IN THE INDUSTRIAL RELATIONS COURT OF MALAWI
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MATTER NO. IRC PR 420 OF 2008
GRAINFIELD KANSADWA ……………………………. APPLICANT
MAKANDI TEA AND COFFEE ESTATES…………………………………………………..RESPONDENT
J. NRIVA DEPUTY CHAIRPERSON
D. Z. Namandwa Employers' Panelist
Ms E. Mtenje Employees' Panelist
Represented by M. A. Tembo
Respondent represented by Mr Muskambo
Represented Legally by Mr A, Muhome
Clerk : Mr Gowa
The Court unanimously holds that the applicant's severance allowance should be for 11 years. The applicant stated that he was getting K391,346 per month. The respondents have not disputed this figure. We shall therefore use this amount for purposes of calculating severance allowance. This comes to K3,973,667.08 (K391346x12x4x11) /12
DECISION ON PERIOD FOR SEVERANCE PAY
. Since the respondent paid the applicant K1,545,159, the respondent should pay the applicant the difference (K2,428,508.08) within the next 14 days.
The respondent employed the applicant on 1st December 1976. He retired in August 2008. He received severance allowance. However, he claims that the respondent underpaid him the severance pay. The reason that the applicant is advanceing is that he worked for 31 years but he was paid severance pay for 17 years.
It is appropriate to note that the respondent, though still using the trade name of Makandi Tea and Coffee Estates has charged hands of management. Most importantly in June 1997, the company was sold to new owners and this was communicated to the employees. The notice also talked about the termination of the employment contracts and that the employees entered into new contracts.
The notice read:
As result of the sale of Central Africa Company Limited to African Plantations Corporation Ldc, severance pay will be paid out to permanent employees who qualify for severance pay under the Malawi Government Gazette order dated 16th July 1976 and mended as per General Notice No. 96 of 1990.
It should be noted that consequent to disbursement of severance pay, the contract of employment with the Central Africa Company Limited will be terminated. African Plantations Corporation will have the option to re-employ whoever they wish, and re-employment will not be automatic.
Employees who will be re-employed under African Plantations Corporation will be starting afresh with no service whatsoever and will sign new contracts.
African Plantations Corporation will require adequate time to go over all the employee records to ensure that severance pay computations are correct and they will therefore be in a position to pay out these funds.
It is therefore clear that the respondent severed applicant's services at that point and the employees started anew in 1997. Therefore, the applicant's severance pay should be for 11 years and not for the whole period of service.
Made this 6th day of October 2010
D. Z. Namandwa