Kudzula v Eco Bank Malawi Limited (IRC MATTER 115 of 2018) [2019] MWIRC 6 (18 November 2019)

THE MALAWI JUDICIARY IN THE INDUSTRIAL RELATIONS COURT OF MALAWI MZUZU REGISTRY L. R. C. MATTER NUMBER 115 OF 2018 BETWEEN JOHN KUDZALA occ casas cevevenaynceeensin ie sOCUeiehemernensenne APPLICANT ECO BANK MALAWI LIMITED .............0.csecesesecevensceees RESPONDENT CORAM: HIS HON. KINGSLEY D. MLUNGU, DEPUTY CHAIRPERSON MISS CECILIA T. NYIRENDA, EMPLOYERS’ PANELIST MR ALEXANDER LUNGU, EMPLOYEES’ PANELIST MESSRS JIVASON & COMPANY, APPLICANT'S COUNSEL MR G. D. LIWIMBI, RESPONDENT'S COUNSEL MR. HEZRON MHONE, COURT CLERK wuocexen INTRODUCTION The applicant herein initially lodged a claim with this Court on 16!" May, 2018 against the Respondent alleging unfair termination of employment on the basis that the same was done without valid reasons and a right to be heard. By an amended claim, however, of 21st August, while maintaining that he was so dismissed, the applicant further alleged that following an order of the Court of 1 10% August, 2018 the Respondent's Appeal Committee upheld the termination, albeit against the principles of natural justice as the appellate panel comprised some members who sat on the Disciplinary Committee. Further, the applicant alleged that when he was invited for an initial hearing, the Respondent did not furnish him with details of the allegations against him including an audit report and the relevant documentation in support of those allegations. To that end, the applicant therefore claims the following: (a) Damages for unfair dismissal; (b) Severance allowance; (c) Notice pay; (d) Leave days allowance and, (e) That the mortgage, car loan and education advance in the cumulative total of Mk19,653,009.46 should not attract interest from the date of his suspension to the date of the judgment. In reply to the applicant’s claim, the Respondent averred as follows: (a)That the applicant was afforded an opportunity to be heard before the Disciplinary Committee; (ob) That after the finding of the Disciplinary Commitiee, the Respondent had a valid reason for dismissing the applicant as he had failed to account for the sum of K208,000.00; (c) That the applicant was duly furnished with the details of the allegations against him as the process emanated from an internal audit review exercise that was conducted at its Mzuzu Branch the results of which were duly communicated to the applicant and he explained his side of the story till he failed to explain the sum of MK208,000.00 (d) That in any case, the applicant was not only given a notice of the hearing that he had attended but was also advised of the rights that he had before and during the hearing including access to any documents to assist him on the hearing. (e) That the appellate process was properly conducted and not by the order of the Court but by the applicant’s own request who had exhausted alll the internal remedies. In any case, the Panel of the said committee was proper and the persons who attend its hearing and comprised of the Disciplinary Committee were only called to explain the issues that were deliberated at the initial hearing; and (f} That the outstanding mortgage, car loan and education advance would attract interest in line with the Respondent's terms and conditions of service as the applicant was no longer in their employment. = THE ISSUES . Whether the applicant was heard before being dismissed, i.e., whether the Respondent advised the applicant of the allegations against him; and whether or not the applicant was given the details of the allegations and an opportunity to explain on the same. Whether or not the decision by the Respondent to terminate the applicant's employment was valid Whether or not the Respondent conducted the applicant's appeal fairly Whether the applicant should be awarded damages for unfair dismissal and other reliefs herein sought. THE APPLICABLE LAW Section 58 of the Employment Act provides that ‘A dismissal is unfair if it is not in conformity with section 57 or is a constructive dismissal pursuant to section 60’ Section 57of the Employment Act provides as follows: “(1) The employment of an employee shall not be terminated by an employer (2) unless there is a valid reason connected with the capacity or conduct of the employee or based on the operation requirements of the undertaking. 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” Section 61 of the said Act provides: (1) In any claim or complaint arising out of the dismissal of any employee, it shall be for the employer to provide the reason for dismissal and if the employer fails to do so, there shall be a conclusive presumption that the dismissal was unfair; (2) In addition to proving that an employee was dismissed for reasons stated in section 57 (1) an employer shall be required to show that in all circumstances of the case he acted with justice and equity in dismissing the employee" THE EVIDENCE Both parties called witnesses to testify on their behalf and they adopted their witness statements and the attachments thereto. The applicant was the sole witness for his case whereas the Respondent called three witnesses namely, Abraham E. Zimba, John Chizunza and Mrs Annie Chavula. THE APPLICANT'S EVIDENCE: JOHN KUDZALA He testified and tendered his witness statement that was marked as exhibit JK and the atiachments thereto were marked serially and admitted in evidence by the Court. In his testimony in brief, he said that whilst working for the Respondent's Bank as a Customers’ Services Manager based at its Mzuzu Branch, he received a notice of disciplinary hearing before a Disciplinary Committee set for 14!n February, 2018. Though he did not have enough time to prepare, he attended the said hearing on the charge of failure to account for the sum of MK4, 200,00.00 He proceeded fo say that when he looked at the said charge, he discovered that some of transactions he was being queried on emanated from the Respondent’s Head Office in Blantyre and not his branch, Mzuzu. He then brought this to the attention of the Committee which resolved that the hearing be adjourned pending some reconciliation. On 19 February, 2018, the applicant received another notice of hearing calling him to account for k208, 000.00 while he was waiting for the decision of the hearing of 14!) February 2018 which he never attended because the said notice was for 14th February, 2018. On 19!) March, 2019, the applicant received a letter dismissing him from employment on the ground that he had failed to account for the sum of K208, 000.000. Finally, he said that he appealed against the decision of the Disciplinary Committee but the Appeals Committee, which also comprised Mrs Victoria Chanza and Grace Matemba who were also panelists of the Disciplinary Committee upheld his dismissal. THE RESPONDENT'S CASE RW1: ABRAHAM ELIAS ZIMBA He testified that he conducted a routine Audit at the Respondent's Mzuzu Branch for the period January to December, 2017 that reviewed, Interalia income and expenditure in which he noied some anomalies with respect to some expenses having approvals with receipts attached to vouchers and no supporting documents/ receipts and most of those related to procurement utilities, power and water. He went on to say that upon verification with the Branch, it was initially revealed that a total of MK4,272,901.04 expenses were approved but had no supporting receipts for the expenses incurred. It further transpired that the applicant was the one who used to draw the approved cash from the Bank for procurement of the said utilities. The witness then tendered a copy of the Report of the Audit Review marked AEZ 1; which he said he forwarded to the applicant with whom he exchanged a lot of emails which he also tendered in evidence as AEZ 2, 2A, AE23 and 3A RW1 further testified that from the applicant's response, there remained a total sum of K3,650,644.03 which he had to provide answers on but he did not beside some reminders in form of emails. He said that on 224 January, 2018 he wrote an email to John Chizunza, the Branch Manager of the Respondent's Mzuzu Branch, copied to the applicant, expressing his disappointment over the matter and urging Mr Chizunza to follow up on the matter with the applicant being his immediate boss. He continued to say that the applicant by an email of 29th January, 2018, responded to the issues raised in the email marked as AEZ4A and interalia, indicated that he had misfiled some of the relevant documents to support the anomalies in issue. All, in all, the witness confirmed that at the end of the audit exercise, the applicant had failed to explain and account for the sum of K3, 650,644.03 per the Report tendered as ACZ4A and thereafter forwarded it to his superiors for further action. Finally, RW1, testified that though the applicant was dismissed for having failed to account for K208,000.00, that decision emanated from the audit exercise that he had conducted and in any case, the initial findings revealed the sums of K4,272,901.04 and K3,650,644.03, respectively the reduction of which arose due to the explanation offered by the applicant Upon being furnished with the report and engaged thereon. RW_2: JOHN CHIZUNZA, MZUZU BRANCH MANAGER He corroborated the testimony of RW 1 fo the extent that RW1 indeed undertook the audit exercise in which at all material times the applicant was consulted, involved and requested to explain on the issues that were raised in the two reports tendered as ACI] and AEZIA that were issued to RW1 and also that he was al all time kept abreast of issues. The witness also confirmed that at the end of the exercise that RW1 conducted, the applicant could not account for K3,659 644.03 and as such the matter was referred to the Head of Internal Audit that eventually led to the disciplinary hearing and ultimately to the applicant’s dismissal. RW3: MRS ANNIE CHAVULA She testified that she is the Respondent's Human Resources Manager based at its Head Office in Blantyre. She corroborated with the evidence of both RW1 and RW2 with respect to the applicant's appointment and functions and also the reason that led fo his dismissal. The witness went on to say that following the findings in AC6, on 9! February, 2018, the Respondent issued a notice of disciplinary hearing and charges to the applicant on a charge of dishonesty, contrary to EMW Disciplinary and Grievance Manual Clause 3.2 (h), 4 which she tendered a copy thereof as AC5. She also testified that the Respondent duly conducted a hearing on 14th February, 2018, that established that the applicant could not account for the sum of K208,000.00 and gave him up to the end of the month of February, 2018 to explain the deficit or the committee would proceed to make its finding. RW3 further explained that although the initial notice she tendered as AC4 but tendered as JK8 by the applicant referred to the sum of M4, 272,901.04, respectively as opposed to K208,000.00 in AC5 and JK 9 respectively, following the hearing on 141 February, 2018, it was established that the sum that remained unaccounted for was the said K208,000.00 and the Respondent neither convened another hearing nor the said amount arose from a different transaction. She then said that in as far as AC5 and JK 9 were concerned (save for the date on JK 9) and AC 4 and JK 8, the difference in the figures was due to the explanation that the applicant had offered at the hearing and in any case, the Respondent's Head of Internal Audit was available at the hearing as a complainant. (see AC7, Report of the Disciplinary Hearing). lt was again RW 3’s testimony that following the findings of the hearing and the failure by the applicant to explain the K208, 000.00 expenditure for electricity by the end of February, 2018, the Respondent dismissed him from employment and issued a letter of dismissal on 7'® March, 2018. And that upon the applicant's dismissal, the Respondent duly calculated his service benefits that amounted to K148,129.93 but the applicant had outstanding financial liabilities with the Respondent totaling K19,653,009.00 comprising car loan, education loan and a mortgage which did not relate to the disciplinary action herein and are as such payable. RW3 further testified that before the matter was heard in court, the applicant lodged an appeal against the Respondent's finding and decision in line with the Conditions of Service and she tendered a copy of the applicant’s appeal letter of 20 March, 2018 as AC8; and that on 6 August, 2018, the Respondent issued a notice of the hearing of the appeal that was set for 10" August, 2018 and was duly served on the applicant and tendered in evidence as AC9. The Board on Appeal upheld both the finding of the Disciplinary hearing and its decision to dismiss the applicant from his services. Finally she argued that the applicant’s claim did not have any merit as per the reply above. FACTUAL AND LEGAL ANALYSIS Whether the applicant was heard before being dismissed Section 57 (2) of the Employment Act provides for what is termed as procedural fairness, which basically entails conducting a fair disciplinary hearing. The Employment Act however has not provided the specific procedures/steps fo be taken by the employer before terminating the employee’s services in compliance with this section. As such Courts have developed rules as to what constitutes a fair procedure, interlia: (a) Investigations; (b}) Adequate Notice; (c) Charge (d) hearing (oral or through statements) (e) Confrontation/ cross examination; (f) Representation and (g) Internal Appeals. The applicant herein argues that there was failure to give notice to him by the Respondent for the hearing of 14!" February, 2018. If is submitted that the applicant herein was notified of the charges two days before this hearing when he was required to travel from Mzuzu to Blantyre which is a day's journey. They cite the case of Zodetsa and others V. Council for the University of Malawi (1994) MLR 412 (HC) whereby the plaintiff was informed of the charges a day before the hearing of the matter. The court held that there was no sufficient notice of the charges. lt has been held that the need for adequate Notice is to allow the employee to prepare for his case and as such there is need that the Respondent having made an allegation against the employee, it should allow the employee a reasonable time within which to respond to the allegations. Disciplinary action is reasonable where it is found that the employer informed the employee in good time of the allegations against him/her. See Wadabwa_V. Union Transport, Matter Number IRC 51 of 2000 (Unreported). With the evidence before this court, we agree with the applicant on this aspect and hold that he was not given adequate notice for him to understand all the factual allegations against him in sufficient detail to allow him prepare for his case considering also that the Respondent did not attach supporting documents to the notice. It has also been argued by the applicant that there was failure on the part of the Respondent to give clear charges to the applicant who stated that he was charged with failing to account for K4,272,901.04, yet when he appeared before the disciplinary committee was told account for K3,650,644.03. As such he was not able to know the charge against him nor the amount that he was to account for. The Respondent counter argues that if did so via exhibits AC4 and ACS. The law on charge or allegation was expounded by R. S. Sikwese, in her book Labour law in Malawi, (2013) as follows at page 90. “The allegation must be clear and must have adequate particulars fo allow the employee to respond accordingly. When in doubt, the charge must be read out to the employee and he/she must be advised on the meaning of the charge. See Kachinqwe& others v. Southern Bottlers {MW) Lid, Matter Number IRC 162 of 2003 (unreported) IRC. It is proper that the allegation must relate to an act or omission that the employee was aware constituted a violation for which disciplinary action could be taken. It would be unfair to charge an employee with an unknown offence unless the act or omission was inconsistent with the express or implied conditions of fhe employment contract. It has been held, for instance, that the allegation should specify the regulation or clause that the applicant had breached. Failure to charge an employee would lead to miscarriage of procedural justice if the employee was not aware of the nature of the misconduct he/ she had pepetrated. See Chimbenje V. Dimon Malawi Ltd, Matter Number IRC 59 of 2001 (unreported) IRC” On this aspect, this Court agrees with the Respondent that the evidence on record is clear that it proffered a charge against the applicant as per exhibit AC4 or JK 8 This charge was very particular for the applicant to understand the same, albeit the difference in figures. Another contention by the applicant is that there was failure by the Respondent to hear the applicant on the charge he was dismissed on. On this aspect, it is argued that the dismissal letter informed the applicant that he was dismissed on the charge of dishonestly claiming money from the bank in the sum of K208, 000.00. The Respondent brought evidence showing a Notice of disciplinary hearing for the said k208,000.00 dated 9h February, 2018 indicating the hearing will take place on the 14!) February, 2018. In evidence, the respondent witness, John Chizunza disowned this notice of hearing and indicated that all notices were signed by him and the real notice was the one he had signed and given to the applicant which showed that the 8 Notice was prepared on the 19'h of February, 2018. The Respondent tried in this endeavour to mislead the court as to whether the applicant was accorded a notice of hearing or not. The respondent contends that from the evidence adduced at the hearing and also supported by AC 7,11, the testimony of RW 3 and indeed the applicant's own admission in cross — examination, the Respondent afforded the applicant a hearing at which he orally not only explained his position but it also produced evidence to substantiate the same. On all these arguments on this aspect, one thing which is coming out clearly is that the applicant was not heard on the charge concerning the sum of K208, 000.00. The Respondent did everything possible to mislead the court by exhibiting document marked as exhibit AC 5 to show that the applicant was heard but this was just as attempt to mislead the court. Throughout the evidence of RW2, Mr John Chizunza, it was clear that AC 5 or JK 9 was dated 19th February, 2018 and he handed it over to the applicant after signing on it and it was summoning the applicant for a hearing to be heard on 14% February, 2018 which date had already passed. RW2 went on fo say that the applicant never attended this hearing. He also disputed of the hearing on 10! February, 2019 as also denounced by RW3, Annie Chavula. Such being the case, the contention by the applicant that all this shows that the Respondent had an intention of depriving him the right to be heard as it proceeded to dismiss him from his employment on 7? March, 2018, holds water. As he has argued with the case of Mchawi -V- Minister of Education, Science and Technology (1999) MLR 167 (HC), per Kumitsonyo, J. where in it was held as follows after it was emphasized therein that this right to be heard is expressly written and protected by section 43 of the Malawi Constitution. “The questions which | must pause now for answer are as follows: (1) Was the applicant given notice in writing of charges of his misconduct? (2) Was he charged of the offences of such misconduct? (3) Was he heard in answer to those charges by an un-biased and independent tribunal? My findings are that the answers to these three questions are in the negative. The applicant had not been given notice in writing of the charges of his misconduct. Neither was he charged with the offences of such misconduct nor was he heard in answer to those charges in defence of himself before an unbiased and independent tribunal. The applicant was not given an opportunity to prepare his defence and to defend himself.” The Court then went to state that “| find therefore that the minister did not give the applicant a fair hearing when he made his decision” The applicant also contends in his witness statement that after his dismissal the Respondent finally invited him for an appeal hearing on the 7' day of March, 2018, which was slated for the 10% day of August, 2018, which letter was tendered and marked as JK 11. He went on to state that the Appeals Committee herein comprised Mr Charles Asiedu (Managing Director), Mr Fabiano Makolija (Chief Finance Officer), Mr Luke Kataika (Company secretary}, Mrs Victoria Chanza (Head Domestic Banking) and Mrs Grace Matemba (Head of Internal Conirol) The applicant argues that the appeals committee herein was_ illegally constituted because Mrs Victoria Chanza was the Chairperson of the first/initial disciplinary hearing whereas Mrs Grace Matemba was the Respondent's witness (complainant). As such, the applicant agues, it is irrefutable that even if he could argue his case before this committee, the same could not hold from the fact that the Respondent had already made up its decision of dismissing him from its employ. And irve to his fears, on 15'* August, 2018, the Respondent communicated to him through its Appeals Committee that it had upheld the decision of dismissal on the ground that the applicant proved to be dishonest and cannot be trusted with the responsibility of being a Customer Service Manager” The Respondent wished away this argument by saying that the said committee was constituted in accordance with the Respondent's relevant rules and regulations and that the decision that the Committee made was within its mandate. With due respect, this Court begs to differ. The law on this aspect is as was espoused in Dr Chilumpha,Labour Law in Malawi, 2004, p.p 367 — 8 as follows: ",... However where an inquiry or some form of hearing is held care must be taken to ensure that any officer of the employer who is directly and personally interested in its outcome does not take part in it as that may give rise to allegations of bias. See R. V. Race Relations Board (1975) 1 WLR 1686. The author continued as follows: 10 “Finally, even if the employer holds a hearing, that may still not satisfy the requirements of section 57 (2) if any person who is personally or professionally interested in the proceedings forms part of the investigation panel. In that case the process may be flawed by bias. This is because of a basic rule of natural justice that a person should not be a judge in his own cause. Stating the rule in Khoswe_V. Toyota Malawi Ltd, Civil Cause No. 718 of 2002, Chimasula, J said that it was based on the “ general principle of law that a person who holds an inquiry must be seen to be impartial, that justice must not only be done but must be seen to be done .... Even if fhe decision - maker has not been biased at all, a decision may still be quashed if they have any professional or personal interest in the issues at stake” In the instant case, this court agrees with the applicant's observation that it was not proper for Mr Victoria Chanza and Mrs Grace Matemba to be part of the Appeals Committee having sat in the initial panel which found the applicant guilty and recommended his dismissal regard being also had to their positions in the Respondent's Bank and role they played in the initial hearing. The appeal ought to have proceeded on the initial Commititee’s Report and not by calling these two senior managers. On whether the Respondent proved and justified that the applicant was dismissed on a valid reason, the applicant submitted as follows: The evidence of the Respondent fell short of proving that the applicant was guilty of the misconduct. During the appeal hearing, the Respondent contended that it could not believe the receipt adduced by the applicant for the K208,000.00 as it doubted its authenticity. The Respondent did not even bother to make follow ups with the source of the receipts. The Respondent contended that he had a chance to bring the receipt during the disciplinary hearing. As shown above, there was no disciplinary hearing conducted for the K208,000.00 as such the applicant could not have brought the receipts to the non — existent disciplinary hearing. The Respondent replies as follows: From the totality of the evidence, the applicant does not dispute the fact that the funds that were established to have been misused were meant for procurement of electricity units. The applicant, however attempted to explain the said misuse by stating that it was reasonable in the circumstances to have applied these funds for the procurement of diesel fo run generators as there was no electricity. 11 The evidence of both RW1 and 2 as to the existence of procedures in such cases remained unchallenged. Indeed at the end of the irial it was clear that the applicant did not only comply with those procedures but also failed to produce supporting documents when he appeared before the Disciplinary Committee on 14th February, 2018 and even by the end of February as testified by RW 3. We take note of the fact that the applicant during the trial contends to have produced the supporting documents before the Appellate Panel per AC8. It is noteworthy that by that time the Disciplinary Committee had already finalized its business and the Respondent made a decision to dismiss him as per ACé. As a matter of fact, the report of the appeal is very clear and stated thus; “.... John was not able to provide the receipts for the diesel or stafionery at the time the Bank's Internal Audit were conducting the branch audit or during the disciplinary hearing ...." The task of this Court when faced with a situation like the one being argued here was summarized by the House of lords in Polkey -V- A. E Dayton Service Ltd, 1987 3 AIIER 974 at 983, when it held that: “Where an employee is dismissed for alleged misconduct and he then complains that he was unfairly dismissed,....the industrial tribunal will usually need to consider (a) The nature and gravity of the alleged misconduct, (6) The information on which the employer based his decision, (c) Whether there was any other information, which that employer could or should have obtained or any other step which he should have taken before he dismissed the employee” Thus, in the instant case having regard to the reason given for the applicant's dismissal, this court establishes that there was nothing to deter the Respondent trom obtaining any other information or taking any other step in as far as the issues of receipis herein were concerned. However if failed to do so and proceed to dismiss the applicant without enquiring more on his explanation as per exhibit AC 8. Such being the case we are of the view that the reason was not genuine and sufficiently supported by available evidence to justify the applicant’s dismissal. The matter in which the Respondent handled the case herein falls short of section 6] of the Employment Act in that the onus of proving the reason for the dismissal was not discharged by the applicant to the requisite standard and that it did not act with fairness, justice and equity in the circumstances. 12 We therefore agree with the applicant's submission on “6. Conclusion and Prayer” and proceed to make an award of compensation to the applicant to be assessed as per section 6 3 (1) (c) and (4) of the Employment Act. ON SEVERANCE Having found that the applicant was unfairly dismissed, severance allowance is payable as per section 35 (1) of the Employment (Amendment) Act No. 27 of 2010. OTHER TERMINAL BENEFITS These are payable as per the Dismissal letter dated 7'" March, 2018 and tendered in evidence as AC6 The claim to do with car loan, education loan and mortgage in the sum of K19,653,009.00 are obligations/ indebtness to the Bank (a liability) and as such is not related fo the present claim as asserted by the applicant. The Respondent’s counter claim of K208,000.00 hereby fails in the circumstances and it is accordingly dismissed. Dated This 18? November, 2019 at Mzuzu. cote DEPUTY CHAIRPERSON t MISS CECILIA T. NYIRENDA EMPLOYERS’ PANELIST MR ALEXANDER LUNGU EMPLOYEES’ PANALIST 13