Mota Engil v Kaukuti and 8 Others (IRC Appeal 1 of 2023) [2023] MWHC 27 (5 May 2023)

NCR te cca, rotatealateae IN THE HIGH COURT OF MALAWI PRINCIPAL REGISTRY CIVIL DIVISION IRC APPEAL NUMBER 01 OF 2023 (Before Justice Rachel Sophie Sikwese) BETWEEN: MOTA ENGI, .ccccccccccccceesureesencesceeseneneseesseseeseeeeseeaesssereereasensveantausanans APPELLANT AND KAUKUTI AND 8 OTHERS, .......cccccseesseceeeneeresetauseepeeesresseseeeuusaurseavens RESPONDENTS CORAM HON, JUSTICE RACHEL SOPHIE SEK WESE Chagoma; Appellant; Minjale; Respondent, Mithi; Official interpreter JUDGMENT Sikwese. J Introduction 1. This is an appeal against part of the Judgment of the Industrial Relations Court (“IRC”) sitting with member panellists. The nine Respondents were former employees of the Appellant. The Appellant appeals the award of overtime made by the IRC, and appeals against the assessment of compensation made by the Assistant Registrar and further that in respect of five Respondents the dismissal was justified. For reasons given below Page 1 of 13 the appeal is allowed in respect of the IRC’s award of overtime, The appeal against order of assessment of compensation and severance pay is allowed. The matter is referred back to the IRC under the IRC Rules of procedure for review of the Assistant Registrar’s order of assessment. Issues 2. The issues before the IRC were itemised as (1) whether the Respondents were unfairly dismissed and (2) whether notice pay, overtime pay, severance pay and leave pay were due and payable.! IRC Findings 3. The IRC found that the Appellant had valid reason for terminating the employment of five of the Respondents namely, Mr. Kaukuti WC2A, Mr. Nkhoma, WC2B, Mr. Malizani, WC2C, Mr. Nazombe WC2D and Mr. Tepani WC2E, However, the termination was unfair because they were not invited for a hearing, 4, The IRC found that four Respondents were unfairly dismissed because the Appellant did not provide any valid reason for their dismissal. 5. The IRC awarded Compensation for unfair dismissal to the nine Respondents, severance pay and overtime. Leave pay was not awarded as the IRC determined that it was already paid. 6. The matter was referred to the Assistant Registrar of the IRC to assess compensation, severance pay and overtime. 7. The IRC directed that in computing the severance pay and overtime, the Assistant Registrar should take into account the amounts already paid by the Appellant to the Respondents through the Labour Office. Facts . 8. The summary of facts of the case appears in the IRC in the record. The nine Respondents were employees of the Appellant as Security Guards employed on divers ’ Page 11 IRC Judgment Page 2 of 13 dates, On 3 December 2013, they were summoned to the camp site in Zalewa where they were served with termination letters. The reason for the termination was abscondment. After termination the Respondents lodged a complaint with the Labour Office where that office intervened and the Appellant paid the Respondents some outstanding payments. Being dissatisfied with the Labour Office resolution the Respondent filed a claim with the IRC in 2014 whose judgment was delivered on 23 November 2021 is the subject of this appeal. Grounds of Appeal 9. The grounds of appeal can be summarised as follows: Overtime 10. The IRC erred in law in holding that the Appellant bore the onus of proving that overtime was earned and due or in the alternative the IRC erred in law in failing to find that the onus of proving that overtime was earned and due was on the Respondents and in the further alternative that the decision of the IRC on overtime was against the weight of the evidence. An award by the Assistant Registrar of MWKI61 058 000 11, The Assistant Registrar erred in law by making an award of MWK 161 058 000 for unfair dismissal, severance pay and overtime without providing any legal basis for the award, 12. The Assistant Registrar erred in law by failing to apply or ignoring the legal principles governing compensation for unfair dismissal, overtime and severance pay as espoused on sections 63, 39 and 35A of the Employment (Amendment) Act respectively, 13. The Assistant Registrar erred in law by failing to take into account the finding of the trial court that the Respondent had valid reason for terminating the services of five of the Respondents. 14. The Assistant Registrar erred in law by failing to be guided by comparable cases in assessing compensation, overtime and severance pay. Page 3 of 13 15, The Assistant Registrar erred in law and in fact by failing to take into account payments already made to the Respondent in assessing the awards. Mitigation of loss 16, The Assistant Registrar erred in law and fact by generalizing that the Respondents had tried to mitigate their loss by basing the finding on a letter tendered by only one Respondent. Retirement age 17. The Assistant Registrar erred in law by awarding compensation for unfair dismissal to retirement age without justification. Jurisdiction 18. The Assistant Registrar erred in law by proceeding to preside over the assessment when he had no jurisdiction. Weight of evidence 19. The Assistant Registrar’s decision was against the weight of evidence. Considerations Overtime 20. The IRC made the following finding on overtime: On overtime from the evidence, it is in evidence of the applicants that they worked more than 48 hrs. They worked from Thursday 2.30PM to Monday 8,00 AM, They claim 277 hours per month. The Respondent in defence, stated that the applicants were paid overtime. In WC4A, WC4B, WC4C,WC4D, EC4E, WC4F, WC4G, WC4H, WC4I, dated 31 December 2013 has overtime 50% and overtime 100%. It doesn’t state for how many hours and for which dates. The respondent has not tendered time sheets and the calculations on overtime, We award overtime to be assessed on a date to be fixed taking into account the overtime that was already paid. Page 4 af 13 Legal framework 21. 22, 23, 24, Overtime claim falls in the category of specific claims to be specifically pleaded and proved by the employee because it represents money earned for work already rendered to the employer. This means that the burden of proving that it was eared is on the employee. The employee must state with clarity the amount of overtime due and when it was earned, This is the settled position of law. Just to reiterate, the Supreme Court of Appeal quoted with approval the principle that the one who asserts must prove: ... The case must be decided in favour of the man unless the evidence against him reaches the same degree of cogency as is required to discharge a burden in a civil case. The degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case, If the evidence is such that the tribunal can say: “We think it is more probable than not the burden is discharged but if the probabilities are equal, it is not”? As argued by the Appellant there was no evidence before the IRC giving particulars of the Respondents’ claim for overtime. The Respondents made a general claim for 277 hours based on calendar day calculations and not based on actual workdays and actual work hours and the authorisation for the overtime. This was an error of law. The IRC should have found that the Respondents had failed to discharge their burden of proof. The Respondents argument that the burden of proof shifted to the Appellant to show that they had paid overtime which the Respondents’ claimed is misconceived and without legal foundation. The only time that the burden of proof shifts to the employer is to prove the contrary or in legal terms ‘to rebut’ the allegation of unfair labour practice, In this case the employee still needs to prove the allegation, the burden then shifts to the employer to prove the contrary of what the employee is alleging. Therefore, the cases cited by the Respondent must be distinguishable and not applicable to the facts and the legal framework prevailing in the case at bar. * BP Malawi Limited v NBS Bank {MLR} 2009] 39, at page 43 Page 5 of 13 25, The appeal is allowed on this ground. Compensation for five Respondents whose employment was terminated for a valid reason Section 57(2) Employment Act provides that... 26. The Appellant is aggrieved that the Assistant Registrar calculated and awarded compensation to five Respondents although the IRC found that their services were terminated for valid reason. 27. The Appellant is misguided on his ground of appeal because nonetheless the IRC found that the dismissal was unfair because the five Respondents were not afforded the opportunity to be heard. The dismissal was procedurally unfair pursuant to section 57(2) of the Employment Act, hence the Respondents were entitled to compensation. This ground of appeal is dismissed. Lump sum award without legal justification 28. The IRC found that the Appellant was liable to compensate the Respondents for unfair dismissal. 29. In his ‘resolution’ on compensation for unfair dismissal the Assistant Registrar said the following: 110. My court is fully alive and aware to the fact that [E]Jmployment can come to an end anytime for whatever reasons. It is not a lifetime commitment. Employees ought to be alive to this fact and always be thinking of plan B. 111, Bearing in mind the afore mentioned principle, the court will consider that when assessing compensation for unfair dismissal, the court have to award damages which are fair and equitable. 112, Unlike, the position taken by counsel for the applicants, I am of the considered view that the applicants shal! not be compensated up to their fully retirement period despite, showing the court evidence that they tried to mitigate the loss, but due to the reference letters from the respondent, they had failed to secure [anjother jobs. Page 6 of 13 30, After making the above observations the Assistant Registrar proceeded to award lump sums of money as compensation to each individual Respondent but without any analysis of how the Assistant Registrar had arrived at those sums of money. He did not indicate how the sums were just and equitable, whether he had taken into account any contributory fault, the years of service each individual Respondent, the salary at the time of termination, or mitigation factors. Legal framework on compensation 31, Section 31(1) of the Constitution provides that ‘every person shall have the right to fair and safe labour practices and to fair remuneration’. 32, Section 63(4) of the Employment Act provides that: 33, 34, 35, An award of compensation shail be such amount as the Court considers just and equitable in the circumstances having regard to the loss sustained by the employee in consequence of the dismissal in so far as the loss is attributable to action taken by the employer and the extent, if any, to which the employee caused or contributed to the dismissal. The starting point in assessing compensation is that the award must be just and equitable, What is just equitable will depend on the facts and circumstances of any individual empioyee including, the loss suffered by any individual employee, years of service, salary at time of termination, contributory fault, if any and mitigation factors of any individual employee. The Court has wide discretion to assess and make an award compensation but the discretion must be exercised judiciously, for instance, the award to be made under section 63(4) shall not be less than the minimum standards set under section 63(5) of the Employment Act. In this Court’s view, applying the same principles of evidence in civil matters, the onus is on the employee to prove his loss and thereafter the burden shifts to the employer to show that the employee either mitigated his loss or that the employee contributed to the dismissal, Page 7 of 13 Proof of loss 36. The IRC record does show that the Respondents lost salaries. By virtue of the unfair dismissal, the Respondents lost a salary from the date of termination’. This loss could be proved through the Respondents’ last payslips. The record shows that the payslips were provided. Proof of mitigation Legal framework 37. 38. 39. AQ, The position of the law is that mitigation is not covered under the statutory provision governing compensation for unfair dismissal. It is a common law principle. The rationale used by the courts and that appears in the jurisprudence for introducing mitigation of loss when considering compensation for unfair dismissal is that at common law an aggrieved party claiming loss has a duty to mitigate loss’, see for example, Telecom Networks Malawi Limited v Bodole,? Mwafulirwa v Manica Malawi Ltd,° and Malawi Environment Endowment Trust v Kalowekamo’ At common law, the principle is that an injured party must take measures to mitigate his/her loss. A wronged claimant should not recover damages for any loss which she/he could have avoided but failed to do so by wilful action or inaction.’ It follows, that the principle on mitigation is not to deprive a successful claimant from recovering for the loss found to have occurred due to the wrong committed by the defendant, rather that the damages should take into account whatever the claimant would have earned if she/he had mitigated his/her loss, The case of Telecommunications v Bodole cited above illustrates this pomt. 3 See generally, Stanbic Bank v Mtukula [2008)]MLLR 54 4 Sikwese, R. S. Labour Law in Malawi (fourth edition) (Lexis Nexis, South Africa, 2022} 131-132 5 [ILLR]Vol 40, page, 159 (IRC Civil Appeal Cause No, 4 of 2019 judgment dated 10 September 2020 {unreported} HC. * [Matter No. IRC 34 of 2004 (unreported)] IRC. 7 2008] MLLR 237, at page, 242. 3 thid, Sikwese, at page, 131 Page 8 of 13 4]. 42, 43, 44. In this regard the onus rests on the defendant to prove the mitigated loss or wilful negiect of the duty to mitigate loss. The jurisprudence that has developed, suggests that it is only just and equitable as stipulated in section 63(4) of the Employment Act that mitigation factors ought to be taken into consideration when assessing loss in an unfair dismissal claim. Therefore, although the Employment Act does not expressly provide for mitigation of loss as a consideration, the principles of compensation or damages for loss should apply by way of interpretation of the Constitution to give meaning to the general right to unfair labour practice under section 31, which has been held to apply to both the employee and the employer.’ In other words, when determining fairness in an employment relationship, the court should consider the rights of the employee and the interests of the employer.!° Further, that the principle of compensation is to place the wronged party in the same position that she/he would have been but for the wrong would be defeated if the court was to award compensation even in situations where it is proved that the claimant had mitigated the loss or wilfully failed to take measures to mitigate his/her loss. Proof of contributory fault 45, The IRC found that five Respondents had contributed to the dismissal through abscondment. That the reason for the dismissal was valid. In assessing a just and equitable compensation the Court must determine and take into account the role of the employee in the unfair dismissal. In this case the five Respondents played a big role in the unfair dismissal and their compensation must reflect this role through a reduced award, Award to retirement age 40. The general principle is that an employment relationship is based on the law of contract although it enjoys some statutory protections in ferms of minimum standards or ° Liquidator, Import and Export (Mw) Ltd v Kankhwangwa [2008] MLLR 219, at page. 232 19 thid Page 9 of 13 minimum conditions of employment, for example, fair treatment and non- discrimination, hours of work, leave, wages, pension, severance and gratuity. Other matters are left to the contracting parties to negotiate and agree upon. It has for this reason been held that a contract of employment is not a contract for life, as rightly put by the Assistant Registrar of the IRC. Parties may decide to part ways at any time as long as they comply with the notice period. An employee may resign or may die while an employer may cease to exist or downsize leading to termination of a contract of employment. Therefore, a dismissed employee is not entitled to treatment as if the contract of employment still subsisted and to be paid all the remuneration until retirement.!! 47. The above are the legal principles that should guide the court when considering a just and equitable award of compensation for unfair dismissal. Jurisdiction of the Assistant Registrar of the IRC to assess compensation. Legal framework Industrial Relations Court (Procedure) Rules 48. As argued, correctly, by the Respondents, the powers of the Registrar of the IRC are derived from the Industrial Relations Court (Procedure) Rules, in particular R.5A of the Industrial Relations Court (Procedure) (Amendment) Rules, 2009 which provides in the relevant parts that: The Registrar and a Deputy Registrar shal! have power to transact all such business and exercise all such authority as may be transacted and exercised by the Chairperson or Deputy Chairperson in Chambers, except in respect of the following matters or proceedings:.. 49. There are four exceptions regulating functions that the Registrar of the IRC may not perform. None of these relate to assessment of compensation. It is therefore concluded by application of the established golden rule in statutory interpretation- __that the words of a statute must, prima facie be given their ordinary meaning. Another rule is that where words of a statute are unambiguous it is not necessary to 4 Ibid, page 165 Page 10 of 13 look elsewhere for their meaning, and if'a state of facts comes fairly and squarely within the plain meaning of those words, then effect must be given to such words,” 50, Further, the words of a legislative provision when read in their natural and ordinary meaning, must give effect to the entire context, harmoniously with the scheme of the legislation, its object, and the intention of the legislature. 51, A careful reading of the rule giving power to the Registrar of the IRC and applying the principles of statutory interpretation to that reading, result in a finding that the Registrar is not precluded from hearing assessment of compensation as directed by the Chairperson or Deputy Chairperson of that Court. This is consistent with or in harmony with the legislative scheme on powers and functions of Registrars holding similar qualifications and at the same professional grade level serving in the High Court, whose mandate includes assessment of damages. 52. The comparative provision is the Courts (High Court) (Civil Procedure) Rules, 2017, providing under Order 25(1) on powers and functions of the Registrars that: Subject to the direction of a Judge, the Registrar may exercise the jurisdiction, powers and functions of the Court to make, or refuse to make, an order, on any or all of the following- (n) assess damages. 53, The Appellant has not cited any legal provision that precludes the Registrar of the IRC from assessing compensation and other awards as directed by the IRC. The authorities from this Court holding the contrary view are not persuasive. The ground of appeal is misconceived and without merit. It is dismissed. 54. This leads to a crucial part of this appeal on the step that the Appellant ought to have taken after being aggrieved by the Registrar’s decision. Rule 5A provides that a party may apply to have a decision of the Registrar reviewed by the Chairperson or Deputy Chairperson. Upon review the Chairperson or Deputy Chairperson may among other 2 National insurance Company v Mzimu and others {20020-2003} MLR 178, at page 185 Page 11 of 13 options confirm, vary, amend or set the decision aside. ‘5 The relevant parts of Rule 5A of the Industrial Relations Court (Procedure})(Amendment) Rules, 2009 read: (2) Any decision of the Registrar or a Deputy Registrar may be reviewed by the Chairperson or Deputy Chairperson on application by a party to the matter or proceeding; and upon such review, the Chairperson or Deputy Chairperson may- (a) Dismiss the application or confirm, set aside, vary or amend the decision of the Registrar or Deputy Registrar (b) Determine the matter as if it was coming before him or her in the first instance and give such decision as the case may be; or (c) Refer the matter back to the Registrar or Deputy Registrar with directions for further consideration. 55, The Appellant had pursuant to this provision the liberty to take the matter before the Chairperson or Deputy Chairperson for review of the assessment. Decision and Direction 56. Accordingly, the matter is referred back to the Chairperson or Deputy Chairperson of the IRC under Rule 5A(2) above to review the Decision of the Assistant Registrar on assessment of compensation. In making such review the Chairperson or Deputy Chairperson shall be guided by the principles laid down in this judgment. Severance pay 57. The Appellant is aggrieved that the Assistant Registrar did not take into consideration by way of reducing from the severance pay payable by the amount of severance pay already paid to the Respondents through the Labour Office. 58. The Chairperson or Deputy Chairperson in reviewing the Order of Compensation as directed above in paragraph 56, shall also review the severance pay bearing in mind the IRC judgment and the law on factors that should be taken into consideration, Conclusion 59. The decision of the IRC to award overtime to the Respondents is reversed. 13 Rule 25A(2)}(a) Page 12 of 13 60, The Order of assessment amounting to MWKI61I 058 000 is set aside. 61. The Chairperson or Deputy Chairperson shall review the award of MWKI61 058 006, and substitute it with an award that is reasoned and justifiable by legal principles and evidence in respect of each individual Respondent. The heads of compensation and severance pay should be separated for each individual Respondent outlining the computation and reasons for each individual award. Order 62. The Chairperson or Deputy Chairperson is directed to prioritize this assessment since the matter has been pending in the court system for over nine years. The assessment should be made within 30 days of this judgment. Pronounced this 5" day of May 2023 at High Court (Civil Division) Principal Registry. Rachel Sophie Sikwese JUDGE Page 13 of 13