Court name
Industrial Relations Court
Case number
Misc. Matter 50 of 2001

Kamono v Cusmarcos Invest Ltd (Misc. Matter 50 of 2001) [2002] MWIRC 19 (20 May 2002);

Law report citations
Media neutral citation
[2002] MWIRC 19
Coram
Null

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 1st 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.


(b) Was there any attempt to reach a
consensus.


(c) Was there any disclosure of
information by the employer.


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


(e) 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
21st day of March 2002 at Lilongwe Industrial Relations
Court.


M.C.C. Mkandawire


CHAIRMAN