IN THE
INDUSTRIAL RELATIONS COURT OF MALAWI

MATTER NO. 50 OF 2001

BETWEEN:

M.B. KAMONO…………………………..………………….APPLICANT

-and-

CUSMARCOS INVESTMENTS LIMITED……..……..RESPONDENT

CORAM: HON.
M.C.C. Mkandawire, Chairman

Applicant – Present (unrepresented)

Mr. Likongwe of Counsel for the Respondents

George Chapalapata – Official Interpreter

J U D G M E N T

MATTERS IN ISSUE: Claim for long
service benefits from 1976-1998.

This
matter has been brought by Mr. M.B. Kamono the Applicant. The
Respondents are Messrs. Cusmarcos Investments Limited. In his
statement of claim, the applicant claims for long service benefits
from the year 1976-98. The Respondents filed in a defence. Their
defence is to the effect that the Applicant is not entitled to any
long service benefits.

The evidence from the Applicant is that he got employed as a painter
by Lustania Limited in the year 1976. He worked as a painter
very
well until 1984 when something puzzled him. He told the Court that
in 1984, he was amazed to see that his wages were paid by
Cusmarcos
Investments Limited and not Lustania Limited. Together with some
other employees he went to see one of the Directors of
Lustania
Limited by the name of Mr. A.P.A. Dacosta. They confronted Mr.
Dacosta as to what was happening. Mr. Dacosta assured all
of them
that Lustania Limited has just been transformed to Cusmarcos Limited
but that there were no changes on their status as employees.
Their
services with Cusmarcos Limited remained intact and that they had not
lost anything. With that assurance, the Applicant said
that he
continued working thinking that all was well. In the year 1998, the
Applicant said that he was amazed when he got a notice
that his
employment was terminated. He was given K1,800 as payment for long
service from 1984 to 1998. The Applicant said that
he had worked for
22 years from 1976 to 1998.

The Applicant told the Court that the Respondents merely took
advantage of its employees. He said that Lustania Limited and
Cusmarcos
Limited were and are one. To prove the point, the
Applicant tendered in Court App Ex1 the headed paper for Cusmarcos
Investments
Limited. He said that the address is the same like that
of Lustania and that the Directors are the same who are Mr. O.V.
Custodio,
Mr. A.P.A. Dacosta and Mrs. M.A. Dacosta. The Applicant
also tendered the letter of reference, which is App Ex 2. On that
letter,
the names of the Directors are also the same. In conclusion,
the Applicant said that he would have loved if he were considered for
all the 22 years of service and not only from 1984 to 1998. He
further tendered the law applicable by 1998.

The Respondents had two witnesses. The first witness was Mr.
Mathews Thawe. With due respect, Mr. Thawe had nothing relevant to
this case. The second witness was Mr. A.P.A. Dacosta. He told the
Court that he was one of the directors of Lustania Limited together
with his son in law as well as his daughter. He said that he did not
know the employees by names as such, he could not tell if the
Applicant was indeed one of the employees of Lustania Limited. The
witness further stated that when he was a partner in Lustania
Limited, he was based in Blantyre as such, he did not know those in
the Lilongwe branch where his co-director Mr. Custodio was.
All he
recalls is that at one point, he had disagreements with Mr. Custodio
and Mr. Custodio threw him out of the partnership in
Lustania
Limited. This therefore made him open his own company now known as
Cusmarcos Investments Limited.

The witness was heavily cross-examined by the Applicant. He openly
told the Court that since the change happened 18 years ago,
he could
not remember as to what he had told the Applicant together with other
employees when they came to find out about the status
of their
employment. He however said that all the former employees of
Lustania Limited know that Lustania had stopped existing.
They were
asked to find jobs and others joined his company whilst others
trekked down to Blantyre to join the existing branch of
Lustania in
Blantyre. Mr. Dacosta further said that the names of the directors
for the Respondents’ company were still the same
like those of
Lustania Limited because of one reason. He said that the
disagreement he had with Mr. Custodio was a private dispute.
It
would therefore have been shameful to throw his son-in-law away
because he had to act in a way that would not embarrass his daughter
who is married to Mr. Custodio. In re-examination, he said that the
old employees were all supposed to be paid their dues by Lustania
Limited.

I have looked at the evidence of this case as a whole. It is thus
settled as a fact that the Applicant’s services were terminated
by
the Respondents in 1998. The reason for termination in 1998 is put
as “operational reorganization”. This came to being as
a result
of fewer contracts won by the Respondents against the large labour
force that they had. In other words, this was retrenchment.

In arguing their case, the Respondent’s Counsel now and again
referred to the relevant law that was applicable at the time this
retrenchment was done. The Respondents are saying that the
termination was lawful and not only that, but that the Applicant is
not
entitled to any severance allowance since he was earning about
K2,000 per annum which bars him from entitlement to severance
allowance
applicable then.

I am aware of the law on severance allowance by 1998 and I totally
agree that the Applicant could not have benefited from the 1979
severance pay order as stipulated in the Minimum Wages and Conditions
of Employment Order. I am also agreeable that the Applicant
cannot
rely on the Employment Act of 1999, which became operational in the
year 2000. This Act has got no retrospective effect.

The approach I have however made in this case is to first look at
our Republic Constitution. By the time the Applicant’s employment
was terminated in 1998, the provisions of our 1994 Constitution were
already in full force. One of the relevant provisions here
is
Section 31 (1) which says:

“Every person shall have the right to fair and safe Labour
practices and to fair remuneration.”

This
provision is extremely fundamental when one is dealing with cases
which occurred before the new Employment Act of 1999.

I am aware that several judicial officers have said that this
Section does not offer any help as to what are fair Labour Practices.
In the case of Guwende –vs- AON Ltd
Misc. Civil Cause No. 25 of 2000, Chipeta J observed that
both the Constitution as well as the Labour Relations Act do not
offer any detailed guidance as to what
fair Labour practice is or
mean. Indeed, one would not expect to find all the meanings of the
constitutional provisions from within
the Constitution itself. In
interpreting the provisions of this Constitution, Courts should pay
regard to the provisions of Section
11 (2) (c) of the Constitution
which says:-

“In interpreting the provisions of this Constitution a Court
of Law shall –

Where applicable, have regard to current norms of public
International Law and comparable foreign case law.”

Again Section 2 (2) of the Labour Relations Act, 1996 provides:-

“This Act shall be interpreted so as to give effect to the
Constitution and the obligations of any international treaty,
including
any international Labour Convention entered into or
ratified by Malawi.”

There
are indeed so many International Labour Conventions ratified by
Malawi and I shall be referring to them in due course.

Thus this case has raised more questions than were envisaged by the
parties. The first issue that I have to settle is whether the
action
taken by the Respondents in the year 1984 could be said to be fair
Labour Practice.

The Applicant’s evidence was very impressive. He was not at all
challenged by the Respondents on the point that he was employed
by
Lustania Limited in 1976. Come 1984, the Respondent without any
consultations with employees formed Cusmarcos Limited. The formation
of this company was done behind their back of the employees. There
is evidence that the employees confronted Mr. Dacosta. But they
were
told that nothing had changed in relation to their status. I
believed Mr. Kamono on this point and it was very interesting
to note
that Mr. Dacosta could not even remember what he had told these
people. I found that he was deliberately fanning forgetfulness
yet
he knew what the truth of the matter was. The Court therefore found
that the owners of Lustania Limited were not dealing with
their
employees in good faith. The reason given by Mr. Dacosta that he was
thrown out of the partnership in Lustania hence the opening
of the
new company cannot hold water here in view of the overwhelming
evidence that is on record against them. Cusmarcos Investments
was a
mere cosmetic change. It was Lustania Limited in disguise. The
address remained the same and the directors are the same.
The reason
that Mr. Custodio remained on paper just for maintenance of family
harmony does not sound truthful in the mind of this
Court. I
therefore find that the Respondents acted in a very unfair manner by
trying to disguise as if they had formed a new company
yet they knew
very well that there were people who had worked from 1976 and
deliberately misled these people that their services
were intact.
Whilst I do agree that Cusmarcos Investments is a limited company,
but I have to approach this case with the sense
of equity. There is
no fairness with what the Respondents did. The Industrial Relations
Court stresses more on equity than legalism.
Thus the opening of
Cusmarcos in 1984 cannot be a shield today for those employees who
were left in the cold to pursue their labour
rights. The action
taken by the Respondents in 1984 was a well-calculated move in order
to run away from the services of the employees
who had worked from
1976 to 1984. That is why they did not come up in the open to inform
the employees as to what was happening.

When there are drastic changes in any institution and where these
drastic changes are done in good faith and are likely to affect
the
rights of the employees, fair labour practice requires that the
employer should act in a transparent and honest manner. What
the
Respondents did here amounted to unfair labour practice and it is a
gross breach of the labour rights of the Applicant.

After resolved that, I next move to the issue of termination of the
services of the Applicant. The reason for terminating the services
of the Applicant is put as due to “operational reasons”. The old
Employment Act that was operational by 1998 did not capture
termination on “operational reasons” precisely. The Employment
Act of 1999 has however categorically captured that in Section
57
which provides:-

“(1) The employment of an employee shall not be terminated by
an employer unless there is a valid reason for such termination
connected
with the capacity or conduct of the employee or based on
the operational requirements of
the undertaking.”

This of course cannot operate retrospectively to the events of 1998.
But one should not lose sight of the fact that by 1998, the
same
provision on fair labour practice in the Republic Constitution was
already operational. Thus this Court has to give meaning
and effect
to the Constitutional provision. To that end, the Court has now and
again sought the help of International Labour Conventions
of the ILO
which Malawi had already ratified by 1998. One such important
Convention is Convention No. 158 concerning Termination
of Employment
at the initiative of the Employer. Malawi ratified this Convention
on 1^st October 1986. Such Conventions that were ratified
before the coming into force of the 1994 Constitution were
automatically carried
forward unless inconsistent with the spirit of
our Constitution. Article 4 of this Convention provides:-

“The
employment of a worker shall not be terminated unless there is a
valid reason for such termination concerned with the capacity
or
conduct of the worker or based on operational requirements of the
undertaking, establishment or service.”

One can therefore see that Section 57 of our Employment Act is in
total conformity with the ILO Convention No. 158 Article 4 thereof.

When it comes to termination of employment on operational
requirement, what usually comes to my mind is retrenchment or
redundancies.
I would therefore look at what fair labour practice
requires an employer to do when it comes to these issues. The
defence in this
case disclosed that the Respondent laid off several
employees as a result of operational requirement. But before an
employer does
that; fair labour practice requires a lot to be done.
Thus in relation to this issue, the Court will have to look at issues
such
as:-

(a) Was there any consultation between the employer and the employee.

2. 
   Was there any attempt to reach a consensus.

   
   

2. 
   Was there any disclosure of information by the employer.

   
   

2. 
   Were the employees afforded an opportunity to make representations
   in order to mitigate the situation and did the employer respond
   to
   these representations.

   
   

2. 
   What was the selection criteria as regards those who were on the lay
   off list.

   
   

When I look at the evidence on record, I find that none of these were
done. When an employer is laying off employees, it should
not be
done without any procedural fairness. Thus with regard the way the
Applicant was laid off on operational requirement, I find
that there
was a lot of unfair labour practice by the Respondent. Thus the
Applicant’s rights in relation to fair labour practices
were
fragrantly violated. The fragrant violation of Constitutional
rights is enforceable pursuant to Section 46 (2) (4) of the
Republic
Constitution which provides:-

“(2)-Any person who claims that a fundamental right or
freedom guaranteed by this Constitution has been infringed or
threatened shall
be entitled –

(a) to make an application to a competent court to enforce or
protect such right or freedom;

(4)-A
Court referred to in Subsection (2) (a) shall have the power to award
compensation to any person whose rights or freedoms have
been
unlawfully denied or violated where it considers it to be appropriate
in the circumstances of a particular case.”

The Applicant in this case was claiming for adequate payment of what
he called long service benefits i.e. for 22 years. It however
became
more clearer during the time when evidence was given by both sides
that apart from the long service benefits as claimed there
were other
fundamental constitutional violations by the Respondents especially
in relation to the right to fair labour practices.
The Applicant is
a mere painter and might not have been very meticulous in the way he
itemized his claim. It therefore becomes
the duty of this Court to
invoke judicial activism in order to safeguard the constitutional
rights of the citizens of this country.
If courts do not employ
judicial activism in matters of this nature, then the constitutional
rights enshrined therein shall just
be reduced to an arid parchment.

I therefore order, pursuant to Section 46 (4), that the Applicant be
compensated for the violation of his rights by the Respondents.
In
coming up with the quantum of compensation, it has not been easy.
Such compensation has got no mathematical exactitude. There
are
hardly any precedents available since the jurisprudence of the
Industrial Court is just at an infant stage. I however find that
an
amount of K10,000 would be adequate compensation. I thus order that
the Respondent should pay K10,000 to the Applicant as compensation.

The money to be paid immediately.

I finally move to the issue of ex-gratia payment of K1,800.
The Applicant was initially paid K2,000 from 1984 to 1998 which is a
period of 14 years. As I have already found,
the period that the
Respondent took into account was wrong. They should have counted all
the way from 1976 to 1998 which is 22 years.
This Court does not
want to be seen as setting down a formula of ex-gratia because
that may lead to dangers since ex-gratia is merely a token of
thanks. Legally, the Applicant did not qualify for Severance pay
since he was earning more than K2,000 per
annum. But even if
ex-gratia is a token of thanks, it should be meaningful. In this
case, since the Respondent are condemned even
for the period from
1976 to 1984, I do order that they should pay another K2,000 for that
period. This amount to be paid immediately.
In total therefore, the
Respondent should pay K12,000 to the Applicant.

DELIVERED this 21^st day of March 2002 at Lilongwe
Industrial Relations Court.

M.C.C. Mkandawire

CHAIRMAN