IN THE
HIGH COURT OF
PRINCIPAL
REGISTRY
Civil Cause number 3719
of 1998
Between
MACPHERSON NELSON
MAGOLA Plaintiff
And
PRESS CORPORATION
LIMITED
Defendant
CORAM: D F MWAUNGULU
(JUDGE)
Kasambala, Legal
Practitioner, for the plaintiff
Chirwa, Legal Practitioner, for
the defendant
Katunga, the official court
interpreter
Mwaungulu, J.
JUDGEMENT
The employee, Mr. Magola, sues for
compensation after the employer, Press Corporation Limited, terminated his
employment on
The plaintiff joined the corporation
on
Before
Mr. Magola accuses Press Corporation of
terminating the employment unfairly and wrongly in contravention of the
Constitution and rights under international agreements to which
The defendant’s contention cannot be
right because of what this Court decided in Nkhwazi
v Commercial Bank of
Both decisions followed the National
Industrial Relations Court decision in Norton
Tool Co Ltd v Tewson [1973] 1 All ER 183, followed in Morrish v Henlys (Folkestone) [1973] 2 All ER 137. The President,
Sir John Donaldson, said in Norton Tool
Co Ltd v Tewson at 186, about damages for unfair dismissal under the
English Employment Acts (much like our Employment Act):
“Counsel for the
appellants has submitted that it is well-established that at common law in any claim
for wrongful dismissal, no account can be taken of injury to the plaintiff’s
feelings by the manner of the dismissal or, with the possible exception of the
case of an actor, of the effect of the dismissal on prospects of future
employment: see Addis v Gramophone Co. Ltd.
The measure of damage in such a case is what the plaintiff would have
earned during the period of notice, less anything which he in fact earned or,
in accordance with the duty to mitigate his loss, he could have earned in that
period….In our judgment, the common law rules and authorities on wrongful
dismissal are irrelevant. That cause of
action is quite unaffected by the 1971 Act which has created an entirely new
cause of action, namely the ‘unfair industrial practice of unfair dismissal. The measure of compensation for that
statutory wrong is itself the creature of stature and is to be found in the
1971 act and nowhere else. But we do not
consider that Parliament intended the court or tribunal to dispense
compensation arbitrary. On the other
hand, the amount has a discretionary element and is not to be assessed by
adopting the approach of a conscientious and skilled cost accountant or
actuary.”
In
my judgment, section 31 of the Constitution created a right not hitherto
acknowledged by the common law. A termination otherwise lawful, in the sense
that it is not wrongful at common law, could be an unfair labour practice under
the Constitution. This concept occurs under the Employment Act. The
Constitution talks about compensation, a similar concept under the English and
Malawian Employment Acts, and damages at common law are inapplicable. The
compensation is, as the President states, in the discretion of the Court.
The principles of compensation are the
same under the Constitution, the English Employment Act and the Malawi
Employment Act. The President states the principles:
“The court or tribunal
is enjoined to assess compensation in an amount which is just and equitable in
all the circumstances and there is neither justice nor equity in a failure to
act in accordance with principle....First, the object is to compensate, and
compensate fully, but not to award a bonus, save possibly in the special case
of a refusal by an employer to make an offer of employment in accordance with the
recommendation of the court or a tribunal.
Second, the amount to be awarded is that which is just and equitable in
all the circumstances having regard to the loss sustained by the complainant.”
The President then suggests the
possible heads of damages for the employee unfairly dismissed: (a) her
immediate loss of wages; (b) the manner of her dismissal; (c) her future loss
of wages; and loss of protection in respect of his unfair dismissal or
dismissal by reason of redundancy. Sir Donaldson thought these heads, based on
the principles in the Employment Act, adequately compensate
losses of an employee unfairly dismissed. The approach, in my judgment, is the
appropriate one under our Employment Act which is in pari material with the English Act. These heads, in my judgment,
are based on logic, fairness and reasonableness concerning the employee’s
losses and assist the Court attain the right compensation where, under the
Constitution, the employer dismisses the employee contrary to fair labour
practice.
In relation to the first head, unfair
dismissal entails loss of wages. Sections
29 and 30 of our Employment Act provides for the loss of wages where the
termination is unfair under this loss. The sums provided are minima. The
calculation for loss is based on the employee’s net pay, namely, after
tax. It is not restricted to the week
pay under the Employment Act: See Davies
v Anglo Great Lakes Corporation Ltd [1973] 1RLR 133. Where not paid in lieu of notice, the
employee is entitled to an award for this loss.
For purposes of this case, because of
the length of the contract that still remains, it might be necessary to
consider four persuasive decisions from
“For my part I would
uphold the principle established by the NIRC in Norton’s case and followed since in the Employment Appeals Tribunal
but, in my judgment, it is necessary to clarify the extent to which it states a
rule of law. Mr. Pannick invited the
court to reject the Norton principle
if and so far as it could be held to apply so as to entitle Mr. Addison to
recover any sum for wages in lieu of notice in addition to loss of earnings
caused by the dismissal. I will come
later in this judgment to the application of the principle to the facts of this
case.
I would uphold the principle firstly
because it is not shown to have worked unfairly or in a manner contrary to the
intention of Parliament in the limited form in which it was stated and applied
in the cases cited. The first step in
the reasoning of the court in Norton’s
case is that when a payment is made of wages in lieu of notice at the time of
the dismissal of the employee, the employee would not have to make any
repayment upon obtaining further employment during the notice period. That is in accordance with the normal
intention of both sides when such a payment is made without stipulation of any
special terms. The next step in the
reasoning is, in my respectful opinion, of a different nature: because good
industrial practice requires that the employer either give the notice of pay
six weeks wages in lieu the employee, who is given neither notice nor payment,
should not be worse off and therefore he also should not have to give credit
for wages earned from another employer during the period of notice
notwithstanding the direction that the rule as to the duty to mitigate shall be
applied. I do not doubt that the
industrial practice referred to was a good practice and right to be applied in
a case such as Nation Tool and such a
case must be typical of a very large proportion of the cases coming before
industrial tribunals. In such a case the
employer, if he was acting fairly, would pay the sum due in lieu of
notice. It is usually convenient for the
employer if the dismissed employee leaves the premises and if the wages for the
whole period are paid in advance; and it is convenient for the employee to be
released to look for other work; and the immediate receipt of wages for the
period of notice, coupled with the chance of getting other employment during
that period, may soften a little the blow of losing employment. In Norton
Tool the period of notice was six weeks.
In J Stepek Ltd v Hough cited
above, where payment in lieu of wages was not made in full, the period was
eight weeks. Not surprisingly there was
no attempt in these cases to show that the circumstances in which full payment
was not made justified or explained departure from the normal good industrial
practice. It seems to me, however, that
circumstances may arise in which, having regard the length of notice required,
and the known likelihood of the employee getting new employment within a short
period of time or for other sufficient reason, an employer may show that a
payment less than the wages due over the full period of notice did not offend
good industrial practice. The employer
might tender two months pay in respect of a six month period of notice and ask
to be informed if the expected new job was for any reason not obtained. I am unable to accept that any rule of law
exists which requires that in all circumstances, irrespective of the terms upon
which a payment in lieu of notice was made, and of any justification for not
making payment in full of wages in advance for the full period of notice, the
employee is entitled in claiming a compensatory award under s74 to disregard
wages earned from another employer during the notice period. The number of cases in which an industrial
tribunal, to justify departure from the general practice, will probably be
small. But in my view no rule of law
exists to prevent the industrial tribunal form considering such a case or from
giving effect to it if it is established.
Next, and before dealing with the
extension of the principle which has been effected by the EAT by the decision
in Finnie’s case and in this case, it
is necessary to consider the limits of the principle. The employee is to be treated as having
suffered a loss in so far as he recovers less than he would have received in
accordance with good industrial practice.
As Mr. Pannick submitted in this court, it seems to me that the
principle, when applicable on the basis of good industrial practice, secures to
the dismissed employee the opportunity to earn during the period of notice
without giving credit for earnings from another employer against wages due
during the period of notice. It does not
secure to him anything in addition to the amount of wages due during the period
of notice: he can only get the extra if he gets the new job and thereby
earnings from another employer. If the
employer has paid the wages due in lieu of notice at the time of dismissal, the
employer has complied with good industrial practice. If the employee does not get employment
during the period of notice, no principle of good industrial practice can
secure to the employee any further payment by way of lost wages in respect of
the period of notice: he has received the wages for the period and if he is to
recover the same amount again it must be by reference to some rule of law
outside the provisions of the 1978 Act and in my view no such rule exists.
Under
this head, the court must credit any payment by the employer to the employee.
The Court of Appeal in Babcock FATA plc v
On the second head the President said,
the court needs to consider ‘whether the manner of dismissal could give rise to
any risk of financial loss at a later stage by, for example, making him less
acceptable to potential employers or exceptionally liable to selection for
dismissal.’ A court awarding damages for an unfair labour practice must regard
prospects of such a loss. Sir Hugh Griffiths makes a useful comment on Norton Tool Co. Ltd v Tewson in
“Finally, the employee
submitted that he should have been awarded some sum by reason of the manner of
his dismissal. He had been summoned from
his home to the office by telephone on a Sunday morning, when he was summarily
dismissed by the Managing Director. It
was no doubt a most distressing experience for him, but that of itself is not a
matter for compensation. It is only if
there is cogent evidence that the manner of the dismissal caused financial
loss, as, for example, by making it more difficult to find future employment,
that the manner of the dismissal becomes relevant to the assessment of
compensation. It was submitted that in
the fairly small community in which he worked and lived, news would have
traveled on the grapevine and some disgrace would attach to being called in and
dismissed on a Sunday, which would make it more difficult to find future
employment. This is pure speculation
without a scintilla of evidence to support it and provides no grounds for
increasing the assessment of his compensation.
The court believes that it will only be on the very rarest of occasions
that it will be found that the evidence justifies an award under this
head. One would hope in any event that
the decision of a tribunal vindicating the employee by a finding of unfair
dismissal would rectify any temporary mischief that might have occurred as a
result of the dismissal whatever its manner may have been.”
Thirdly, the court must consider future
losses of wages. Where the employee has another job and earns the same or more
than in the previous employment, this head requires considering whether she
could lose this job. Where on the evidence there is no such threat, the court
will not award on this head. Where the new job is insecure, the court must
forestall such prospect by an appropriate award. Where the employer earns less,
subject to her earning more in future, the award must regard the prospect of
such a loss. This entails a consideration of the labour market, the employee’s
age and qualification, and the list is not exhaustive. These are the same sort
of considerations where the defendant has not found a job. Where the employee
receives less in the new employment or is not employed, the award must, after
allowing for tax, regard that the money is paid well before it is earned. The
onus is on the employee to prove the probable future loss and its scale: Adda International Ltd v Curcio [1976] 3
All ER 620. In assessing the prospect of a job loss the court can rely on its
own knowledge of employment in the locality: Coleman v Toleman’s Delivery Service Ltd [1973] ICR 67. Moreover
the loss could be limited to the time of retirement or time when the employee
cannot earn any more: Barrel Plating and
Phosphating Co Ltd v Danks [1976] 3 All ER 652.
On the fourth aspect, section 35 of
the Employment Act provides for a redundancy or severance pay. If an employer
terminates employment unfairly, she affects the employee’s right to payment
under the section in three ways. First, immediately, the employee loses the
right to the amount which the court must compensate for. Secondly, even if the
employer pays for the immediate loss, the employee has to work for another
prescribed period before she is entitled to another severance pay. Thirdly, her
right to qualify for a higher pay on account of long employment is lost. She loses her right to protection against
unfair dismissal.
In
These heads and others not covered for
purposes of this matter are ones applied in
In this matter, as I understand it, the
option the corporation introduced for senior officers, never meant termination
of the contract at the end of the contract period. The contract was renewable
at the end of the term. It seems to me that the contract was renewable as a
matter of course. In this respect, the plaintiff’s contract of employment
persisted. I do not think that the change of trustees should affect legal
arrangements between employees and the corporation. I do not even want, when
considering compensation, to think that the plaintiff’s employment would have
ended with the change of trustees politically appointed. That would subject the
employee to discrimination on political grounds, something clearly proscribed
under the Constitution and the Employment Act. On the other hand credit will be
given for sums the employer paid the employee.
This approach is new. The onus, as
seen, is on the plaintiff to prove the losses and their extent. The plaintiff,
in my judgment, proved the losses. In Norton
Tool Co. Ltd v Tewson the President of the court emphasized the importance
of a court awarding compensation to give reasons and detail on awards under the
various heads of damage. Commenting on
this practice Philips J. in Blackwell v
GEC Elliot Process Automation Ltd [1976] IRLR 144:
“That practice applied
equally in the Employment Appeal Tribunal and is current in all industrial
tribunals now, and it is absolutely essential that industrial tribunals, when
determining the amount of compensation, should explain and act out, in the
matter prescribed in that case, the details of the individual heads under which
compensation it awarded and, briefly at all events, the manner and reasoning by
which they have arrived at those figures.
It is necessary to do that for a number of reasons. First of all, if it is not done, the parties cannot
see whether the amounts awarded are correct. Secondly, if they wish to consider
and appeal, they cannot decide whether it is an appropriate case in which to appeal. Thirdly, the appeal tribunal, if it is not
done, cannot see whether the order appealed from was right. And there is perhaps a more important point
than any of those that, fourthly, the very discipline of having to set down in
orderly manner the heads under which the compensation is awarded and the brief
reasons for it, ensures that the tribunal does not make a mistake, does not
omit anything and arrives at a reasonable figure.”
The assessment of the award bases on
the employee’s loss which includes salary (including overtime payments) and
other benefits which the employee might reasonably be expected to receive: the use of the company car free or cheap
accommodation, tips, mortgage allowances, school fee allowances, medical
insurance as these cases show: Noha v
Granitstone (Galloway) Ltd, [1974] ICR 173; Crampton v Dacorum Motors Ltd, [1975] IRL 168; De Cruz v Airways Acro Association Ltd, (6066/72, IT); Bradshaw v Rugby Portland Cement Ltd, [1972]
IRLR 46; Hedger v Davy & Co. Ltd, [1974]
IRLR 138; Butler v J Wendon & Son, [1972]
IRLR 15; and Lee v IPC Business Press Ltd
[1984] ICR 306.
The detail and care needed in each
case was not appreciated by counsel. To do justice to the parties, I adjourn to
Monday 24thto my chambers for assessment of damages.
Made in open court this 21st
Day of November 2003.
D F Mwaungulu
JUDGE