Court finds MRA guilty: Ordered to compensate 210 ex-employees for unfair dismissal

About 210 former employees of Malawi Revenue Authority (MRA) now have a reason to afford a broader smile after the Industrial Relations Court in Blantyre ordered the firm to compensate them for unfair dismissal.

The ex-employees dragged MRA to court after they were declared redundant during the organization’s restructuring process that took place between June 2009 and July 2010.

The government’s tax collecting agency retrenched the workers following a recommendation from their consultants, Ernest and Young, who carried out the restructuring process.

MRA boss John Bizwick: To pay fired employees
MRA boss John Bizwick: To pay fired employees

But the fired workers argued that their former employer did not apply fair labour practices in retrenching them and were seeking reinstatement.

Alternatively, the ex-members of staff were claiming compensation for unfair dismissal, withheld terminal benefits, non-payment of pension benefits, severance pay, notice pay, bonuses and house allowance, non-payment of arrears in salary increment and non-payment of leave days.

But the ex-employees backed their argument of unfair dismissal because initially, according to documents, MRA through its Acting Deputy Director Ernest Thindwa had promised every member of staff that the process would not result in redundancies as it was only aimed at developing an organizational structure that would respond to the changing operational environment.

The former staff members also argued that the process did not affect their employments at MRA as in the course of restructuring some people were recruited on both temporary and permanent positions even without advertising in the media.

Further to that, some people who were employed on temporary basis during the restructuring, argued the fired employees, were given permanent positions and the employment of new workers continued even after the restructuring, replacing the redundant ones.

Due to the above, the workers felt they were discriminated against, suffered unfair labour practices in that they were wrongly retrenched without the organisation following proper procedures.

And in its judgment made on Friday, January 24, 2014, the court sided with the applicants and faulted MRA for effecting the redundancies without following proper procedures like consultations, disclosure of reasons for the redundancies as well as the criteria used to select the retrenched.

Article 13 of the International Labour Organisation (ILO) Convention Number 158 concerning termination at the initiative of the employer states that where an employer intends to terminate services of an employee, the employer must provide the workers’ representatives the reasons for termination and consult the representatives on the matter, which MRA did not do.

“In our agreed view, the evidence before us does not show that there were any consultations in as far as the question of job losses is concerned. From the evidence of the applicants and from the evidence of the respondents we hardly find that the respondent forewarned the applicants that there was going to be an activity whereby its employees would lose jobs,” reads judgment.

“The carrying out of consultations is rooted in international law applicable to Malawi. Failure to carry out the consultations trickles down to the accusations of unfair dismissal because consultations are a practical and legal aspect of procedural fairness of the dismissal. It also has a bearing on the concept of justice and equity.

“We feel inclined to think, and we agree, that the decision to terminate the applicants’ services was unilateral and without due process of consultations. To that extent, we find that the applicants’ respective dismissals were unfair.

“We do not find that there was any attempt to reach a consensus. There was hardly disclosure of information by the employer but most importantly, the employees were not afforded an opportunity to make representations. Apart from that we are at a loss as to the selection criteria that the respondent used as regards the applicants in declaring them liable for retrenchment.”

However, the court also ruled that, looking at the case, instead of reinstatement the ex-employees must instead be compensated.

The court observed it would be impracticable to order MRA to reinstate the retrenched workers because it did not appear that the parties (applicant and respondent) were willing to continue with the employment relationship.

“In this matter it does not appear that it would be practical to order that the parties should continue in the relationship… The respondent relies much on the fact that their establishment was restructured and therefore that it would be impractical to order reinstatement,” said the judges in their ruling.

The development implies that MRA will now have to pay millions to the 210 retrenched employees in compensation.

However, the court will have to consider the appropriate compensation to award the applicants.

“As the matter has taken long, we direct the court registry to set down the matter for assessment as a matter of urgency,” states the court ruling.

However, the court also gave a go-ahead to both parties to appeal against the decision in the light of section 65 of the Labour Relations Act.

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