Court name
Industrial Relations Court
Case number
Misc. Matter 57 of 2001

Kapyola & Ors. v Lonrho Motors MW Ltd (Misc. Matter 57 of 2001) [2002] MWIRC 7 (31 March 2002);

Law report citations
Media neutral citation
[2002] MWIRC 7
Coram
Null

IN THE
INDUSTRIAL RELATIONS COURT OF MALAWI


LILONGWE
REGISTRY


MATTER NO. 57
OF 2001


BETWEEN:


W. KAPYOLA &
39 OTHERS…………….……….……….APPLICANT


Against


LONRHO MOTORS
MALAWI LIMITED……….……RESPONDENT


CORAM:


 HON. M.C.C.
MKANDAWIRE, CHAIRMAN


Mr. Isaac Kambuku,
Employers’ panelist


Mr. Masasa,
Employees’ panelist


Applicants: Present,
unrepresented but assisted


by fellow
co-employees



(1) Mr. W. Kapyola


(2) Mr. B. Gondwe


(3) Mr. I. Jana


Mr. Nkuna, of Counsel for the
Respondent


Mr. Davie Mpakani, Official
Interpreter

J U D G M E N T


There are forty
Applicants in this case who have brought this matter against the
Respondent Lonrho Motors Malawi Limited. These Applicants
are
represented and assisted by three of their co-employees who are also
interested parties in this case. The three are Mr. W. Kapyola
the
first Applicant, Mr. B. Gondwe the twenty-fifth Applicant and Mr. I.
Jana the twenty-sixth Applicant. The names of all the forty
Applicants are listed on a separate sheet of paper, which has been
attached to the Applicant’s form number one, which contains
all the
skeleton details of this case. The Respondent are represented by Mr.
Nkuna of Counsel. The Applicants have brought trade
disputes which
can be summarized as follows:-



(a) Dispute on pension benefits


(b) Dispute on terminal benefits


(c) Dispute on Actuaries after the
Lilongwe office was sold.

The Applicants
therefore pray to this Court for the following relief:-



(i) 10 percent company contribution
on pension fund


(ii) Share of Actuaries after Halls
was sold Lilongwe branch only.


(iii) Three months notice instead of
one-month notice given to them.

The Respondent filed
in a response in which they denied liability. They aver that:



(i) The Applicants were each paid in
accordance with the rules of existing pension.


(ii) The notice pay paid to each one
of them was in accordance with their letters of appointment.

The Applicants were
the first to present their side of the story with three witnesses.
The witnesses were Mr. W. Kapyola, Mr. B. Gondwe
and Mr. I. Jana.
Each one of them referred to several documents plus the pension
scheme document. Their testimony was rather similar
and we have
thought it wise to present it as one.


It was common
evidence that all the Applicants were employed by Lonrho Motors
Malawi Limited and were all working for Halls Cars owned
by Lonrho.
It is again common evidence that the Applicants were employed on
divers dates. Some were employed as early as 1968, others
in the 70s,
others in the 80s and others in the late 90s. It is again common
evidence that all the forty Applicants had their services
terminated
on 5th July 1998 as a result of Halls Cars being sold off.
There are several documents tendered in Court especially by the
Respondent which
are marked Res Ex No.1. These are documents relating
to letters of appointments, letters of termination and certificates
of payment
of terminal benefits as well as notice pay. These
documents are not in dispute.


The evidence from
the Applicants was that they were panic days in 1998 due to rumours
that Halls Cars was to be sold. There was however
no concrete
information reaching them as employees of Halls Cars because no
official from the Employer’s side was coming upfront
to address
them on this worrying development. One day in the month of June 1998,
at around 3.00 p.m., Mr. Ali from the Blantyre office
who works as
Sales Manager called at the Lilongwe office with sad news that Halls
Cars was sold. Thus Mr. Ali had nothing to do with
personnel issues
and by 4.00 p.m. of that very day, letters were issued out about
termination of services and cheques were issued
to the Applicants.
After receiving the clearance certificates which contained details of
payments, that is when they discovered anomalies.
The anomalies are:-



(i) Instead of 3 months notice they
were paid one month’s salary in lieu of notice.


(ii) They were only paid 7½%
as pension contribution instead of 7½% as their contribution
plus 10% of the company’s
contributions.


(iii) They were not given any share
of the money realized from the sale of Halls Garage.

The Applicants also
contended that they were grossly mistreated by the Respondents. Most
of them had worked for the Respondent for
a lot of years. They
therefore thought that the Respondent had unfairly treated them by
not even telling them in advance about the
pending sell of Halls
Cars. They also found that the Respondent had not been transparent
with them in the way they handled the pension
issue.


The Applicants
tackled each item separately. On the issue of notice, they were
surprised to see that they had one-month notice. They
tendered into
Court several letters of termination involving other employees who
were given three months notice instead of one. They
further observed
that some of those employees who were given three months notice were
even juniors to some of the Applicants. Whilst
appreciating that some
of the letters they were tendering referred to matters that occurred
before 1998 when the Company was sold,
the Applicants however
stressed the point that these letters were enough testimony that the
Respondent were practicing double standards.
The Applicants further
gave an example of some employees whose services were terminated with
one-month notice. The employees protested
on the one-month notice.
When the Respondent found that there was growing pressure, they
rescinded their decision and instead issued
out fresh letters of
termination with three months notice instead of one. This, the
Applicants said was clear testimony that the
Respondents were not
serious minded. They were actually capitalizing on the weaknesses of
their employees; the Applicants stressed.
The letters I have been
talking about were tendered as Applicants Ex 1 (a) (b) (c), 4 (a)
(b), 5 (a) (b), 6, 7, 8 16. All these exhibits,
the Applicants
stressed showed the double standards that the Respondents were
administering.


The Applicants
further said that to their surprise, there were several employees who
got three months notice on termination yet they
had stolen from the
company or had misconducted themselves. They therefore wondered as to
why the Respondent were cruel to them yet
they had served them
honestly up to the time Halls Cars was being sold off. Was this not
injustice, they wanted to know.


The next point was
on Actuaries. The Applicants said that they did understand the term
Actuaries to mean what has been realized after
the Company Halls Cars
was sold. It therefore meant that they were entitled to a share of
the sale of Halls Cars.


On the issue of
pension, the Applicants said that as per the Pension Scheme which was
in place, the employee contributed 7½%
whilst as the company
did contribute 10%. In 1998 when the company was sold off; they only
got 7½% and they wondered what
happened to the 10% plus the
compound interest on it. The Applicants tendered the book on Pension
Scheme which is App Ex No. 2 in
particular Clause 7.7.1 on page 23.
The Applicants tendered in Court App Ex No. 15 which was a form that
indicates payment of 10%
company contribution on pension which was
paid to one of their friends who left in 1995. They therefore
wondered why this did not
apply to them. They also tendered in Court
the pension benefits booklet which is App Ex 13.


The Applicants
finally hinted on the terminal benefits that were paid to them. The
Applicants said that they were paid one week pay
for each year of
service up to 5 years completed, then 2 weeks pay from years 6-10 and
3 weeks pay above 10 years, whereas some of
their friends who had
left the service before were paid as follows:-


         
(1) 2 weeks pay for each year of
service up to 10 years.



(2) 3 weeks pay for each year of
service for over 10 years.

They therefore
wondered as to why there was such a difference in the absence of any
cogent explanation. Such was the evidence from
the Applicants.


The Respondent did
not call any witness to testify. They instead decided to rely on
affidavits of two of their senior officers who
are Mr. H.A. Mbawala
former Personnel Manager and Mr. George Austin Jaffu former trustee
of the Lonrho Group Pension Scheme. These
affidavits are marked as
Res Ex III (a) and III (b) respectively.


I am mindful of the
fact here that Rule 18 (1) (a) of the IRC Procedure rules allows
evidence on affidavits. This rule provides:-



"Without prejudice to
Section 71 of the Labour Relations Act, the IRC may permit the
parties together with or in lieu of other
evidence to –


(a) adduce evidence by way of
affidavits."

In the affidavit of
Mr. Mbawala, it is denied that the Applicants were entitled to three
months notice. Their entitlement was one-month
notice as contained in
the letters of appointments. In the affidavit of Mr. Jaffu, it is
deponed that following the termination of
their employment, all
employees under Halls Cars Limited had to withdraw from the Group
Pension Scheme in accordance with Rule 5.11.1
of the Group Pension
Scheme Rules, and that each one of them was paid pension withdrawal
benefits as outlined in Rule 5.11.1. and
that it is clear from Rule
5.11.1 that the claimants were not entitled to the employer’s
contribution on leaving the services of
the employer.


Finally, Mr. Jaffu
deponed that the claimants’ termination of service did not entitle
them anything more as the scheme was still
going on.


It is therefore
clear from these two affidavits that the Respondent are denying
liability basing on the letters of appointments and
clause 5.11.1 of
the Pension Scheme. These documents shall be put on the microscope as
we analyze the case as a whole.


We shall approach
the case in the sequence which the Applicants had followed. The first
issue is in relation to the notice pay.


We have looked at
the letters of appointments in relation to the Applicants. We however
make an observation here that some of the
letters of appointments for
some Applicants are not available. The majority are however
exhibited. These letters of appointment were
issued on different
dates and years. The letters had a clause stating that the Applicants
acceptance of the offer of employment will
be subject to the Rules
and Conditions of Service applicable as amended from time to time and
such other circulars and memoranda
as may be in force and applicable
to them.


It is clear from the
evidence on record that since employment, most of the Applicants have
been operating on these same letters of
appointments. Some of these
Applicants had risen through the ranks but it would appear that
nothing really changed on their Conditions
of Service. Ordinarily,
change in status on the job also corresponds with change of
conditions of service. For example, if one was
employed as a mere
counter salesman and later on gets elevated to the rank of Sales
Supervisor, one would expect that this promotion
would also be
accompanied with more attractive conditions of service. Such
conditions of service would, may be lead to more leave
days, just as
an example. We also observed that most of these Applicants had been
working for the Respondent for quite a very long
time. One can
therefore not comprehend that they were all still pegged at one-month
notice.


What has further
complicated the matter for the Respondent is the way they had treated
other employees when it came to termination
of services. There were
several letters of termination of services tendered in this Court. As
was already observed, some of these
terminations were based on purely
disciplinary grounds. But there were others based on similar grounds.
Others were based on incapacity.
We were very interested to look at
letters such as App Ex I (c) which was termination on the ground of
redundancy. There are also
App Ex 5 (a) and 5 (b) which are also
termination letters on the ground of redundancy.


In all these
terminations, the employees were given three months notice by the
same Respondent. What we further observed on App Ex
5 (a) and 5 (b)
was rather disturbing and very difficult to believe that such a
reputable employer like Lonrho would have been engaged
into. At
first, the Respondent had written App Ex 4 (a) and 4 (b) which only
contained one-month notice. After protests from the
concerned
employees, the Respondent changed from one-month to three months.
What a dramatic change. We found that here was an employer
who was
full of inconsistencies and full of unfair labour practice. How does
an employer change like a chameleon? Our conclusion
was very simple.
The Respondent had no real labour policy. They could deal with their
employees as it pleased them. They took advantage
of this sell out
and put the Applicants on one-month notice thinking that the whole
chapter was closed. We looked at this act by
the Respondent to have
been tantamount to unfair labour practice. This Court in looking at
unfair labour practice stresses more on
unfairness as opposed to
unlawfulness. It is concerned with practices which might be lawful
(such as lawful termination of employment)
but are deemed unfair. The
Industrial Relations Court is, accordingly, a Court of equity rather
than a Court of Law.


Thus the argument
put by the Respondent here that the terminations of the Applicants
services were based on their letters of employment
cannot hold water
here. It might have been lawful, that we do accept. But the bottom of
the matter is, was it fair? We do not think
so. Why were other
employees who were mere watchmen being given three months notice. We
have employees who had perpetrated fraud
against the Respondent who
were given three months notice. We have employees who were incapable
of performing their duties who were
given three months notice. We
have employees who had protested about one month notice and new
letters were issued out to them with
three months notice.


Here we have forty
employees who had rendered their services without any fault at all.
They were given one-month notice. This cannot
be described as fair
labour practice as enshrined in Section 31 of our Republic
Constitution. We therefore order that all the Applicants
should be
paid such an amount that would amount to three months notice. We
order that since they were already paid one-month notice,
the
calculations should only be for two months each.


We would now move to
the issue of Actuaries. We observed that the Applicants here had
missed the point. The term Actuaries is not
referring to what was
realized after the sale of Halls Cars. This is a technical term in
the field of pension. An Actuary is an expert
who advises on what
shall be paid from the pension fund. Even if the term Actuary meant
what the Applicants had understood it to
mean, we would have found
problems to appreciate why the Applicants could have deserved a
share. They were not shareholders in Halls
Cars. We therefore dismiss
this item in its entirety.


The next point to be
considered is in relation to the pension issue. The Applicants indeed
tendered a document which is an example
of an employee who was paid
10% as company contribution. There was indeed no contradiction of
this payment by the Respondent. This
document was a sign that the
Respondent had paid out its contribution to one of the employees. The
example might be only one but
it speaks for itself. It cannot
therefore be denied that the Respondent had effected such payment
before as shown on App Ex 15. This
Court has been referred to two
documents in relation to the pension issue. The first document is App
Ex No. 13 which is the Lonrho
Group Pension Scheme (Malawi)
Explanatory Booklet. The other document is the Lonrho Group Pension
Scheme (Malawi) Interim Trust Deed.
The Respondent in the affidavit
of Mr. Jaffu have heavily relied on clause 5.11.1. This clause has
been referred to in paragraphs
12, 13 and 14 respectively. It is
therefore imperative to reproduce the contents of this clause which
is headed as:



‘LEAVING SERVICE’

5.11.1 "f
a member leaves the service of an Employer before normal Retirement
Date for a reason other than ill-health (where
Rule 5.4 applies) or
retirement (where Rule 5.3 applies); he may receive in cash his
accumulated contributions plus an additional
percentage of his
accumulated contribution calculated according to the following table
----"


There is of course a
table which should not really bother us here because it is not in
issue.


We have again paid
attention to the relevant paragraph in the Explanatory notes on
pension which is Ex 13. The relevant paragraph
is paragraph 15 which
reads:-


"What
Happens if I Resign From Service?"


The answer is in the
following terms:-



"If you leave the service
of an employer you will receive a lump sum equal to a full refund of
all your own contributions to
the Scheme together with interest at
the rate of 3% per annum compound.


You will also receive an
additional percentage of your contributions plus interest, depending
on the number of years you have completed
under the scheme. The
additional percentage is as follows:-"

We note that the
table is exactly like the one under para 5.11.1 of the Pension Trust
Deed.


A look at clause
5.11.1 will reveal that this clause is covering instances whereby the
employee on his/her own volition leaves employment.
This will refer
to instances like resignation. The leaving should be at the
employee’s own volition or initiative. The booklet
further
fortifies our observation because it answers the questions as to what
happens once an employee resigns. This booklet is part
of the
information on the Pension Scheme ran by the Respondent. We found
that the application of clause 5.11.1 to the situation at
hand was
misconceived. The Applicants did not resign from service. They were
literally forced to have their services terminated as
a result of the
sell off of Halls Cars. There should thus be a distinction here.
Clause 5.11.1 was and is dealing with a situation
where the employee
resigns and consequently leaves employment. We do not think that this
clause is relevant to the current situation
that we have before us.
It was a misapplication of the clause. The Respondents did not have a
relevant clause in their Pension Scheme
and as such, decided to take
chances. The presence of App Ex 15 where an employee in 1995 was paid
both his contribution and company’s
contribution does vindicate
that the Applicants had a valid point. We therefore order that each
one of the forty Applicants be paid
such amount that would amount to
the Company’s (Respondents) contributions for the entire period
that the Applicants were on the
Pension Scheme from 1985. The quantum
for each one of them to be assessed by the Registrar of the
Industrial Relations Court.


The final issue is
in relation to calculations of terminal benefits. The evidence that
surfaced is to the effect that the Applicants
were underpaid. To
their surprise, their colleagues got a better package. For example,
they got 2 weeks pay for each year of service
up to 10 years. Then 3
weeks pay for each year of service above 10 years. An example here is
on App Ex 1 (c) of Mr. M.M. Banda whose
benefits were paid at 2 weeks
pay for each completed year up to 10 years and 3 weeks pay for each
year completed over 10 years. This
evidence was not at all
controverted.


We found that the
Respondent had double standards. They were not consistent at all in
the way they approached issues. They portrayed
such a picture that
they were in the habit of discriminating their employees. This is a
Court which stresses more on equity than
lawfulness. We found that
there was no fairness in paying some employees more and others less.
We therefore order that all the Applicants
be treated equally. They
should be paid two weeks pay for each year of service up to 10 years.
Then they should be paid three weeks
pay for each year completed
above 10 years. The Registrar to assess the amounts of course minus
what they already got.


The issue of
informing the Applicants at 3.00 p.m. and then cheques being issues
out has greatly exercised our minds. The Respondent
had no respect
for the labour rights of the Applicants. The conduct was very unfair.
They did not at all sit down with the Applicants
to explain the
situation. They had no regard at all to fair labour practices. We
wholly condemn them on this and we feel that the
awards we have made
are enough lesson already. We therefore do not make any order on this
item since it was not specifically pleaded.


DELIVERED this
------------- day of April 2002 at Lilongwe.


Signed:
--------------------------------------------------------------


M.C.C. Mkandawire


Signed:
---------------------------------------------------------------


Mr. I. Kambuku


Signed:
---------------------------------------------------------------


Mr. Masasa