is therefore their prayer that this matter on summary judgment be
re-heard and that the Court should also take into account the
statement of reply by the Respondent which would be filed.

I have studied the affidavit in support of this application to
re-hear the matter for Summary Judgment. The affidavit has raised
an
interesting point in relation to payment of Severance allowance. I
am aware that this matter on Severance allowance has been
a subject
of controversy in the industrial field.

The issue that has been raised by the Respondent therefore is very
pertinent and the Court has the duty to give a proper direction
on
this issue. I will first look at the historical background to
Severance allowance and then look at the new legislation on Severance
pay. If need arises, I will order for the re-hearing of the matter.
If not, then that will be the end of this matter.

The historical background to Severance pay in as far as statutory
entitlement to Severance pay is concerned dates back to 1976 through
the introduction of the Wages and Conditions of Employment (Severance
Pay) Order, 1976. This order was made pursuant to Section
5 of the
Regulation of Minimum Wages and Conditions of Employment Act, which
was later on amended in 1976 and 1990. In that order,
the following
points are noteworthy:

1. the order did not
   apply to public servants;

   
   

2. an employer was
   exempted from paying severance pay –

   
   

1. 
   Where an employee earned an income of more than K2,000 per annum;

   
   

2. 
   to apprentices and casual and seasonal employees;

   
   

3. 
   where the employee had been summarily dismissed;

   
   

4. 
   where compensation had been paid pursuant to the Workers
   Compensation Act;

   
   

5. 
   an employee had refused an offer of re-employment or renewal of
   contract; or

   
   

6. 
   if an employee earned a pension calculated at more than one-tenth
   of his entitlement as Severance pay subject to two provisions.

   
   

The
new Employment Act 2000 has put a new statutory provision on
Severance pay which is Section 35 of the Act. For avoidance of
confusion
I hereby reproduce the section extensio. It says:-

“(1) On
termination of contract, by mutual agreement with the employer or
unilaterally by the employer, an employee shall be entitled
to be
paid by the employer, at the time of termination, a Severance
allowance to be calculated in accordance with the first Schedule.”

In
relation to the case at hand since the claim for Severance allowance
has been lodged by the surviving wife to the deceased husband
(former
employee), it would be good to reproduce the provision of Section 35
(7) of the Employment Act which says:-

“(7) Where
the contract of employment is terminated by reasons of the death of
the employee, the severance allowance shall be paid
to the surviving
spouse of the deceased employee or, in the absence of such spouse, to
such other dependent relative as the Labour
Officer may decide.”

A dissection of Section 35 clearly shows that the Employment Act 2000
entitles an employee to be paid by the employer a severance
allowance. Basically, the Act seeks to compensate for loss of office
according
to length of service. I have thus caused a post-mortem
examination of Section 35 under the following heads so that we are
not engaged
into deliberate misunderstanding; excluded employees
termination, and the effect of payment of severance allowance on the
employees’
entitlement to other payments.

1. 
   EXCLUDED EMPLOYEES

   
   

In terms of Section 35 (6) of the Employment Act, severance allowance
is not payable where the employee, at the time of termination
of the
contract of employment-

1. was serving a
   probationary period;

   
   

2. was fairly
   dismissed for reasons related to his conduct;

   
   

3. unreasonably
   refused an offer or re-employment with one or more of the partners;
   or

   
   

4. entered, after
   dissolution of a partnership, into employment of the personal
   representative etc of the deceased employee.

   
   

In the
premises, unlike under the Wages and Conditions of Employment
(severance pay) order, severance allowance entitlement under
the
Employment Act extends in principle to-

1. public servants,
   except members of the armed forces, the prison service or the
   police;

   
   

2. apprentices; and

   
   

2. casual and
   seasonal employees.

   
   

2. TERMINATION
   

   
   

In terms of Section 35 (1) of the Employment Act, no entitlement to
severance allowance arises unless and until the contract of
employment
has been terminated either by mutual agreement or
unilaterally by the employer. Thus unilateral termination by the
employee does
not fall within the purview of Section 35 (1).

3. 
   EFFECT OF PAYMENT OF SEVERANCE ALLOWANCE ON THE EMPLOYEE’S
   ENTITLEMENT TO OTHER PAYMENTS

   
   

Section 35 (5) of the Employment Act provides that the payment of
severance allowance does not affect the employee’s entitlement,
if
any, to payment in lieu of notice or to compensatory or special award
under Section 63 of the Act. This Section therefore requires
an art
of interpretation.

Parliament, having expressly indicated that payment in lieu of
notice, compensatory award and special award are not to be affected
by the payment of severance allowance, ought to be understood that it
never intended that payment of severance allowance should not
affect
the employees’ entitlement to other payments, such as pension,
gratuity or other terminal benefits. In other words, a contract
of
employment that provide that payment of severance allowance shall
affect the employee’s entitlement to terminal benefits does
not
violate the letter and spirit of the Employment Act. What the
Employment Act has put in place is a minimum statutory requirement
on
severance allowance. It is up to the employer to make sure that
their contract of employment documents are harmonized with the
requirements of the Employment Act. This duty put on the employer is
already put in Section 69 of the Employment Act which provides:-

“(1) Every Contract of Employment entered into prior to the
coming into force of this Act shall, notwithstanding that its terms
are
not in conformity with this Act, continue to have effect until
the expiry of three months from coming into force of this Act.

2. An employer
   who is a party to a Contract of Employment to which subsection (1)
   applies shall be responsible for causing the contract
   to comply
   with this Act.

   
   

2. After the
   expiration of three months from the coming into force of this Act,
   an employer who is a party to a contract of employment
   to which
   subsection (1) applies shall not have any rights hereunder until
   subsection (2) is complied with.

   
   

2. An employee
   who is a party to a contract of employment to which subsection (1)
   applies shall, in the case of failure by the employer
   to comply
   with subsection (2), be entitled to a fair value of any service
   rendered by him to the employer as a Labour Officer
   may, on the
   matter coming to his notice, assess and certify in writing the
   amount to which the employee is entitled to under
   this subsection.

   
   

Provided that the Court may vary and set aside the certificate of
the Labour Officer and itself assess the fair value of the services
rendered by the employer.”

From
the above statutory provision, it means that contracts entered into
before the Employment Act, 2000 were given three months validity
period within which the employer was duty bound to re-organize such
contracts so that they are in conformity with the Employment
Act.
Thus if an employer did not harmonize the contract of employment
within three months after the coming into force of the Employment
Act, such an employer loses his/her rights until subsection (2) is
complied with.

The
fact of the matter therefore is this: Severance allowance under
Section 35 of the Employment Act is payable as a minimum statutory
requirement. It does not matter whether the employer has an in-house
arrangement like insurance policy of its employees. In other
words,
these other internal or in-house arrangements do not affect payment
of severance allowance. This severance allowance is payable
as an
entitlement pursuant to Section 35. But payment of other benefits
may be affected by payment of severance allowance. All
will depend
on the terms on the contract of employment.

Such
being the case, I do not think that the discovery of new evidence in
relation to the existence of an in-house policy shall have
any
bearing on the payment of severance allowance. If at all the
employee or the surviving dependants also request for payment of
these other benefits then one has to go the drawing board and
ascertain whether the employer had complied with Section 69 (2) of
the Employment Act. This Section is very important for employers
because once they do not comply with it, they will find themselves
pressurized towards a tiny corner whereby ending up making double
payments.

I
therefore order that the severance allowance should be paid as
already ordered in my previous ruling. Since there was execution,
I
order that the Sheriff fees and expenses should be paid. But to be
fair to both parties, I do order that the Sheriff fees be calculated
on such a sum which is arrived at after the deduction of any tax
payable if any. I order that this be done within 7 days from the
date hereof.

MADE this 20^th
day of February 2002.

M.C.C.
Mkandawire

CHAIRMAN