Tchuwa v Carlsberg Malawi Limited (MATTER NUMBER IRC 79 of 2017) [2020] MWIRC 4 (22 May 2020)

THE MALAWI JUDICIARY | __ANYHE INDUSTRIAL RELATIONS COURT OF MALAWI MZUZU REGISTRY MATTER NUMBER L. R. C. 79 OF 2017 ALFRED STEVENSON TCHUWA,, ....cne0nnsnmeananansianen ssa oaiy guMeres ect NN eNOS INGE APPLICANT CARLSBERG MALAWI LIMITED................. 0-2 ceececee cee ee eee ee eeee eens RESPONDENT CORAM: HIS HON. KINGSLEY D. MLUNGU, DEPUTY CHAIRPERSON MISS CECILIA T. NYIRENDA, EMPLOYERS’ PANELIST MR ALEXANDER LUNGU, EMPLOYEES’ PANELIST MR KOLEZI PHIRI, LEGAL AID ADVOCATE. FOR THE APPLICANT MR GEORGE J. KADZIPATIKE, COUNSELFOR THE RESPONDENT MR HEZRON MHONE, COURT CLERK JUDGEMENT 1. INTRODUCTION The applicant was employed as a Sales Driver by the Respondent and his duties was to drive a Company Vehicle and sell company products to various Customers in his allocated routes. It was agreed between the Respondent and the applicant that all shortages he incurred while preforming his duties which he could not properly account for on reconciliation would be deducted from his monthly salary. 1 The applicant retired from service on 30" April, 2017 having worked for the Respondent since 15 August 1996 and was communicated that he would receive his contributory pension benefits and also Mk3,654,458.45 as voluntary early retirement package. To his surprise a total of MK3,168.648.67 was deducted from his terminal benefits MK825,848.60 was deducted from funds that he received from his contributor Pension Scheme and K2,342.779.99 was deducted from his early retirement package. When the applicant enquired from the Respondent, he was informed that he had accumulative shortages amounting to MK3,168,648.67 prior to his retirement hence the deduction. The applicant consulted the Respondent with a view to recover the said sum but the Respondent refused to make a refund hence his claim before this Court to have the deducted sum refunded by the Respondent. THE EVIDENCE 2.1 APPLICANT’S EVIDENCE He stated during cross — examination that he was nof aware that he had a shortage but conceded that the company had a procedure whereby anyone with a shortage was signing for the same before being deducted and as for him the amounts that were being deducted from his salary varied from around K20,000.00 per month. However he said he was not aware as to how much he owned the Respondent as the balances were not shown to him despite asking for information. He said as he was retiring from the service he was not informed about the total amount of shortages that he had accumulated which was owing to the Respondent and the Respondent was wrong to deduct money from his terminal benefits without his knowledge. During re — examination he said that he was only given the document showing the shortage after it was already deducted from his benefits and was not given a chance to challenge the shortages. When answering a question from the member plainest, he said he was available when they were counting stock. 2.2. RESPONDENT'S EVIDENCE The Respondent paraded its Human Resources Manager Mr Ibrahim Luhanga as its sole witness. He stated under oath that the applicant as a sales driver, 2 knew the quantity of products demanded in a certain route and would give a request for the warehouse of the quantity he would require. The warehouse loaded on to the vehicle standards products without defects through a stripping exercise. He would be given extra case of mineral and one beer case to ensure that if there is any damages, these cases should replace them. After the sales, the applicant would report to the Logistics Auditor at the checkers office who would check fhe remaining products and compare them to the given products and the total sum of money he had made that day. The applicant would counter sign with the Logistics Auditor on the load in form which showed the products the applicant had brought back. Then the applicant woula go to the cashier's office where he would bank the cash realized from the sales and he would be issued with a receipt. The settlement office would reconcile the banked money to the total number of products sold and those returned and see if they correspond. If there was a shortage, the applicant would be called to explain on the shortage and where he admits failure to account for it, the difference would be debited into his debtors account. When he had an overage, which would sometimes arise from him selling the extra case given to him it would also be credited into his debtors account, as such he would always be aware of the money he had failed to account for. The Respondent would then deduct from his salary the amount he had failed to make due account during payment. The applicant then tendered payslios of the applicant showing the deductions thal were being made from his salary marked as “IL1.” When the applicant gets the requested products from the ware house, he would be issued with an invoice which would be recorded in the system at the settlement office which would indicate the number of the invoice. When the applicant makes a payment he would be issued a Credit memo by the settlement office as per exhibit “IL 2.” He went on to say that the applicant always had access to the debtor's office from which he could check his transactions and the payments he owed the Respondent and was supposed to make. The witness went on to state that the applicant's Medical Scheme was contribuied by the Respondent by 75% and the applicant would contribute 25% when the applicant and family members get sick and treated at the hospital, 100% of the bill would be paid by the Respondent through a cheque to the service provider, and the 25% would be debited to the applicant debtors account as per exhibit IL 2” on page 9. He continued to say that over the years, of fhe applicant's employment, the accumulated amount that he owed the Respondent was K3,168,648.67 and that the Respondent had a right to deduct the same from his salary as they have always done and as he had always agreed to the same and being that from the laws of Malawi, salary includes one’s terminal benefits excluding pension only, the Respondent duly deducted the same from his salary on his final payslip. He concluded that the applicant's pension has never been deducted from as this is prohibited by the laws of Malawi. 3. THE ISSUE TO BE DETERMINED Whether or not the Respondent was justified to deduct the sum of MK3,168,468.67 from the applicant and if not, then the same should be paid to back the applicant. 4.0 THE APPLICABLE LAW (i) Standard and Burden of Proof in civil cases. In civil cases, the standard of proof is one on a balance of probabilities and the burden lies on the plaintiff or the one who alleges to prove his case against the Defendant. See Kelvin Kumwenda and Stevelia Tembo V. Keneth Gondwe and Royal Insurance Co. Ltd, Civil Cause No. 168 of 2008 (unreported) (Mzuzu) (ii) Right to be heard The right to be heard is provided for in section 43 of the Republican Constitution “Every person shall have the right to — (a) Lawful and procedurally fair administrative action, which is justifiable in relation fo reasons given where his or her rights, freedoms, legitimate expectations or interests are affected or threatened; (b} Be furnished with reasons, in writing, for administrative action where his or her rights freedoms, legitimate expectations or interests if those interests are known” (iil) Whether an employer may deduct money from employee's wages as restitution Section 56 (4) of the Employment Act provides: 4 ‘An employer may deduct money from an employee's wages as restitution for property damaged by the employee" Section 56 (5) provides: “In deciding whether the employer has acted reasonable, regard shall be had to the nature of the violation, the employee's duties, fhe penalty imposed the employer, the procedure followed by the employer, the nature of any damage incurred and the previous conduct and the circumstances of the employee. See also” Chilongo V. Chilembwe Lodge |RC matter No. 16 of 2006. , (iv} What is Remuneration? Section 3 of the Employment Act provides as follows: “Remuneration” means the wages or salary and any additional benefits, allowances or emoluments whatsoever payable, directly or indirectly, whether in cash or in kind, by the employer to the employee and arising out of the employee's employment” DB: ANALYSIS OF THE LAW AND THE EVIDENCE What comes out clearly from the law discussed above is that an employer is entitled to deduct money from an employee's terminal benefits to make good of certain situations which brought a loss or a debt to the employer. What is significant is that in doing so, the employer has to take into consideration certain factors so as to avoid acting unreasonably and unjustifiably as it was stated in the case of Chilongo supra, and in Chamba and others V. Tourism investment Ltd t/a Hofel Victoria, IRC Matter N. 345 of 2005: It was held as follows in the case of Philips V. Shire Business Ltd, |RC Matter No. 181 of 2011. (i) The applicant swindled the respondent the sum of K125,600.00. The Respondent is entitled to recover this amount from any money they owe the applicant in the terminal benefits package. (ii} ORDER: The Respondent is ordered to compute the applicant’s terminal benefits as pleaded in the statement of claim. The computations must be filed with the Court showing all the pleaded items and their value at the date of retirement. The Respondent is also ordered to show any deductions they make from the retirement package, including their K125,600.00 and government tax if applicable. Thus, having regard to the applicant's duties herein who was fasked with driving the sales vehicle and making sales; and who had the Respondent's products in his sole custody, property damage to the products or loss that could not be accounted for by the applicant when he was called upon to do so, justified the Respondent's action to deduct from his wages to make restitution. However, the issue does not end there as the contention is whether the Respondent followed ihe applicant’s process right in doing so i.e., whether the Respondent observed procedural fairness in tts duty to act fairly towards its employees. We referred to section 43 of the Constitution which provides for every person's right to lawful and procedurally fair administrative actions and also which requires that every person must be furnished with reasons in writing for any administrative actions. In Chawani V. Attorney General (200) MLLR 1 (S. CA)}, the court stated as follows with regard to this provision: “An administrative action affecting another person must be lawful and fair; if must also be supported by reasons, which must be given to the affected person. This requirement exists where the administrative action would adversely affeci the rights, freedoms, interests and legitimate expectations of persons.” The Constitutional Courl held in the case of Mkandawire V. University of Malawi (2008) MLLR 66 (cc} that section 43 has incorporated tne principle of fair procedure in administrative action. This includes the right for an employee to be heard before a decision is made against him. Further section 31 of the Constitution provides that: “(1) Every person shall have the right to fair and safe labour practices and to fair remuneration” The High Court in Kalinda V. Limbe Leaf Tobacco Ltd Civil Cause No. 542 of 1995 hald that: “ The Constitution does not define “fair labour Practices” The words entail practices that are even handed, reasonable acceptable and expected from the stand point of the employer, employee and all fair -— minded persons looking at the unique relationships between the employer and employee and good industrial and labour relations. Laws limiting this right must, according to section 44 of the Constitution be reasonable, not offend international human rights standards and must not wholly abrogate the right” In Malawi V. Environmental Endowment Trust V. Kalowekano (2008) MLLR 237(HC), the Court gave as an example of unfair labour practice failure of an employer to be transparent in his / her dealings with employees. “And in the case of Lovemore Dzimbira V. Malawi Broadcasting Corporation civil cause No. 171 of 2011, the Court held as follows: “In the case before us, by withholding the plaintiff's wage, the defendants have clearly imposed a monetary penalty on the plaintiff such as the Employmeni Act expressly prohibits. This conduct would be more faulted because the defendant proceeded to do so without even hearing the plaintiff” In the instant case, the applicant was communicaied that he would receive money amounting to MK 3,631,625.52 as part of his voluntary retirement benefits by a letter dated 10!F April, 2017 from the Managing Director a copy of which has been exhibited as ATC |, The applicant was not given any other communication about the payment of the said amount of money until when he received his payslip for the month of April, 2017 which showed that money amounting to MK2,342,799.99 was deducted from his terminal benefits — see a copy of payslip for the months of April, 2017 herein exhibited as ATC 2, Upon enquiring on this, the applicant was informed that the money deducted was to cover the shortages he had accumulated as a salesman prior to his retirement and that actually the amount he owned the Respondent was MK3,168, 647.67 and at that point a further sum of MK825,848.60 was deducted from his severance pay. The applicant then received only Mk369,315.73 as severance pay instead of MK1,195,1654.41 as per exhibit A T C 3 which is a photocopy of the cheque implying that in fotal he went home with mk485,809.78 as his terminal benefits. The applicant’s attempts to consult the Respondent to have a refund did not yield any fruits. During cross — examination of the Respondent's witness, Mr Ibrahim Luhanga, he stated that all adjustments to an employee's emoluments are communicated to him in writing prior to affecting them and that it is proper to Communicate before carrying out any disciplinary action. He went on to say that the letter of 10% April, 2016 did not mention the action that was going to be affected against the applicant in respect of the shortages he had incurred whilst in the Respondent's service. He admitted that there is no documentation supporting the deduction effected herein as a way of communicating to the applicant as regards the deduction. In re-examination, Mr Luhanga, emphasised that the procedure regarding shortages was that the concerned employee would have the amount deducted from his salary and that herein the applicant was aware of his shortages as every month the same was deducted from his salary. To that effect he tendered the applicant’s payslios and a sheet indicating the applicants credit history which were marked as exhibits IL] and IL 2 respectively. Again we note that even {the tendered sheet, IL 2 was not signed in acknowledgement by the applicant and it is not supported by a letter addressed to the applicant stating what it was. But be that as it may, this Court has no qualms with the issue that the applicant had shortages which were being deducted from his salary at the end of the month or that he could owe the Respondent some money. What this Court has problems with is the correctness of the due process of the applicant’s rights as an employee and how the Respondent discharged its duty of acting fairly towards its employee and in the instant case, to the applicant. As Lord Reid said in Ridge V, Baldwin (1963) 2 ALLER 66: “... a duty of giving to any person against whom the complaint is made a fair opportunity to make any relevant statement which he may desire to bring forward and a fair opportunity to correct or controvert any relevant statement brought forward to his prejudice” This position was upheld by Justice Chikopa in Kachinjika V. Portland Cement Limited (2008) MLLR 161 when he said: “This rule is not confined to the conduct of strictly legal tribunals but is applicable to every tribunal or body of persons invested with authority to adjudicate upon matters involving civil consequences to individuals” 6. FINDINGS AND CONCLUSIONS Thus, we find that lack of communication by the Respondent to the applicant prior to the deductions effected here in violated the applicant's rights under sections 31 and 43 of the Constitution. The Respondent had failed to adhere to tenets of natural justice which | require that the employee should be granted an opportunity to be heard prior to being subjected to administrative action particularly where fhe action is punitive in nature thereby depriving the applicant herein the opportunity to know whether the decision herein was fair, equitable and just or not. On another note, the applicant pleaded with this Court to disregard the evidence of the Respondent's witness Mr Luhanga as hearsay on aspects which did not lie in his area of knowledge since he testified on the procedures in other departments such as logistic, audit, sales and finance yet these departments have heads which could have come and testified in this Court. We would indeed agree with that to a certain extent considering that Human resources Officers are treated as technical peoples in issues of employment in an organization. So, in as far as the evidence touched on the truthfulness of the said procedures, the same may be treated as hearsay and indeed inadmissible. However, all in all, this Court holds that it was a violation of the applicant’s Constitutional rights by the Respondent to subject the applicant to punitive measures of deducting a substantial amount of money from his retirement package without first communicating to him and hearing his side of the story. Accordingly, it is ordered that in as far as the amount concerns the shortages and deducted as such, the Respondent should make the refund to the applicant of the sum of MK3,168,648.67 within 7 days from. the date of this order. Dated 2299 May, 2020 at Mzuzu. K. D MYUNGU DEPUTY CHAIRPERSON MISS C. T NYIRENDA EMPLOYERS’ PANELIST 9 ere MR ALEXANDER LUNGU EMPLOYEES' PANELIST 10