Kasuma v Micro Loan Foundation Ltd (IRC MATTER 610 of 2016) [2025] MWHC 7 (3 February 2025)

THE MALAWI JUDICIARY IN THE INDUSTRIAL RELATIONS COURT PRINCIPAL REGISTRY MATTER NO. IRC 610 OF 2016 In the dispute between: AGNES KASUMA............ccccccsesecceccssccesceeeescecsseesessesseseesesssseenens APPLICANT -AND- MICROLOAN FOUNDATION LIMITED. ............c.ccccececscceessescecees RESPONDENT CORAM: TAMANDA C. NYIMBA _ : Deputy Chairperson Pilirani Chuma : Counsel for the Applicant Lughano. Mwabutwa : Counsel for the Respondent Rose Msimuko : Court Clerk JUDGMENT 1 INTRODUCTION 1.1 1.2 The applicant in this action charges that she was unfairly dismissed by the respondent. As per IRC Form 1, she is claiming, among other reliefs, compensation for unfair dismissal, severance pay and recalculation of her terminal benefits. The respondent denies the applicant’s claim by chiefly contending that it did not dismiss the applicant as her contract of employment was terminated by mutual agreement following her underperformance. To state the obvious, the matter reached the defining moment of a hearing because attempts by the parties to settle the issues at a pre-hearing conference stage, before the Assistant Registrar of this Court, yielded nought. 2 THE FACTUAL MATRIX 2.1 At the hearing of the matter, the applicant gave evidence on her own behalf. On the other hand, Mr. Ted Chanza, the respondent’s Head of Shared Services, testified on behalf of the respondent. In that regard, the incontestably relevant facts of this case — as elicited from the applicant’s evidence-in-chief, cross- examination and re-examination; and from the respondent’s witness’s evidence-in-chief, cross-examination and re-examination — are as follows: 1 2.2 2.3 2.4 2.5 2.6 The respondent is an organisation which provides loans and ongoing business and financial literacy training to clients across its branches’. The respondent’s operations in Malawi focus on serving rural women in under-reached communities’. With a large proportion of its clients engaging in farming, the respondent also offers agricultural and irrigation loans’. The applicant was in the employ of the respondent from January 2010 to May 2016. She rose to the position of Regional Manager. During the subsistence of her employment, the respondent on 30" May 2015 and on 3 December 2015 issued warning letters to the applicant which were titled “O/ 20/5 94 Performance — Final Warning’’’. The respondent alleged poor performance by the applicant as justification for both final warning letters. The first “Ol 2015 Performance — Final Warning” \etter dated 30" May 2015 came after the applicant had submitted to the respondent’s Chief Executive Officer (CEO) a report dated 8" February 2015 titled “Update Report on Floods in Southern Part of Malawi and Damage Caused” wherein she attributed the poor performance primarily to the fact that most parts of the Southern Region received heavy rains which led to flooding resulting in loss of life, loss of property including crops and houses as well as displacement of the respondent’s clients. The applicant went on to explain in the report that loan repayments had been affected as it was difficult to reach some of the respondent’s clients who were displaced such that respondent’s officers were unable to access or visit the clients due to bad road network exacerbated by the flooding to the extent that the officers were required to cross rivers. It was further stated in the applicant’s report that the situation led to businesses slowing down and, in some cases, halting owing to the circumstances in which the respondent’s clients found themselves in. At the time the applicant received the second “Q/ 20/5 Performance — Final Warning” letter dated 3‘ December 2015, most of the respondent’s clients had https: //www.microloanfoundation.org.uk/our-work/where-we-work/malawi/ (Accessed 23"¢ January 2025). 2 As above. 3 As above. 4 Exhibits TC1 and AK9 which are one and the same document. > Exhibit AK8. 2 2.7 2.8 2.9 2.10 not yet recovered from the impact of the floods and were still in arrears. Around this same period, the respondent distributed Tilime loans in Mulanje, Phalombe and Thyolo districts. Tilime loans are agricultural input loans disbursed by the respondent to its clients on top of business loans. Disbursement of the Tilime loans was followed by the applicant’s supervision visits in the three mentioned districts where she observed areas that were hit by dry spell. To make matters worse, the dry weather was hot on the heels of planting such that crops in some fields wilted permanently. Following the applicant’s supervision visits as part of her superintendence in the relevant districts, she submitted a report to the respondent’s Operations Manager (copying the respondent’s Acting CEO) detailing the status of the Tilime Groups in the Mulanje branch. The applicant’s said report was replete with vivid photographs capturing the pitiful state of the crops in the respondent’s clients’ fields that had been affected by the elements, as it were. Subsequent to the foregoing occurrences, there transpired a sequence of events in the following order: On Friday 29" April 2016, the applicant convened a meeting with her staff in the Southern Region. After the regional meeting, one Corrie Mulder sought a one-on-one meeting with the applicant. Corrie Moulder was not an employee of the respondent but a Human Resource and Operations Management Consultant (hereinafter “HR Consultant”) engaged by the respondent. The HR Consultant termed the meeting he had with the applicant a performance review. In the said performance review meeting, which was brief, the HR Consultant informed the applicant that he had no option but to fire her. He further told the applicant that he would send her a letter through email. The communication did not come through. The applicant prompted the HR Consultant, through a phone call, on 3" May 2016 whereon the letter® the HR Consultant alluded to was finally emailed to the applicant. It was dated 28" April 2016 and titled “Review of Performance Regional Manager Southern Region”. J shall henceforward refer to the letter 6 Exhibit AKS1. 2.11 emailed to the applicant by the HR Consultant on 3"! May 2016 as “the first 28" April letter”. The first 28" April \etter contained a summary of the applicant’s performance review and findings thereof but the same had not been priorly discussed with the applicant during the 29" April 2016 meeting the applicant had with the HR Consultant. The first 28 April letter also contained three options the respondent’s management apparently wanted the applicant to consider or decide on. To aid a complete appreciation of the first 28” April letter, 1 quote hereunder its most consequential parts: “4. The overall findings of these sources of review are: a. You have failed to achieve set targets. b. A long-term stakeholder review indicated a pattern of poor performance that repeated itself. c. A perceived unwillingness to heed advice, guidance and developmental inputs. 5. You are a long-standing member of staff who were afforded promotional and developmental opportunities, which benefitted you greatly. We acknowledge that and your contribution. A management principle, Peter’s principle, states that members are often promoted to one level above their level of competence. 6. It is the opinion of MLF that this is true about you. MLF is a rapidly changing entity and challenges, that requires staff with the ability to respond in kind. You have shown a lack of capacity to meet these changes and adapt to the new business environment. 7. Your appointment as Regional Manager is suspended with immediate effect. There will be restructuring of regions and your current Region will be integrated into a new region, under a new Regional Manager Two RM Positions are scrapped in this process. Due to your status and long service, Management offers you the following options to consider: a. Legal opinion. In terms of Malawi Labor Law, you are entitled to a hearing where the evidence against you can be heard, and cross examined by you, while you can present evidence to refute the charges. An invitation to a hearing is attached, if you choose to 4 exercise your rights. The hearing will take place on 3 May 2016 in the Central Region’s managers Office (@ 2 pm. Corrie Mulder will preside with Mateo Zanetic as panel member and an HR administrator as scribe. Documentary evidence will be presented from performance reports and MLF will call Andre Harriman as witness. You have the right to call your own witnesses, if they are MLF employs they will be paid travel and accommodation allowances by the company. b. Option 2. You can negotiate mutually agreed exit from MLF. The terms will cover the following (MLF POSITION AS OPENING OFFER). i. Two months’ pay with benefits, to afford you time to seek alternative employment. ii. Normal exit payment as per Employee Manual and conditions of service. iii. Final payment due on your car for July will be written off and ownership transferred to you. iv. Staff loans, if any May be negotiated, but you will need to reimburse MLF. v. Clean reference to any new employer. The exit agreement will be subject to confidentiality between MIF and you. vi. On acceptance of such an agreement, you prejudice your rights and accept the agreement as final settlement. c. Option 3 Continued employment. You can accept a position as senior branch manager for the Northern Zone. i. Salary reduced to Senior Branch Manager. ii. Relocation to Mzuzu. iii. | Reporting line directly to CEO. iv. You will control a number of branches and one satellite, to be confirmed. 2.12 2.13 v. Manage arrears collection (written off loans) team for MEF. vi. Accepting this on a voluntary basis with prejudice of rights accepting this as a final option. vii. | Continued use of your car and reimbursement of fuel when travelling as per rates used by MLF. No maintenance supports. Alternatively transport will be arranged by motorbike, public transport or pool vehicles. 8. We thank you for your contribution to MLF and wishes you well in making your decision. CORRIE MULDER HR AND OPERATIONS MANAGEMENT CONSULTANT”. (sic) Since this first 28” April letter made reference to a hearing that would take place on 3’ May 2016 which happened to be the day the applicant actually received the first 28 April letter notifying her of the said hearing, the applicant proceeded to ring the HR Consultant for clarification on this state of affairs. Then, on 4 May 2016, the HR Consultant emailed the applicant another letter dated 28" April 2016 (hereinafter referred to as “the second 28" April letter”’) again titled “Review of Performance Regional Manager Southern Region”” whose contents, I observe, seem effectively identical to those in the first 28” April letter. The most noticeable or major differences in the two letters are, first, that the first 28 April letter contained 3 options for the applicant’s consideration which options did not appear in the second 28" April letter. Secondly, the second 28" April letter contained tabulated information about client growth in the applicant’s districts or region of superintendence which details were not part of the first 28” April letter. Significantly, when the HR Consultant emailed the applicant the second 28 April letter, he did not indicate that the first 28" April letter had been withdrawn. 7 Exhibit AKS2. 2.14 2.15 2.16 On 5 May 2016, the applicant received another email from the HR Consultant with an attachment® named “MLF Notification of Hearing AGNES KASUMA” which contained a document titled “Notification of Hearing”. Within the “Notification of Hearing” was a section titled “Charges” under which appeared “Charge 1” as well as what was captured as “Alternative Charge to Charge 1”. For reasons that will become clear later in this judgment, it is important that I set out the contents of the two charges. They read thus: “ Charge 1: Gross Misconduct in that the accused failed to adhere to 4 warning letters as referenced below to improve PAR rating to below the accepted norm of 5%. After years of service there is lack of capacity to serve the evolving microfinance industry in Malawi. You were negligent in performing her duties in managing her staff to achieve goals and objectives. A summary of these failings are listed below [.....].” (sic) “Alternative Charge to Charge 1: Misconduct in that the accused failed to perform his duties in a satisfactory manner and disregarded operational procedures by omitting to manage PAR as prescribed (HR Policy Section 1.8.2 subpar b and j).” (sic) On the day of the purported hearing on 13 May 2016, it emerged that members of the disciplinary panel comprised of two individuals, namely, the HR Consultant and a lawyer from the now defunct Indebank (henceforward referred to as “the Indebank lawyer”). Both the HR Consultant and the lawyer were not employees of the respondent. At the commencement of the so-called disciplinary hearing and bearing in mind that the applicant was by this time in possession of the first 28 April letter which letter required her to make a choice from three options, the applicant informed the two panellists that she thought her presence at the hearing was simply to state the option she had elected out of the three suggested to her by the respondent’s Management. 8 Exhibit AKS3. 2.17 2.18 2.19 2.20 2.21 The applicant felt that there was no need to conduct a disciplinary hearing in light of the decisions that had already been made by the respondent in terms of the options she was supposed to choose from as communicated to her by the HR Consultant in the first 28” April letter. Notwithstanding the applicant’s reluctance to be subjected to the disciplinary hearing, the two panellists insisted and had their way that the hearing be proceeded with. Then, at some point before the hearing concluded, the applicant produced the first 28" April letter and gave it to the Indebank lawyer. Upon seeing the said first 28" April letter, the Indebank lawyer remarked that its contents had complicated the disciplinary hearing and that it (the first 28 April letter) was not a good one. Consequently, the hearing ended in suspense as the applicant maintained that the respondent had already decided her fate. Moreover, out of the three options offered to the applicant before the hearing had taken place, the applicant told the two panellists that she saw option number 2 in the first 28” April letter as the option she could feasibly go for albeit resignedly. That, at any rate, the respondent had, prior to the disciplinary hearing, lined up options including option number 2 whose terms the applicant had not agreed to much less been part and parcel of any negotiations wherefrom option number 2 sprung. Option number 2 was the “mutual release” or “exit agreement” and I shall henceforth interchangeably refer to it as such. On hearing the foregoing applicant’s sentiments, the panellists asked the applicant to give them time to discuss the issue further and that they be allowed to communicate to her afterwards. With that, the meeting ended in suspense without any resolution. Subsequently, the HR Consultant travelled abroad to South Africa. Therefrom, the HR Consultant started placing frequent phone calls to the applicant to force her to decide on the three options she was offered before the abortive disciplinary hearing. With the amount of pressure bearing down on her through the incessant calls she was getting from HR Consultant, the applicant caved in by opting for the exit agreement for her peace of mind because the processes she was being put through were psychologically tormenting her. Her 2.22 2.23 2.24 actual words were that she felt like she was in a tug of war and could no longer endure the torment. The applicant proceeded to sign the mutual release document or exit agreement on 18" May 2016” at the office of the Indebank lawyer though she, earlier to affixing her signature, vainly protested to the HR Consultant about calculations in an attachment to the mutual release document which had an account of her terminal benefits that had not been agreed on. For reasons which will become clear, I see no utility in reproducing the salient terms of the mutual release document. Following termination of her employment, the applicant sought intervention of the District Labour Office in Blantyre as evidenced by various letters'° written to the respondent by the said office. The respondent, through its lawyers, responded'! to the demands by the District Labour Office after which the applicant escalated her grievance to this Court by commencing the action herein. This concludes the facts germane to the resolution of this action. 3 THE PARTIES ARGUMENTS AND SUBMISSIONS 3.1 I express my profound gratitude to Counsel for their helpful written submissions. I must also highlight that though I view this matter as one with little or no major factual disputes, arguments were put forward by both Counsel in a number of ways. The parties should stand assured that I have taken all of that into account, albeit that in the interests of some semblance of brevity in expressing my reasons for reaching the conclusions which I have, I shall not refer to them all in the body of this judgment. 4 THE APPLICABLE LAW 4.1 affirmative, ! This being a civil action the burden of proof is on the party who asserts the ? namely the applicant. As regards the standard of proof in civil cases, the same is on a balance of probabilities. As to meaning of “balance of probabilities”, this is best exemplified by interrogating the difference between ° Exhibits TC4 and AK2 (Mutual Release or Exit Agreement) which are one and the same. 10 Exhibits AK10 and AK11. 1 Exhibits AK12 and AK13. “. Chipiliro Banda v. Southern Bottlers Ltd [2012] MLR 53 (HC). 9 succeeding on the balance of probabilities and failing on the balance of probabilities. In Miller v. Minister of Pensions? Denning J said: "Tf the evidence is such that the tribunal can say 'we think it more probable than not' the burden is discharged, but if the probabilities are equal it is ” not. 42 To articulate the foregoing statement in simple percentage terms, if a tribunal concludes that it is 50 (fifty) percent likely that the applicant's version is true or right, then the applicant loses. Contrastingly, if the tribunal comes to the conclusion that it is 51 (fifty-one) percent likely that the applicant’s version is true or right, then the applicant carries the day. 43 Section 57 (1) of the Employment Act provides that 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 requirement of the undertaking. Section 57 (2) of the Employment Act provides that the employment of an employee shall not be terminated for reasons connected with his capacity or conduct before the employee is provided an opportunity to defend himself against the allegations made, unless the employer cannot reasonably be expected to provide the opportunity. 44 lundertake to cite — where relevant — the rest of the applicable statutory and case law in appropriate places in the “Analysis-and-Disposal” segment of this judgment. 5 ISSUES FOR DETERMINATION 5.1 As I factually, evidentially and legally appreciate the matter herein, the principal issues this Court must resolve are: " Whether or not the circumstances under which termination of the applicant’s employment contract occurred amount to unfair dismissal or, cast differently and in specific terms, whether the mutual release or 13[1947] 2 All ER 372. 10 5.2 exit agreement which led to the termination of the applicant’s employment was reached under duress that it ought to be vitiated and applicant's dismissal be treated as an unfair one, and; " Whether, if the threshold question is responded to in the affirmative, the applicant is entitled to the reliefs she seeks. The threshold question may generate sub questions and this Court shall answer them all. 6 ANALYSIS AND DISPOSAL 6.1 6.2 6.3 6.4 It is this Court’s custom not to place parties in what I call “gratuitous suspense” respecting the decision this Court finally reaches. Accordingly, for reasons I shall be setting out hereunder, it is my judgment — on a preponderance of probabilities — that the applicant’s claim for unfair dismissal must succeed. The applicant carries the day following this Court’s careful scrutiny of the questions formulated formerly in the “Jssues-for- Determination” section of this judgment and, importantly, in light of the relevant facts and applicable law. I now proceed to deploy my reasoning. " Whether or not the circumstances under which termination of the applicant’s employment contract occurred amount to unfair dismissal or, cast differently and in specific terms, whether the mutual release or exit agreement which led to the termination of the applicant’s employment was reached under duress that it ought to be vitiated and applicant's dismissal be treated as an unfair one; Given that the arguments advanced by the applicant, through learned Counsel Chuma, are in harmony with my standpoints in deciding on the threshold question, I shall for purposes of expediency only present the respondent’s arguments as presented by learned Counsel Mwabutwa. They are as follows: He contends that the respondent did not unfairly dismiss the applicant by stating, firstly, that the applicant was in fact not dismissed at all because there ll 6.5 6.6 6.7 6.8 is clear evidence that the respondent never terminated the employment contract between the parties. He cites absence of a termination letter from the respondent to the applicant as lending support to the respondent’s contention that the separation between the parties was amicably reached. Besides, argued Counsel Mwabutwa, the exit agreement to which the parties appended their signatures is succinct and further that it was in evidence that the applicant was never coerced into signing the said agreement. That the applicant signed the exit agreement terminating the contract five days after the respondent conducted a disciplinary hearing. He further asserted that even if the alleged conduct of the respondent as an employer were to be construed as dismissal, the respondent complied with section 57 of the Employment Act and therefore the dismissal was not unfair since the respondent acted with justice, equity and good faith as it warned the applicant on her underperformance and gave her ample time to improve on her performance to no effect. It is Counsel Mwabutwa’s final contention that the applicant was accorded an opportunity to defend herself at a hearing which was properly conducted and from which the exit agreement to terminate the contract was thrashed out. That furthermore, the applicant had an option to internally appeal against the decision of the disciplinary committee in keeping with clause 1.8.4 (e) of the respondent’s Human Resource Policy but the applicant opted not to exercise that right. In that regard, the respondent’s submission is that the applicant was in agreement with the arrangement to resolve the matter through the agreement that was entered into by the parties. These were the respondent’s arguments. In view of the fact that the parties’ primary quarrel revolves around the validity of the exit agreement signed by the parties, I begin reacting to the arguments which are connected to this point by making general platitudinous statements — for which no authority need not be cited — about the validity of a contract or an agreement as well as some associated points relevant to agreements that are hashed out in the context of industrial relations sphere. 12 6.9 Firstly, a contract is simply ‘a legally enforceable agreement’. It is where parties to the agreement, having had distinct and perhaps contradictory objectives, reconcile their differences in a mutually beneficial arrangement which both sides believe to be binding and treat as such. The assumption is that all contracting parties have entered the agreement voluntarily fully aware of their rights to the agreement and thus have agreed in good faith with full consent to create binding relations based on the agreement. 6.10 Secondly, it is mundane to state that in an employment agreement, the employee is considered vulnerable to coercion, undue influence or misrepresentation because the employee often has significantly less bargaining power compared to the employer. The imbalance in the employee-employer relationship may potentially lead to situations where the vulnerable employee may have to accept unfavorable terms as a result of desperation to have the job at whatever cost, lack of understanding of his or her rights, or fear of losing employment opportunities if he or she negotiates vigorously. 6.11 Obviously, the inequality of bargaining power equally applies to situations where the employee and employer embark on negotiations leading to a separation or exit agreement. What is further tolerably clear is that the employer wields control over the employee owing to the power of employment and compensation or money the employer can withhold from the employee. 6.12 And so, among the purposes of labour or employment law is protection of employees against the coercive control that may be visited on them by overbearing, careless and powerful employers. Indeed, it has been authoritatively pointed out that “[l]abour rights provide a means of bridging the inequality of power between the employer and the employee and thus ensure that employees are not exploited.”'* 6.13 And so, a contract or an agreement will be vitiated if a party can show that there was no true consent in forming the agreement. Duress, undue influence or misrepresentation are some of the factors that, if proven, can vitiate an agreement. Again, platitudinously put, if a contract is entered into under duress, it becomes voidable, meaning the party who was coerced can choose to 14 Danwood M. Chirwa (2011) Human Rights Under the Malawian Constitution p.301. 13 set aside the illegitimate agreement and not be bound by its terms, as the pressure exerted on them negated their ability to freely consent to the agreement. Essentially, the contract is considered invalid due to the lack of genuine agreement. 6.14 In the matter under consideration, the applicant asserts that the agreement which was used by the respondent as a basis to terminate her services is unenforceable having been procured under economic duress. Economic duress arises where one party uses his or her superior economic power in an illegitimate way so as to coerce the other contracting party to agree to a particular set of terms!’. The question of whether or not termination was by voluntary mutual release or exit agreement (no dismissal) or caused by pressure from the employer forcing the employee to consent to the purported voluntary mutual release or exit agreement (dismissal) is essentially one of fact. 6.15 In the English’® case of Pao On vy. Lau Yiu Long'’, Lord Scarman gave guidance as to the matters which might indicate the presence of duress, to wit, whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly coerced, he did or did not have an alternative course open to him such as an adequate legal remedy; whether he was independently advised; and whether after entering the contract he took steps to avoid it. 6.16 Back home, in the case of Mulli Brothers Limited v. Malawi Savings Bank'®, Mwaungulu JA, a dissenter in the judgment, said the following about economic duress in an extract occurring at p.25: “The rationale of the doctrine of economic duress is that the law will not give effect to an apparent consent which was induced by pressure exercised upon one party by another party when the law regards that pressure as illegitimate: Universe Tankships Inc of Monrovia v. International Transport Workers Federation //983/ 1 AC 366 at 384 per Lord Diplock. As his Lordship pointed out, the consequence is that the “consent is treated in law 15 Ewan McKendrick (2007) Contract Law (7" edn) Palgrave Macmillan p.358. 16 An appeal case from the Court of Appeal of Hong Kong decided by the Judicial Committee of the Privy Council. 17 [1980] AC 614 or [1979] 3 All ER 65. 18 MSCA Civil Appeal No. 48 of 2014 [Unreported]. 14 6.17 6.18 6.19 6.20 as revocable unless approbated either expressly or by implication after the illegitimate pressure has ceased to operate on his mind” at (384). In the same case Lord Scarman declared (at 400) that the authorities show that there are two elements in the realm of duress: (a) pressure amounting to compulsion of the will of the victim and (b) the illegitimacy of the pressure exerted. “There must be pressure”, said Lord Scarman “the practical effect , of which is compulsion or the absence of choice.’ Applying the foregoing principles to the relevant facts as informed by the arguments put forth by the parties, it is abundantly clear in my mind that the applicant’s evidence unassailably establishes material indicating the presence of duress. First and in no particular order, I find as a fact on which I place, and considerably place, great reliance that the applicant was not given time to seek independent legal advice on the contents of the exit agreement before signing it. [have no basis to disbelieve the soundness of the applicant’s testimony that the HR Consultant told her that if she did not sign the exit agreement with dispatch, she would leave with totally nothing. To reinforce this finding, one of the scenarios in the exit agreement depicts that upon calculation of all her terminal benefits, the applicant would indeed leave with literally nothing. Instead, she would be indebted to the respondent in the sum of K42,493.80. In the second place, at the time she was being coerced to sign the exit agreement, she did not have an alternative course open to her. On this aspect, there was a curious argument by the respondent that the applicant had an option to internally appeal against the decision of the supposed disciplinary hearing pursuant to clause 1.8.4 (e) of the respondent’s Human Resource Policy but the applicant opted not to exercise that right meaning that she was in agreement with the arrangement to resolve the matter through the exit agreement purportedly entered into by the parties. For starters, I reyect the Human Resource Policy document exhibited by the respondent’s witness!? which had no approval date and was therefore at odds 19 Exhibit TC3. 15 6.21 6.22 6.23 t?° which had an approval date of May with the one exhibited by the applican 2012 and was therefore authentic and in force. As a matter of further fact, the clauses providing for appeal in the two documents are dissimilar. But that is beside the point. The point I make is that, on the facts, I find that no decision was ever made by the disciplinary committee which the applicant could launch an appeal against. The respondent’s witness did not even adduce in evidence minutes of the alleged hearing. It is indisputable that the purported disciplinary hearing ended in suspense upon the Indebank lawyer noting that the first 28" April letter with the options for the applicant to choose from had complicated things and was not a good one. Therefore, the applicant had no alternative course at her disposal. As it happens, there was no disciplinary hearing at all and this is a fact I return to very shortly in this judgment. In the third place, it is equally a fact that the applicant protested throughout the processes she was being subjected to before signing the exit agreement. For instance, she complained that the hearing was otiose as a decision had been made for her to sign the exit agreement whose terms were just imposed on her devoid of dialogue involving both sides. She also unsuccessfully protested to the HR Consultant concerning reckoning of her terminal benefits as appeared in the exit agreement she was meant to sign. She said the HR Consultant was firm that no adjustments would be made to the calculation of her terminal benefits. Her protests are further borne out by the fact that the HR Consultant kept pressing her to sign the exit agreement through persistent calls. If the applicant was — of her own volition — amenable to sign the exit agreement, there would have been no need for the excessive calls. Clearly, presented with a choice between evils, the pressure was such as to deprive the applicant of her will and unmistakably left her with the clear position that she had no alternative but to accept what was being shoved in her face or thrust upon her namely, the onerous terms of option number 2 as captured in the exit agreement. 20 Exhibit AK1. 16 6.24 In the fourth place, it is a fact that after entering into the exit agreement, to show that her consent was not obtained freely, the applicant took extensive steps to avoid it. She immediately launched a series of complaints against her dismissal before lawful authorities?!. When discussions failed on account of 22 the recalcitrant““ respondent, the applicant took out this action against the respondent for unfair dismissal. 6.25 To sum up, the applicant was plainly railroaded into signing the exit agreement dated 18" May 2016. She did not validly consent to her employment ending. In these circumstances, as per the law cited earlier and conscientiously applied, duress unravels the exit agreement signed by the parties. I am satisfied on a balance of probabilities that the applicant entered into the exit agreement under duress. The applicant’s contract of employment was, therefore, not consensually terminated. She was unfairly dismissed, plain and simple. I so emphatically find. 6.26 In case my reasoning above is found wanting elsewhere, I would still alternatively find that the applicant was unfairly dismissed on four further grounds. The first base is on procedural justice. My reasons follow. 6.27 If clause 2.3 (as read with clause 1.9.5 (c)) of the respondent’s Human Resource Policy issued and approved in May 2012 is anything to go by, configuration of the respondent’s Disciplinary Committee which sat to hear the applicant’s transgressions was clearly illegitimate having been constituted in contravention of the said provision. Clause 2.3 provides as follows: “Tod Membership of the Disciplinary Committee shall comprise — of representatives from: e Finance Manager — Chairman e Human Resources and Administration — Secretary e Additional member of management team e Co-opting Regional Managers” 21 District Labour Office, Blantyre. 22 As per exhibit AK11. 17 6.28 6.29 6.30 6.31 6.32 Clause 1.9.5 (c) states that: “The Finance Manager shall be the Chairman of the committee with HHRA playing an advisory role. It will also include one other member of Management Team and will incorporate Regional Managers if appropriate. The minimum shall be three members including the chairman. The disciplinary matters of senior Management shall be handed by the Board of Trustees or anybody so appointed by the Trustees”. Yet in the case of the applicant, the Disciplinary Committee comprised of the HR Consultant and the Indebank lawyer both of whom were not employees of the respondent and were, therefore, not holders of any of the positions referenced in clause 2.3 of the respondent’s Human Resource Policy. This means the Finance Manager was not present, the HHRA was not present and the minimum requirement of 3 people in the disciplinary committee was not met. The irregular configuration of the Disciplinary Committee was equally against the proper one promised by the respondent in the first 28" April letter which even specifically mentioned names of those that would be in attendance. Consequently, the respondent drove a coach and horses through its own Human Resource Policy. And so, bearing in mind that an employer is enjoined to comply with both substantive and procedural justice for termination of employment to be deemed fair, the applicant herein was thus unfairly dismissed as the respondent did not follow the designated procedure in terms of its own Disciplinary Committee’s constitution. The second further ground for finding that the applicant was unfairly dismissed relates to circumstances in which the applicant was invited to the futile disciplinary hearing. In this vein, it repays to pay particular attention to the chronology of events. Remember, the applicant was first called to a performance review meeting presided over by the HR Consultant engaged by the respondent. No doubt, a performance review is by no means synonymous with a hearing. At the performance review meeting, the HR Consultant informed the applicant that he was going to fire her and that the terms of her dismissal would be in a 18 6.33 6.34 6.35 6.36 communication to follow. The first 28” April letter was emailed to the applicant. It contained three onerous options the applicant had to choose from. The choices consisted of the exit agreement, a disciplinary hearing and finally, what was effectively a demotion. Despite dispatching the second 28" April letter to the applicant, the first 28" April letter was never at any point withdrawn by the respondent. Thus, throughout the relevant period, the heavy terms of the first 28 April letter operated on the mind of the applicant as evidenced by the fact that she expressly made reference to the said letter when she appeared before the panellists at the abortive disciplinary hearing. The respondent, through the HR Consultant, came up with the three substantive oppressive decisions which were disingenuously clothed as options for the applicant’s consideration. The respondent arrived at the said three decisions or options well before the applicant had been summoned to a hearing. In my considered view, the respondent impermissibly put the proverbial cart before the horse, as it were. In my firm assessment, I would have expected the order of events to have been like this: first, the respondent should have conducted a performance review with the applicant and if the results thereof warranted a disciplinary hearing then the process may have been escalated to a disciplinary process (if that is what the respondent’s pertinent policies spelled out). Next, depending on what emerged from the said disciplinary hearing, the respondent and the applicant could have discussed the possibility of the exit agreement (option no. 2) or the demotion (option no. 3). To subject the applicant to a disciplinary hearing in circumstances where pre- conceived decisions about her (mis)conduct were lying in wait (and at this point those decisions having already been conveyed to the applicant) is a perfect indication that the bungled disciplinary hearing was a brazen ruse by the respondent to sidestep or circumvent treating the applicant with justice and equity in the process of terminating her contract of employment contrary to the dictates of section 61 (2) of the Employment Act. Any purported disciplinary hearing would have been totally meaningless and of no consequence for the reasons expressed. 19 6.37 6.38 6.39 6.40 6.41 This takes me to the third and penultimate additional ground for finding that the applicant was unfairly dismissed. This being that I am completely persuaded by the evidence in this matter that the respondent did not have justification or reasons to dismiss the applicant. It is also here where I shall demonstrate that after the collapse of all the respondent’s points on the validity of the mutual release or exit agreement, the respondent cannot elevate to great prominence a contention that it acted in conformity with section 57 of the Employment Act and that the dismissal was not unfair because the respondent treated the applicant with justice, equity and good faith as it warned the applicant on her underperformance and extended sufficient time to improve on her performance without success. I begin with a statement that, going by the disciplinary hearing notice that was sent to the applicant, the allegations levelled against her principally concerned her capacity. Indeed, section 57 of the Employment Act permits termination of an employment contract based on the employee’s capacity. And if the grounds for effecting termination of an employment contract are capacity or conduct of the employee, valid reasons must be proffered for the termination. The burden of showing that the reasons for dismissal are valid is on the employer”’. Also, termination on grounds of capacity relates to an employee’s failure to perform and deliver on the responsibilities demanded of a position where an employee represented that they possess the requisite qualifications, skillsets and experience required for the performance of such responsibilities”*. As earlier stated, the applicant was answering misconduct and gross misconduct charges”? which were effectively essentially rooted in her failure to meet targets in terms of collection of loan repayments from the respondent’s clients. The charges were apparently backed by warnings issued to the applicant for poor performance. But, observably, in February 2015 (that is three months before her first warning), the applicant pre-emptively submitted a comprehensive report to the respondent’s CEO which was basically a harbinger of the difficulties the 23 Section 61(1) of the Employment Act; Mangulama vy. Raiply Malawi Limited Matter No. IRC 254 of 2003 [Unreported]. 24 Chifundo Chioko and 59 Others v. First Capital Bank Matter No. IRC 10 of 2020 (Mzuzu Registry) [unreported]. 25 Exhibit AKS3. 20 6.42 6.43 6.44 6.45 respondent was going to face in collecting loan repayments as its clients had been on the receiving end of natural disasters in terms of flooding. However, the respondent inexplicably visited the respondent with warnings in May 2015 and December 2015 alleging poor performance on her part. Also, in January 2016 the applicant submitted a report to the respondent’s Operations Manager about erratic rains and dry spells that were being experienced in the region she was overseeing loan collections. The report was replete with pictures vividly capturing the desperate situation the respondent’s clients were contending with. And yet, hardly three months later in April 2016, the respondent was accusing the applicant of poor performance when the state of affairs — being pure acts of God — were totally out of human control though they were having a lasting impact on the applicant’s performance. Take a moment to consider this: the applicant received two so-called final warnings; the applicant was called to the abortive hearing to answer two strong charges of gross misconduct and misconduct; in place were overall findings from the applicant’s professed performance reviews that (a) the applicant had failed to achieve set targets; (b) that a long term stakeholder review indicated a pattern of poor performance that repeated itself; and (c) that the respondent perceived unwillingness on the applicant to heed advice, guidance and developmental inputs. Yet this very same applicant was given an option (option 3 in the exit agreement) to relocate to Mzuzu; be reporting directly to the CEO; control a number of branches and one satellite. It sounds very oxymoronic, in my view, that an employer would still want to hold on to an employee who is carrying a litany of final warnings, an employee who has failed to meet set targets, an employee whose pattern of poor performance repeated itself and an employee whom the employer perceived unwillingness to heed advice, guidance and developmental inputs. A quick aside is that the two warnings issued to the applicant were all characterized as “Final warning” which was palpably contrary to the respondent’s Human Resource Policy which provides in clause 1.9.4 that an 21 employee will be given a verbal warning followed by a first written warning and then a second and final written warning. 6.46 If unvarnished truth be told, the applicant had no issues of poor or under performance as the respondent would want this Court to believe. Thus, if the applicant had been dismissed on account of poor performance, this Court would have found that the reason is not supported by evidence and hence conclude that there was no justification for the applicant’s dismissal as the applicant thoroughly explained in her two reports to the respondent the main cause of the poor performance. 6.47 I am buttressed in this conclusion because if the respondent truly had a basis to charge the applicant with misconducts grounded in poor performance, the respondent would simply have subjected the applicant to a disciplinary hearing and lead evidence supporting the relevant charges rather than chaotically vacillate between presenting a trio of options to the applicant then subject her to an irregular disciplinary hearing only to revert to giving her difficult choices to make a selection from. 6.48 Actually, in matters where the question is whether or not the employer’s reason for dismissal is fair on the set of facts known to the employer or the belief held by the employer at the time of dismissal, the court usually examines the reason given for termination of employment and the act of misconduct and try to find if the termination was justified. If the reason is not supported by evidence the court may conclude that there was no justification for the applicant’s dismissal®. 6.49 The fourth and final point is about the principle in the Mpungulira case?’ that failure to call a crucial and material witness works against the party who has so failed because the Court assumes that the only reason why such a witness is not called is that the evidence is adverse to the party who should have called him. 2° Mahowe v. Malawi Housing Corporation Civil Cause No. 3687 of 2000 (HC) [Unreported]. 27 Mpungulira Trading Ltd v. Marketing Services Division [1993] 16(1) MLR 346 22 6.50 In this matter, I observe that in terms of the respondent’s potential witnesses, the HR Consultant and the Indebank lawyer would have adduced the best and most reliable evidence. The reason is simple. These two persons directly dealt with the applicant herein and had a ringside seat, as it were, as regards the happenings which they perceived with one or more of their own five senses. In fact, the witness who gave evidence on behalf of the respondent during trial could not answer some questions from the applicant’s Counsel in cross- examination which questions, I believe, only the HR Consultant and the Indebank lawyer could have ably responded to. 6.51 I have no doubt that the respondent has the wherewithal and could have managed to call at least the former Indebank lawyer to testify on its behalf. The respondent did not. I believe the explanation for the absence of the two potential witnesses is prosaically simple: the evidence from any one of these potential witnesses was going to be adverse to the respondent’s case. 6.52 All these additional considerations come together to fortify my determination that the respondent unfairly dismissed the applicant. 6.53 Very finally, having made out her case that the manner her contract of employment was terminated by the respondent amount to unfair dismissal — the applicant is clearly entitled to compensation for unfair dismissal in keeping with section 63 (1) (c) of the Employment Act. The applicant is also entitled to the rest of the reliefs she sought except the one encompassing costs of the action which on the facts herein has no legal basis and is impermissible in this Court. 7 CONCLUSION 7.1 For all I have articulated above, I reiterate my pronouncement earlier rendered as follows: (a) The applicant’s claim for compensation for unfair dismissal is well founded and succeeds. The parties are at liberty to agree on appropriate compensation out of court. If the parties do not avail themselves that choice, this Court shall preside over a remedy hearing to assess compensation and other relevant reliefs on a date and time to 23 be fixed upon the parties filing pertinent assessment papers and the applicant filing a pertinent notice. 7.2 It bears stating that this having been a modularized trial, the liability issue was just the first instalment. In that respect and on the authority of the case of JTI Leaf (Malawi) Limited v Kad Kapachika’®, the decision herein is inchoate for appeal purposes. It can only be escalated to the High Court subsequent to this Court rendering its order on assessment of compensation or the parties settling pertinent quantum of compensation out of court. To avoid potential confusion, I am saying the right of appeal remains and within the dictates of section 65 (2) of the Labour Relations Act but, at this stage, caveated by my sentiments just conveyed. Pronounced this 3" day of February 2025 at IRC, PRINCIPAL REGISTRY Tamanda Chris Nyimba DEPUTY CHAIRPERSON 28 MSCA Civil Appeal No. 52 of 2016 [unreported]. 24