Chunga and 4 Others v Registered Trustees of Mzuzu Diocese (IRC MATTER 68 of 2016) [2019] MWIRC 12 (27 June 2019)

THE MALAWI JUDICIARY IN THE INDUSTRIAL RELATIONS COURT OF MALAWI MZUZU REGISTRY I. R. C. MATTER NUMBER 68 OF 2016 BETWEEN ee OSWARD CHUNGA & FOUR OTHERS ............:.csseceeeeeceeeeenentereteeeeees APPLICANTS AND THE REGISTERED TRUSTEES OF MZUZU DIOCESE ................ccseceseeenenees RESPONDENT CORAM: HIS HON. KINGSLEY D. MLUNGU, DEPUTY CHAIRPERSON APPLICANTS PRESENT AND REPRESENTED BY MR OSMAN K. K ZIMBA, TRADE UNION MR WILLIAM CHIBWE, RESPONDENT'S COUNSEL MR. HEZRONE MHONE, COURT CLERK - JUDGEMENT 1. BACKGROUND The four applicants herein filed this matter in this court claiming severance allowance, gratuity and withholding wages after the termination of their respective contracts with the Respondent herein. 2. EVIDENCE The applicants paraded only one witness, Mr Osward Chunga and briefly, his evidence was to the effect that they were not given severance allowance at the time their services were terminated and also the Respondent withhold their earned wages / salaries. The Respondent paraded one witness, Mr Titus Stephen Manjanja who adopted his witness statement. His evidence simply shows that all what was due to the applicants herein was already duly paid. 3. ISSUES FOR DETERMINATION (i) Whether or not the applicants are entitled fo severance allowance; (ii) Whether or not the 1st applicant is entitled to four months wages; 4. THE APPLICABLE LAW 4.1. In civil cases the burden of proof rests on the party who asserts the affirmative and he/she must prove it on a balance of probabilities and not on the one who denies; see S. J Construction V. Plan Malawi Comm. Case No. 201 of 2008; Miller V. Minister of Pensions (1947) 2 All ER 372. 4.2 It is a settled principle of law that general principles of the law of contract apply to contracts of employment. In the case of Council for the University of Malawi V. Urban Mkandawire Civ. App. No. 38 of 2003 (unrep.} M. S. C. A the Supreme Court held that: “The law of contract is concerned only with legal obligations as agreed by the parties themselves and not with any other expectations however reasonable they might be" 4.3 Afixed term contract automatically terminates on expiry of the period Section 28 (2) of the Employment Act provides that: | “A contract of employment for a specified period of fime_ shall automatically terminate on the date specified for its termination and, unless it is expressly or tacitly renewed or prolonged, no notice shall be required for its termination.” 4.4 Non-renewal of a fixed term contract does not amount to unfair dismissal; The court does not have the power to convert fixed term contracts to that of contracts for unspecified periods as the same would amount to rewriting express terms and obligations the parties agreed to. 4.5 5i In the case of Kalowekamo V. Malawi Environmental Endowment Trust (2008) MLLR 21, the Supreme Court refused to interpret section 28 (3) of the Employment Act as giving the court to rewrite express fixed terms contracts converting them into contracts for unspecified periods and held that fixed term contracts cannot be the subject of unfair dismissal when they expire by effluxion of time. Severance allowance is not payable on termination of a fixed term contract by effluxion of time. Section 35 (1), (5) (a) of the Employment Act provides: On the termination of a contract as a result of redundancy or retrenchment, or due to economic difficulties, or technical, structural or operational requirements of the employer, and not in any other circumstance, an employee shall be entitled to be paid by the employer, at the time of termination, a severance allowance to be calculated in accordance with the first schedule” For the purposes of sub section (1), termination includes termination by reason of the insolvency or death of the employer, but does not include. {a} Termination of a contract of employment for a specified period of time where termination occurs at the expiration of the specified period. 4.46 Payment of severance allowance has been affected by the Pension Act In Prince Saopa Nkhoma V. Medicines San Frontiers France Matter. No. IRC PR 560 of 2011 (unreported), the Court recognized that severance allowance payment has been affected by section 91 of the Pension Act which provides for accrued severance liability. However the section does not extinguish the claim for severance allowance as the same is still payable to employees who have been unfairly dismissed, have been declared redundant or retrenched as per section 35 of the Employment Act. . APPLICATION OF THE LAW TO THE FACTS subjecting the facts of the case herein to the applicable law, this court proceed as follows: The contracts of employment of the applicants herein were for a fixed term and not for unspecified period and as such the parties’ agreement must be respected. A contract for a fixed term automatically terminates on the date specified for its termination. In the instant case the applicant’ contracts automatically terminated by effluxion of time on the agreed date of 28th February, 2016 and in accordance with section 28 (2) of the Employment Act. See Kalowekamo_V. Malawi Environmental Endowment Trust (supra) This finding is observed from the letters of January, 2016 as well as the letter of 28th February, 2016 addressed to the applicants on the status of their respective contracts herein. At the end of the contract, if was open for the Respondent to renew the contract or not and the discretion to do so solely rested with the Respondent. As such the Respondent herein cannot be held to have dismissed the applicants by virtue of not renewing the applicants’ contracts. On the claim of withheld wages; since the 1 applicant was clearly made aware that his services were not going to be renewed, the same cannot succeed. Further from section 35(5) of the Employment Act, it is clear that employees whose services are terminated by effluxion of time, are not entitled to severance allowance upon to expiry of their terms of contracts or upon completion or upon completion of the specific task. See Kalowekamo case (supra). Since there was nothing illegal in the termination of the applicant's services, the same being by virtue of effluxion of time and not by way of dismissal, the claim for unfair dismissal warranting compensation is misconceived and cannot succeed. Before the Pension Act, 2010 and the Employment (amendment) Act 2010, came into force, a person who retired or had been dismissed was entitled to Pension (if he or she belonged to any Pension Scheme) and to severance allowance. Every employer was therefore liable to pay severance allowance on retirement or dismissal. With the coming in force of the Pension Act, 2010 and the Employment (amendment) Act, 2010, the law has now changed so that all employer’s accrued severance liability with regard to an employee will now be recognized as part of the Pension due and where the severance entitlement is greater than the sum of the accumulated employer Pension contributions and any growth or where the severance entitlements is less than the employer's Pension Contributions the same not be recognized as Pension. In the instant case, the evidence before this court points to the fact that all the applicants had no accrued severance that they could claim. Rather, the evidence shows that prior to the entry of the Pension Act, the applicants were always paid their gratuity and severance due entitlement upon the expiry of their respective contracts. This is seen from exhibits marked as OC2, TC2, RM2, IC2 and VZ2. Further, it is clear from the evidence that after the expiry of the contracts running up to March, 2013, the applicants were dully admitted to the Pension Scheme. After the automatic termination of the contracts by effluxion of time, the applicants were dully paid their Pension benefits in accordance with the Pension Act. This can be seen from exhibits marked as CO3, TC3, IC3, and VZ 3. 6. CONCLUSION This court having found as above, i.e., that the applicants’ contracts were lawfully terminated by effluxion of time, and that no claim for severance allowance or withheld wages can rise solely as a result of such termination, proceeds to dismiss the applicants’ claims in their entirety. MADE This 27!) Day of June, 2019 at Mzuzu. KINGSLEY MLUNGU DEPUTY CHAIRPERSON