Capital Foods Limited v Mitumbira and 2 Others (Civil Appeal 25 of 2012) [2023] MWHC 130 (13 July 2023)

Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. eR me JUDICIARY IN THE HIGH COURT OF MALAWI PRINCIPAL REGISTRY CIVIL APPEAL NO. 25 OF 2012 (Being Matter No. IRC 539 of 2016 in the Industrial Relations Court, Lilongwe Registry) BETWEEN CAPITAL FOODS LIMITED ........ ccc ccececceeeeeereeereetseveeece APPELLANT AND GOSTINGS MITUMBIRA ...........sccceccccccccecvcccceveccees 1** RESPONDENT LEFAT I SADE sssivsscuwssvvcscvcccvsteotscvececvescssveesscsorseoes 2"? RESPONDENT OFTEN KAMPALIRO .... ccc cceeeeeeeeeeeeeeeeeeneeeneeenenes 3" RESPONDENT CORAM: THE HONOURABLE JUSTICE KENYATTA NYIRENDA Mr. Sambakusi, Counsel for the Appellant Mr. Namanja, Counsel for the Respondents Mrs. Alinafe Mtenje, Court Clerk JUDGMENT Kenyatta Nyirenda, J. Introduction 1. This is an appeal by Capital Foods Limited (Appellant) against an Order of Assessment of Compensation dated 20 December 2021 [hereinafter referred to as “OAC” made by the Industrial Relations Court (lower court). The appeal is strongly opposed by Messrs. Gostings Mitumbira, Lefati Sade and Often Kampaliro (Respondents). Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. 2. A brief background may not be out of order. The Respondents were employed by the Appellant as general worker, laboratory assistant and cleaner respectively. On 20" August 2016, the Respondents were dismissed after they had demanded salary increment. 3. The Respondents commenced proceedings against the Appellant claiming compensation for unfair dismissal. The Appellant was found liable for the claim and, by the OAC, the Appellant was ordered to pay each of the Respondents the sum of K20, 400,000.00 as compensation. Paragraph 1 on page 6 of the OAC is relevant and this is what is said therein: “According to the available evidence, all of them were born in or around 1987 and this means at the time of assessment on 11 November 2021, they were about 35 years of age and remained with 25 years to reach their mandatory retirement age of 60 years. Hence, considering that their salaries would not remain static with passage of time, an award of two month’s wage for each of the 25 years they remained with (300 months) will in our view be appropriate and just in the circumstances. This will be calculated as follows: 1* Applicant: K34, 000 x 2 x 300 = K20, 400,000.00 2”4 Applicant: K34, 000 x 2 x 300 = K20, 400,000.00 34 Applicant: K34, 000 x 2 x 300 = K20, 400,000.00 TOTAL: K61, 200,000.00.” Grounds of Appeal 4, According to the Notice of Appeal dated 27" September 2022, the Appellant advanced the following three grounds of appeal: “7, The Deputy Chairperson erred in law in awarding compensation to the Applicants up to retirement age. 2. The Deputy Chairperson erred in law in basing his decision on an irrelevant consideration of manner of dismissal. 3; The Deputy Chairperson erred in law in not adhering to the dictates of sections 63(4) and 63(5) of the Employment Act.” 5. Each ground of appeal will now be considered in turn. Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. The Deputy Chairperson erred in law in awarding compensation to the Applicants up to retirement age 6. The submissions by the Appellant on this ground of appeal were couched in the following terms: “4.1.1 Arguments that the Applicant ought to be compensated up to the age of retirement 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6 are untenable and unsound as there is no guarantee that one can work up to retirement age: See Kachinjika vs Portland Cement Company, Civil Cause 320 of 1998: Some courts over the years have assessed compensation for Unfair Dismissal under the two heads of Immediate Loss and Future Loss. Under the head of future loss, it was possible to award compensation from the date of judgment to the date on which one would have reached his retirement age. However, the recent decision pronounced on 20" October 2021 by the same Deputy-Chairperson whose Order on Assessment has been appealed against herein in Charles Nsaliwa vs Malawi Communications Regulatory Authority, Matter Number IRC PR 24 of 2015 held on page 20, that the approach of awarding compensation up to retirement age when assessing compensation is neither just nor equitable. The Court opted to use the minimum awards prescribed in section 63 of the Employment Act to assess compensation. It is acknowledged that the Nsaliwa (SUPRA) case differs from the one at hand since the Applicant in the Nsaliwa case was neither working for a private compuny nor was he working under a contract of unspecified tenure prior to his dismissal as is the case with Respondents herein. However, this disparity is immaterial since in Terrastone Construction Ltd vs Solomon Chathuntha, MSCA Civil Appeal No 60 of 2011, a matter regarding an applicant under a contract of unspecified tenure with a private limited company just like Respondents herein, the Malawi Supreme Court of Appeal took a similar approach of assessing compensation for Unfair Dismissal using Section 63 of the Employment Act and did not award compensation up to the age of retirement. The Court in Terrastone Construction Ltd vs Solomon Chathuntha, (SUPRA) actually warned against the practice of awarding damages with elements of punishment to the employer and set aside an award that was equivalent to the salary the employee earned during the entire period of his tenure and instead awarded him the minimum statutory compensation under Section 63(5) of the Employment Act. Furthermore, the Supreme Court emphasized that section 63(5) of the Employment Act is not a blank cheque for the court to decide any amount payable as compensation. Furthermore, the same Deputy-Chairperson who pronounced the Order on Assessment appealed against herein held on page 12 in the matter of Kad Kapachika vs JTI Leaf (Malawi) Limited, Matter Number IRC 40 of 2018 that the 3 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. 4.1.7 4.1.8 4.1.9 approach of awarding a former employee compensation up to retirement age runs counter with the spirit of section 63(4) of the Employment Act. He further held that there are a lot of precedents, such as the First Merchant Bank Bank vs Eisenhower Mkaka and 13 Others, MSCA Civil Appeal Number 53 of 2013 and Charles Nsaliwa (SUPRA) cases, which have abolished the practice of awarding compensation up to retirement age and then proceeded to assess compensation as per section 63(4) and 63(5) of the Employment Act. In First Merchant Bank Bank vs Eisenhower Mkaka and 13 Others, Civil Appeal Number 1 of 2016 it was stated that employment is not a lifetime commitment and that it would be against the spirit of Section 63(4) and (5) of the Employment Act to award an employee compensation under the heads of Immediate Loss and Future Loss. The Supreme Court stated as follows: “In assessing compensation, the IRC had to stick to the spirit of Section 63 of the Employment Act. Under this provision, it is the duration of service before termination that matters a lot in the calculation of compensation that must fall due, not the loss of salary, increments and sundry amenities from the date of dismissal to the date of judgment or the assessment of damages/compensation. In the same manner, future losses do not matter at all. Therefore, one cannot talk of loss of earnings up to the time the former employee would have retired. Certainly, that is not the spirit of the Employment Act. As already observed, Section 63(5) sets down the minimum compensation. The Court enjoys the wide discretion to settle for either the minimum prescribed or for any higher amounts of compensation as would fit the description of “just and equitable” after weighing the considerations in Section 63(4) of the Act”. Section 63(4) of the Employment Act, provides that an award of compensation shall be such amount as the Court considers just and equitable in the circumstances having regard to the loss suffered 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. Section 63(5) of the Employment Act provides that the amount to be awarded under subsection (4) shall not be less than — (a) one week’s pay for each year of service for an employee who has served for not more than five years; (b) two week’s pay for each year of service for an employee who has served or more than five years but not more than ten years; (c) three week’s pay for each year of service for an employee who has served for more than ten years but not more than fifteen years; and Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. (a) one month’s pay for each year of service for an employee who has served for more than fifteen years. 4.1.10 In the case of Kachinjika vs Portland Company, [2008] MLR 161, the Court 4.1.11 4.1.12 refused to award Immediate and Future loss following the unfair dismissal of the Applicant therein. The Court disagreed with the Applicant’s claim that he should be paid compensation in form of benefits such as housing allowance, gardener's allowance, water allowance and car allowance as if he had worked up to retirement age. The Court held that such an argument would mean that had the Applicant not been wrongfully terminated, he would have worked up to the age of retirement, which in that case was 60, while enjoying these benefits. The Court held further that any which way you want to look at it, such argument is untenable. The Court added that the truth of the matter is that not only had the Applicant not worked up to retirement age with the defendant company, but that there is also no bankable guarantee that he would have worked up to such age, the termination notwithstanding. The Applicant for instance could have died, resigned or he could have been properly terminated. The Court stated further that even afier this wrongful termination, it is possible that the plaintiff will find other employment or gainful work before the age of 60 which will not only pay him a salary but also extend to him the same fringe benefits for which the defendant would have paid him up to the age of 60 as compensation. The Court then concluded that the correct way is to calculate compensation from date of commencement of employment up to the point of termination of service or dismissal whatever the case might be as provided under section 63(3) of the Employment Act. Furthermore, the Deputy-Chairperson cited the case of Buliyani vs Malawi Book Service, 1994 MLR 24 as a basis to hold that unreasonableness on the employer's part can entitle an employee to compensation up to retirement age. However, a reading of the said case of Buliyani (SUPRA) does not show such a holding at all. The Applicant in the Buliyani case was not awarded compensation up to retirement age by virtue of unreasonableness on the part of the Respondent therein. Furthermore, the Buliyani case is not at par with the case involving the parties herein since the Buliyani case was a judicial review case centered on the validity of the decision making process which led to dismissal of the Applicant and not the merits of the case as is the case with the parties herein. Thus, it is submitted that the reliance on the case of Buliyani (SUPRA) by the Deputy-Chairperson as a Justification for awarding compensation up to retirement age for the Respondents herein was erroneous. In view of the foregoing, the Appellant submits that in awarding the Respondents compensation up to retirement age, the Deputy-Chairperson went against not only his previous case law in the Charles Nsaliwa (SUPRA) and Kad Kapachika (SUPRA) cases, but also pronouncements of the High Court in Kachinjika vs Portland Company and the Malawi Supreme Court of Appeal in Terrastone Construction Ltd vs Solomon Chathuntha and First Merchant Bank vs Eisenhower Mkaka and others, MSCA Number 1 of 2016 which were at all material times binding on him.” Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. 7. The position of the Respondents is that this ground of appeal is misconceived in that the AOC does not fall foul of section 63 of the Act in that the AOC does not pay the Respondents their salary up to their respective retirement ages. The relevant paragraphs of the Respondents’ Skeleton Argument read as follows: “3.1.1 There are a number of cases that have discussed this aspect of consideration when the Court is mulling over the question of how far to award compensation to an Employee who is determined to have been dismissed unlawfully by his or her employer. 3.1.2. In Davie Msinkhu v. Rab Processors,'! Kandulu A. R. stated as follows: ‘It is common knowledge that the purpose of awarding damages is to place the person in a position he would have been if there was no loss arising from the breach of Contract or unfair dismissal in the present case, putting the Applicant herein back to the position he would have been if he was not unfairly dismissed. ’ 3.1.3 The Court further said that: ‘To arrive at immediate losses, the assessment is from the date of dismissal to the date of Judgment of the Court. If the Applicant was re-employed soon after dismissal this factor will be taken into account by assessing when he got employed elsewhere and what his pay was. And the assessment is based on the pay per month that he would have earned during that period multiplied by the number of months in that period’. 3.1.4 In Charles Nsaliwa v. MACRA,’ the Court discussed the position of assessment in this manner: ‘The Court is given wide latitude to the extent that entrenched common law principles are applicable in assessing compensation provided the same revolves around the principle enacted in section 63 (4) of the Employment Act. 3.1.5 The Court further said that the Court is not allowed to dream up a figure without showing how it was arrived at. 3.1.6 The Court showed its reasoning and its calculations to how it made the award herein. It is not a dreamt up figure. 3.1.7 In FMB v. Eisenhower Mkaka & Others,’ the Court stated this: | Matter Number IRC 338 of 2013 (Principal Registry) (Unreported) 2 Matter Number IRC PR 24 of 2015 3 Civil Appeal Number 1 of 2016 (Lilongwe District Registry) 6 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. ‘In assessing Compensation, the Industrial Relations Court had to stick to the spirit of Section 63 of the Employment Act. Under this provision it is the duration of service before termination that matters alot in the calculation of the Compensation that must fall due, not the loss of salary, increments and sundry amenities from the date of dismissal to the date of Judgment or the assessment of damages/ Compensation. In the same manner future losses do not matter therefore one cannot talk of loss of earnings up to the time the former Employee should have retired.’ 3.1.8 This is the guiding principle as determined by the High Court whose decisions, as observed correctly by the Appellant, are binding on the Court below. 3.1.9 However this holds true in a case where the Court has not seen any aggravating factors, as was in this case, and those aggravating factors were sufficiently outlined in the determination for Compensation, which we have also outlined below in paragraph 3.2.7. 3.1.10 It should also be noted that the Court below did not award a Compensation which would be equal to the Respondents’ salaries up to retirement age. The Court only made a Compensation of 2 months payment for the remaining duration in which they would have worked. This in line with the spirit of the Section 63 herein that the idea is to Compensate the injured party and not to pay them a full salary until their retirement age. 3.1.11 In Stanbic Bank y. R. Mtukula,* the Supreme Court stated that: ‘An appellate Court is ordinarily reluctant to interfere with an award of damages by trial Courts in the exercise of their discretion. Again this Court is slow to interfere with an award of damages made by the trial Court and will only do so where it is satisfied that the award is ‘glaringly large or small’ and that no reasonable Court could make it,’ 3.1.11 The Respondents submit that the award for Compensation as made the Deputy Registrar, has not fallen foul with section 63 and the various case law which is currently obtaining because it is not paying the Respondents their salary to retirement. The Respondents also ask the Court to have consideration of the Stanbic v. Mtukula case cited above with a view that the Compensation which the Court below made was not glaringly large, all circumstances considered. Therefore, this ground of Appeal should be dismissed by the Court.” 8. I have considered the respective submissions on this ground of appeal and I cannot agree more with the submissions by the Appellant. The first question to 4 Civil Appeal Number 34 of 2006 (MSCA) Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. consider is whether or not the Respondents were compensated up to their respective retirement ages? To my mind, the answer has to be a positive yes. It is clear from the OAC that the Respondents were awarded “two month’s wage for each of the 25 years they remained with (300 months)” to retirement. 9, As aptly submitted by the Appellant, the lower erred in awarding the Respondents compensation up to their respective retirement ages: see Terrastone Construction Ltd v. Solomon Chathuntha MSCA Civil Appeal No 60 of 2011, First Merchant Bank v. Eisenhower Mkaka and others, MSCA Number | of 2016 and Kachinjika vs Portland Cement Company, Civil Cause 320 of 1998. 10. For the foregoing reasons, this ground of appeal has to be sustained and it is, accordingly, allowed. The Deputy Chairperson erred in law in basing his decision on an irrelevant consideration of manner of dismissal 11. It is the case of the Appellant that the award was based on the irrelevant consideration of the manner in which the Respondents were dismissed from work by the Appellant. This ground was argued in the Appellant’s Skeleton Arguments thus: “4.2.1 Section 63(4) of the Employment Act, provides that an award of compensation shall be such amount as the Court considers just and equitable in the circumstances having regard to the loss suffered 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. 4.2.2 The manner in which an employee has been dismissed does not appear anywhere in the said section 63(4) of the Employment Act in terms of factors to consider when awarding compensation. 4.2.3 In Terrastone Construction Ltd vs Solomon Chathuntha, (SUPRA) the Supreme Court determined what amounts to a just and equitable compensation and how Courts should apply Section 63(4) of the Employment Act. The Supreme Court then guided and held that Section 63(4) of the Employment Act should be read together with Section 63(5) of the same Act and added that the minimum awards prescribed by Section 63(5) should be awarded when assessing compensation for unfair dismissal. 4.2.4 On page 4, paragraph | of the Order on Assessment appealed against herein, the Deputy-Chairperson correctly stated that the minimum compensation the Respondents herein is K15, 692.30 for the 1" Respondent and what should be KY4, 153.80 each, although it is indicated as K94, 15.80 by perhaps clerical mistake, for the 2"4 and 3'4 Respondent. Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. 4.2.5 4.2.6 4.2.7 4.2.8 4.2.9 4.2.10 4.2.11 4.2.12 On page 4, paragraph 2 of the said Order on Assessment however, the Deputy- Chairperson proceeds to state that the Respondents herein deserve an award above the minimum provided in section 63 of the Employment Act by stating as follows: “However, these as we have already alluded to, are only the minimum statutory award. The maximum or the actual award that is to be made differs from case to case and is eventually in the discretion of a particular Court. The Courts have the powers to enhance or maintain it depending on the circumstances. What is of paramount importance is that such an award should be just and equitable in the circumstances. To consider what is just and eguitable, Courts take into consideration a number of factors such as age of the employee, the type of contract of employment, mitigation of loss and the conduct of the employer in so far as the dismissal is concerned” It is emphasized that the factors in bold in 4.2.5 above were stated without relying on any legal authorities. It is admitted that section 63(4) of the Employment Act grants the court some discretion in assessing compensation for unfair dismissal. However, the factors in bald letters in paragraph 4.2.5 above are not included as relevant factors in considering the issue of amount of compensation under the said section. Thus, the discretion the Deputy-Chairperson had in assessing compensation was to be exercised by taking into consideration factors such as the loss suffered 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 and not any other considerations such as manner of dismissal. The Court enjoys the discretion to settle for either the minimum prescribed or for any higher amounts of compensation as would fit the description of “just and equitable” after weighing the considerations in Section 63(4) of the Act: See Mkaka (SUPRA) matter as cited in paragraph 4.1.7 above. An Appellate Court is allowed to interfere with the award of compensation by a lower court if there was improper exercise of discretion by the lawer court. See Stanbic Bank Limited vs Mtukula, MSCA Civil Appeal No. 34 of 2006. The Appellant observes that the Deputy-Chairperson focused on the issue of conduct of the employer and emphasized on the manner in which the dismissal was conducted as a basis for awarding the Respondents herein compensation up to the age of retirement. See paragraph 4 on page 4 and paragraph 2 on page 5 of the Order on Assessment in question. The Appellant submits that the issue of the manner in which the Respondents herein were dismissed is an irrelevant consideration in so far as the assessment of compensation under section 63(4) of the Employment Act is concerned. The Appellant further submits that the award of compensation based on such an irrelevant consideration ought to be set aside by the Court.” 9 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. 12. The position of the Respondents is that the manner of termination of their employment is a relevant factor that the lower court had to take into account in coming up with the award. The Respondent’s Skeleton Arguments on this ground were couched in the following terms: “3.2.1 The Appellant states that Section 64 (4) of the Employment Act does not contain 3.2.2 3.2.3 3.2.4 3.2.5 anything which would have allowed the Court to have made such an award in Compensation. The said Section provides for loss occasioned to an Employee as attributable to the actions of the Employer. The manner of dismissal of an Employee is an action which is done and effected by the Employer. The manner in which the Respondents herein were dismissed, is not only impudent and sad, but also deplorable. This is a consideration the Court can make and made as regards the actions of the Appellant in dismissing the Respondents. In Esau C. Chikuse v. SOS Children’s Village,’ Mzikamanda J, as he was then, stated thus on assessment of Compensation: ‘On assessment of compensation, the law is clear that the court should award Compensation of such amount as it considers just and equitable in the circumstances having regard to the loss sustained by the Employee in consequence of the dismissal so far as loss is attributed to the action taken by the Employer and the extent, if any to which the Employee caused or contributed to the dismissal. These are the considerations which the Court had to make to come up with the final award of Compensation which it arrived at. The Respondents cannot be faulted in any way as to have contributed to the dismissal which caused them this loss, and the manner of the dismissal is what was at the back of the mind of Court vis-a-vis the issue which the Respondents had raised with the Appellant. The Respondents are of the view that the Section does not limit that considerations of the trial Court to have a narrow view as to what ensued between the parties. The Court must have a holistic view of the circumstances and events as they unfolded in the process of the dismissal, because surely dismissals do not take place in a vacuum or controlled situation for the Court to have such a limited application of the above mentioned Section 64 (4). And likewise, neither are the decisions of the Court made in a vacuum. The Court must have due consideration of every aspect of the case, manner of dismissal inclusive, to come up with a fair decision. In Kachinjika v. Portland Cement Company,° the Court stated that: > Civil Appeal Number 77 of 2009 (Lilongwe District Registry) (Unreported) ® Civil Cause Number 320 of 1998 10 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. ‘The manner of his termination, his legitimate expectations and the cost of money since his termination are also relevant considerations. The list of relevant considerations is of course not a closed box. 3.2.6 In Kad Kapachika Phiri v. JTI Leaf (Malawi) Limited,’ the same Court whose decision is being appealed herein said: ‘Where the Court sees no aggravating factors and intends to reach a just and equitable remedy it becomes prudent to award no more than the said minimum award’. 3.2.7 In so saying, the Court is aware that each case is different according to its fucts and circumstances and that some cases will be divergent from the rest depending on its own facts, which aggravate the dismissal of the Employee. This is such a case where there are aggravating factors which have had a bearing on the Court's final award on Compensation. The Court also narrated the circumstances which led to the dismissal and found them to victimisation and discrimination, and using redundancy as an excuse to dismiss the Respondents. The current situation of the Respondents having failed to mitigate their losses was also considered. 3.2.8 The Respondents submit that the Trial Court had the right to make such consideration as to the manner in which the dismissal occurred and was effected such that it would have a bearing on the final amount to award, and as such this ground of Appeal should be dismissed.” 13. JT have considered the respective submissions on this ground of appeal. One thing is clear from a reading of the OAC: the manner in which the Respondents were dismissed was one of the factors that the lower court took into account in determining the quantum of compensation to award the Respondents. The all- important question under this ground of appeal is whether or not the lower court should have included the said factor as a consideration in so far as section 63(4) of the Employment Act is concerned. 14. Iam inclined to agree with the submissions by the Appellant that the manner in which an employee is dismissed is not a factor to have regard to in making assessment of compensation under section 63(4) of the Employment Act. The matters that the Court has to take into account in exercising its discretion under section 63(4) of the Employment Act are those expressly stated therein, that is, “the loss suffered 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”. 7 Matter Number IRC 40 of 2018 11 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. 15, It is noteworthy that the crux or central point in the above quoted phrase 1s not about the actions of an employer as such but on an entire different issue, that is, the question whether or not the loss suffered by an employee is attributable to the actions taken by an employer. The two issues are separate and distinct. In terms of section 63(4) of the Employment Act, the Court has to take into considerations the matters stated therein and these do not include the manner of dismissal. In the premises, it would be unreasonable and misleading to argue that section 63(4) of the Act includes the manner through which an employee was dismissed as a consideration in determining the compensation that may be awarded in the circumstances. 16. In view of the foregoing and by reason thereof, the second ground of appeal is allowed. The Deputy Chairperson erred in law in not adhering to the dictates of sections 63(4) and 63(5) of the Employment Act 17. The arguments by the Appellant in support of this ground can be better understood by quoting in full the skeleton arguments thereon: “4.3.1 From the authorities already discussed above, particularly Charles Nsaliwa (SUPRA) and Kad Kapachika (SUPRA) decided by the same Deputy-Chairperson, the decision of the High Court in Kachinjika ys Portland Company and the decisions of the Malawi Supreme Court of Appeal in Terrastone Construction Lid vs Solomon Chathuntha and First Merchant Bank vs Eisenhower Mkaka and others, MSCA Number I of 2016, it is clear that the Deputy-Chairperson ought to have restricted himself to the provisions of sections 63(4) and 63(3)_of the Employment Act. 4.3.2 The Order on Assessment appealed against herein deviates from established principles of law on assessment of compensation for unfair dismissal pronounced by higher courts without good justification. 4.3.3 As already stated, the award in issue herein was based on the irrelevant consideration of the manner in which the Respondents were dismissed from work by the Appellant and such a consideration is not prescribed in section 63 of the Employment Act. 4.3.4 The Appellant submits that the Deputy-Chairperson erred in law in not adhering to the dictates of sections 63(4) and 63(3) of the Employment Act 4.3.5 Ironically, as stated in paragraph 4.2.4 above, the Deputy-Chairperson had assessed compensation correctly under sections 63(4) and 63(5) of the Employment Act and then proceeded to depart from such correct approach based on irrelevant considerations. 12 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. 4.3.6 The Appellant submits and prays that compensation in this matter be assessed using the minimum provided in the aforementioned sections of the Employment Act.” 18. The position of the Respondents is that this ground of appeal lacks merit. Paragraph 3.3 of the Respondents’ Skeleton Arguments is relevant and it reads as follows: “3.3.1 Section 63 of the Employment Act provides for Remedies for unfair dismissal. The relevant sections as cited in this ground of Appeal provide as follows: 63 (4) An award of compensation shall 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. 63 (5) The amount to be awarded under subsection (4) shall not be less, than— (a) one week’s pay for each year of service for an employee who has served for not more than five years; (b) two week’s pay for each year of service for an employee who has served for more than five years but not more than ten years; (c) three week’s pay for each year of service for an employee who has served for more than ten years bul not more than fifteen years; and (ad) one month’s pay for each year of service for an employee who has served for more than fifteen years, and an additional amount may be awarded where dismissal was based on any of the reasons set out in section 57 (3). 3.3.2. In Paladin Africa v. Patrick Mkango,’ Mkandawire J, as he was then, said that: ‘the Industrial Relations Court may go up the minimum standard on its evaluation of the matter. The Court is not limited to by the next bracket. The Court enjoys wide discretion to settle either the minimum prescribed or for any higher amounts of compensation as it would fit the description of ‘just and equitable circumstances’ afier weighing the considerations of Section 63 (4) of the Employment Act.?’ 3.3.3 The Court in the Paladin Africa case (Supra), further stated that: 8 Civil Appeal Number 83 of 2017 (Lilongwe District Registry) (Unreported) ° Cap of the Laws of Malawi 13 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. ‘Much as I am aware that this is a discretionary exercise, it is however imperative that whenever the Court is exercising its discretion to move away from the minimum threshold, it must give reasons. It is not open to the Court to give any Compensation as it wants.’ 3.3.4 In Southern Bottlers Limited v. George Langwe,!" the Court stated thus: ‘without fear of repetition, allow me to emphasise that Section 63 actually provides for the minimum standards and where the Court considers it necessary the Court will award such an amount as it considers just and equitable in the circumstances of the case.’ 3.3.5 Section 63 (5) contains the words ‘not less than’. This is where the Act puts a certain limit below which an award made by the Court should not go beyond, after it has made its due calculations using the formula listed therein. The Section does not direct the Court to make a compensation to be as it has listed, but rather to start from there and go up according to its discretion. There is no cap on the amount that a Court can award, but there is a cap on the lowest amount it can aware according to this section. The Court is not confined on the amount upwards. 3.3.6 The Courts have interpreted Section 63 (5) and what strongly comes out in the cases cited above is that the Section provides a minimum only. In other words it provides the starting point or the lowest amount which the Court may award in Compensation. It does not provide any formula for a maximum. That is left to the Court to consider, in its discretion, when all factors of that particular case have been considered. 3.3.7 In the Nsaliwa Case (Supra), the Court stated that: ‘As promulgated by the provision of Section 63 (4) of the Employment Act, the fundamental principle in making the award of Compensation for unfair dismissal is that it should be just and equitable in the circumstances, Now to ensure that the compensation is fair, just and equitable to both parties, Section 63 (4) then provides for the starting points. The discretion of how much maximum compensation to award to an employee who_has been unfairly dismissed is given to the Court.’ (Our own emphasis) 3.3.8 In the end, the trial Court has that discretion to award the amount which it has deemed fit as per the facts of that particular case. 3.3.9. The Respondents submit that the provision of the Law which has been cited in this ground of Appeal only provides a bare minimum and a starting point in the consideration of making an award for Compensation. The maximum award amount is in the discretion of the Court and the Court is not limited by the brackets provided therein in the said Section. '© Civil Appeal Number 48 of 2009, Lilongwe District Registry (Unreported) 14 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. 3.3.10 In the Kachinjika Case (supra) the Court said that: ‘whether or not the Plaintiff tried to mitigate his losses is another relevant consideration when determining an assessment of compensation for unfair labour practices. ’ The Lower Court has it on record that the Respondents tried to mitigate their loss by looking for employment but they were unsuccessful. This has compounded their loss. 3.3.11 The Court in the same case said: ‘That other relevant considerations include the manner of the employee's dismissal, his legitimate expectations and inflation since the termination of employment. ’ 3.3.12 The Respondents therefore ask the Court to dismiss this ground appeal.” 19. [have carefully considered the respective submissions by both Counsel. It will be recalled that the Court has already found and held that the lower court erred in law in basing its decision on an irrelevant consideration of manner of dismissal which consideration is not provided for in section 63 (4) of the Act. In short, the lower court did not adhere to the dictates of section 63 (4) of the Act. 20. The Court has also already held that the lower court erred in law in awarding the Respondents compensation up to retirement age. This has implications in so far as section 63(5) of the Act is concerned. The compensation awarded to the Respondents under section 63 (5) of the Act was calculated on the basis that Respondents had 25 years to reach their retirement ages. This is evidenced by the use of the multiple of 300 (25 years x 12 months). It was wrong for the lower court to calculate the compensation based on the consideration of retirement age. Section 63(5) of the Act is crystal clear: the amount to be awarded to an employee has to be based on years of service of the employee and not the years left before the employee reaches the age of retirement. See Terrastone Construction v. Chathuntha, supra. 21. All in all, the Court agrees with the Appellant that the OAC is in breach of sections 63(4) and (5) of the Employment Act. Accordingly, this ground of appeal is allowed. 22. Before resting, I wish to make the following observation regarding the application of section 63(5) of the Act in circumstances where the Court is minded to award an amount more than the minimum compensation provided under the said provision. 15 Capital Foods Limited v. Gastings Mitumbira & 2 Others Kenyatta Nyirenda, J. 23. The correct approach to take, in my view, is for the court to replace the number of weekly wages per year in section 63(5) with additional number of weeks, provided good reasons (well founded in law) for doing are given: see the Order on Assessment in Kad Kapachika v. JTI Leaf (Malawi) Limited, Matter Number IRC 40 of 2018. For instance, by way of example, the lower court could have awarded the Respondents 3 or 4 weeks’ pay for each year of service. Such compensation would have been above the prescribed minimum but based on years of service as required by section 63(5) of the Act. In other words, such an approach would have the effect of the court awarding compensation amounting to a sum greater than the minimum provided in section 63(5) of the Employment Act based on the years of service of the employee before termination of employment (and not up to retirement age) without breaching the provisions of section 63(4) and (5) of the Act. 24. Based on the foregoing, the net result is that compensation in this matter has to be assessed using the minimum threshold provided in section 63(5) of the Act. The 1° Respondent was employed on 5“ December 2014 and he was dismissed on 20" August 2016. This means he had been in employment for one year and eight months. At the time of termination of employment, the 1‘' Respondent was earning a salary of K34,000.00 per month. Having served for not more than five years, the compensation to be awarded to the Respondents under section 63(5) of the Act is “one week’s pay for each year of service”, that is, K7.94 . 25. The 2™ Respondent was employed on 16" June 2010 and he was dismissed on 20" August 2016. This means he had been in employment for six years and two months. At the time of termination of employment, the 2"4 Respondent was earning a salary of K35,000.00 per month. Having served for more than five years but not more than ten years, the compensation to be awarded to the 24 Respondent is “two weeks’ pay for each year of service”, that is, K105,000.00 . 26. The 3 Respondent was employed on 26" July 2010 and he was dismissed on 20" August 2016. This means he had been in employment for six years and one month, At the time of termination of employment, the 1** Respondent was earning a salary of K36,000.00 per month. Having served for more than five years but not more than ten years, the compensation to be awarded to the 3 Respondent is “two weeks’ pay for each year of service’, that is, K108,000.00 . 27. For avoidance of doubt, the award made by the lower court is set aside and replaced by the award by this Court. 16 Capital Foods Limited v. Gostings Mitumbira & 2 Others Kenyatta Nyirenda, J. Pronounced in Court this 13 day of July 2023 at Lilongwe in the Republic of Malawi. —_— Wwe) Kenyatta Nyirenda JUDGE 17