IN THE HIGH COURT OF MALAWI
PRINCIPAL REGISTRY
Civil Cause No. 1792 Of 1995
Between
W. M. PHOSO
Plaintiff
And
WHEELS OF AFRICA (MALAWI) LIMITED Defendant
CORAM: D F
MWAUNGULU, JUDGE
Kauka, a legal practitioner, for
the plaintiff
Kainja, a legal practitioner,
for the defendant
Chaika, official recording
officer
Mwaungulu, J
JUDGMENT
In
this action Mr. Phoso, an employee, sues Wheels of Africa (Malawi) Ltd, his
employers. The defendants, Wheels of
Africa (Malawi) Ltd,
employed Mr. Phoso in 1988 and terminated the plaintiff’s employment in 1995.
When Wheels of Africa (Malawi) Ltd
terminated the employment, Mr. Phoso was working in Mombassa, Kenya, for
Wheels of Africa (Kenya)
Ltd. The effect of Mr. Phoso’ working
for another subsidiary company in Kenya is
contested. Just as there is a dispute about who terminated Mr. Phoso’s
employment. Both Wheels of Africa (Malawi Limited) and Wheels of Africa (Kenya)
Limited are, at least were, companies of a larger company or companies named,
on documents in court, Wheels of Africa Limited or Sabot Haulliers. Two things concerning
the plaintiff’s action happened in the bigger company simultaneously.
First,
disruption in the transport business triggered undersizing the company’s
operations and staff retrenchment. This necessitated the second event: Wheels
of Africa Limited had to be sold. The plaintiff had stark choices. He could,
upon terminating employment with Wheels of Africa Limited or, and there is a
bit of uncertainty here, the parent company, agree with the buying
company. The plaintiff did not opt for
that. It is not for this Court to investigate the reasons. The second
possibility, the one the plaintiff chose, of course after some piecemeal jobs
in Mombassa with the buying company and other concerns interested in his
services, was to return to Wheels of Africa (Malawi) Limited. On the second
possibility, he risked retrenchments occurring in the parent company and its
subsidiaries like Wheels of Africa (Malawi) Limited.
Wheels of Africa (Malawi) Limited
arranged to pay retrenched employees based on the years served in the company
worked at the employee’s current salary.
Wheels of Africa (Malawi) Ltd.
calculated Mr. Phoso’s entitlements on a salary he received when working for
Wheels of Africa (Malawi) Ltd. in Malawi. Mr. Phoso’s salary changed considerably when
working for Wheels of Africa (Kenya)
Ltd. Mr. Phoso thinks, and Wheels of
Africa Malawi Ltd., vehemently object, that whatever the nature of payment
Wheels of Africa Malawi LTD gave when the employment contract ended, Wheels of
Africa (Malawi) Limited
should calculate the entitlement on the salary the plaintiff earned at Wheels
of Africa (Kenya)
Ltd. Wheels of Africa Malawi Ltd.’s
refusal to pay on that basis prompted this action.
In
the writ issued on the 28th
September 1995, Mr. Phoso claims US$ 10,498.33 representing
the shortfall based on the Kenyan salary. The crux of the action is that Wheels
of Africa Malawi Ltd. erroneously calculated his terminal benefits. Wheels of Africa (Malawi) Limited,
Mr. Phoso alleges, overlooked the plaintiff’s last earnings as on 15th March 1995.
Mr. Phoso contends Wheels of Africa Malawi Ltd. should have calculated
based on the salary and allowances as at that date. In his statement of claim Mr. Phoso computes
the entitlement’s dollar value of his earnings providing for Wheels of Africa
Malawi Ltd.’s payment.
Wheels
of Africa (Malawi) Limited
deny they seconded the plaintiff to the Wheels of Africa (Kenya)
Limited. The defendant alleges they
transferred the plaintiff, the plaintiff consenting, to Wheels of Africa Kenya
Ltd. on 9th February 1995. The defendant contends that, after Wheels of
Africa (Kenya) Limited
employed Mr. Phoso, Mr. Phoso’s terms and conditions of employment were those
of Wheels of Africa (Kenya) Limited.
The defendant further alleges that between the 9th January 1and 15th March, 1995, Wheels
of Africa (Kenya) Limited
paid Mr. Phoso’s salary. Wheels of Africa (Malawi) Limited
allege that in March 1995 they retrenched employees. The plaintiff, having worked for Wheels of
Africa (Malawi) Limited for approximately seven years, the defendant says, in
spite that the plaintiff was Wheels of Africa (Kenya) Ltd.’s employee paid him
benefits the defendant paid to all retrenched employees who worked for the
defendant by the 9th of January, 1995.
The defendant contends that, like for all the other employees, the
plaintiff’s payment base on the salary he received in Malawi. The defendant, therefore, contends the
calculations were correct. If anything,
the defendant contends, the payment was gratuitous and Wheels of Africa Malawi
Ltd had no obligation to pay the plaintiff.
The facts, but for the inferences, drawn from the facts, are easy
to follow. This matter hinges on what
happened when Mr. Phoso left Wheels of Africa) Limited Malawi for Wheels of
Africa Kenya Limited and who between the parent company an Wheels of Africa (Malawi)
Limited, transferred the plaintiff. The starting point should be a letter Mr.
Chris Jackets, the Group Administration Executive for Wheels of Africa Ltd,
wrote Mr. Phoso on 19th
December, 1994. Quite
some detail of this letter, because of the many crucial inferences to be made
to resolve this matter, is important.
Mr. Phoso’s move to Wheels of Africa (Kenya) Ltd.
followed discussions between Mr. G. Miller, of Wheels of Africa Malawi Ltd, Mr.
Phoso, an employee of Wheels of Africa Malawi Ltd, and Mr. Chris Jackets, of
Wheels of Africa Ltd. This letter is on
Wheels of Africa (Kenya) Ltd.’s
letter head. It is clear though Mr.
Chris Jackets worked for the parent company and used different letter heads
wherever he made the decisions from. The
use of different letter heads appears repeatedly in the evidence concerning Mr.
Jackets and other officials of the company.
Whatever forms the discussions took, the
transfer was reduced to writing. Mr.
Chris Jackets and Mr. Phoso, whose signature was to be witnessed by two others,
signed.
Many
issues emerge from this letter. First,
the letter itself is headed “transfer to Kenya”. In it Mr. Chris Jackets writes to Mr. Phoso,
“this letter serves as an official notification of your transfer from Blantyre to Mombassa and to
outline the agreements of the said discussions...” Right at the outset
therefore, there is no suggestions that Mr. Phoso is being transferred from one
company, namely, Wheels of Africa Malawi Ltd, on the one hand, to another,
Wheels of Africa Kenya Ltd, on the other.
The transfer is indicated as being between places rather than between
institutions. There is a paragraph ‘c’
which reads, “Your transfer shall be with effect from the
9th January 1995 and be in for a minimum of one year or terminated at the
management discretion.” It is
significant that in this clause, just as in the ones mentioned earlier, the
word used is transfer. What is important
about this clause however is that the transfer is for a fixed period. This is
important for the inference that I want to make which is that the letter does not
suggest Mr. Phoso’s employment is being terminated. For if it was, being
terminated, it would be unreasonable for Mr. Phoso, though not impossible, to
accede to an arrangement where he leaves a permanent employment for one determinable
at the whims, rather discretion, of management. The inference must be
that, this, as the two earlier statements show, was a transfer between places.
The termination in the letter relates only to the transfer not to the
employment. This is confirmed by that
in paragraph ‘d’ there is reference to remunerations payable to Mr. Phoso in
Malawi and Kenya and that in Kenya Mr. Phoso would receive a stipulated taxable
allowance. The part where his Malawi income is stipulated
is crossed out. The inference must be
that he would receive a different salary in both countries. Then there is a long paragraph which, in my
judgment, does not even suggest that Mr. Phoso would be working for Wheels of
Africa Kenya Ltd as an employee of Wheels of Africa Kenya Ltd. All the paragraph covers are Kenyan
Immigration requirements for employees working in that country. This letter, for all intents and purposes
refers to the transfer of staff. It
scarcely suggests cessation of employment between Wheels of Africa Malawi Ltd
and Mr. Phoso or resumption of a new contract of employment between Wheels of
Africa Kenya Ltd and Mr. Phoso.
The
letter Mr. G W Miller of Wheels of Africa Malawi Ltd. of 15th March, 1995 wrote to Mr. Phoso confirms that
there was no termination of employment of between Mr. Phoso and Wheels of
Africa Malawi Ltd. There is a lengthy
discourse about problems of Wheels of Africa Malawi Ltd and other
companies. The letter suggests
retrenchment and Mr. Phoso’s possible retrenchment. The letter suggests arrangements made for
various employees: those who served the company for less than 36 months will
receive 50% of one month’s salary for every year served and those, like Mr.
Phoso, who served for over 36 months, a full month’s salary. Other aspects in the letter do not concern
this application.
What, in
my judgment, is important in this letter is the heading of the letter; it
refers to retrenchment of staff. What is
equally important is it is written to Mr. Phoso. What is the most important, however, is what
it says in the first paragraph: “It is with sincere regret that we advise that
your duties in this company have been made redundant with effect from today.” This
statement is inconsistent with that Mr. Phoso’s employment with Wheels of
Africa Malawi Ltd. ended. It is also incongruous
with the pleadings that the payment to Mr. Phoso was gratuitous because Mr.
Phoso ceased working for wheels of Africa Malawi Ltd and was at the time of the
letter employed by Wheels of Africa Kenya Ltd.
Wheels of Africa (Malawi) Ltd. could
not write this letter to a person who ceased to be its employee many months
before.
One
little aspect of this letter needs noting because of earlier comments and
inferences made for this decision. Mr.
Miller signs this letter for Wheels of Africa Malawi Ltd and Sabot Hauliers
(Property) Ltd. Sabot Hauliers (Property) Ltd either belongs to wheels of
Africa Ltd or has taken over Wheels of Africa Ltd. This underlines the
complication referred to earlier about Mr. Phoso’s transfer. It leaves the impression that he, like Mr.
Chris Jackets, a Senior Official of the parent company, Wheels of Africa Ltd,
was transferred any where in the subsidiary companies. G W Miller was terminating Mr. Phoso’s
employment in that same vent using Wheels of Africa (Malawi) Ltd,’s letter head
unlike Mr. Chris Jacket who used a Wheels of Africa Kenya Ltd.’s letterhead.
The first reference to secondment is in
Mr. Chris Jackets’ letter on 21st March, 1995. The letter is not particularly directed to Mr.
Phoso. Mr. Phoso received this letter because it affects him. The letter is directed “to all secondment
staff from Zimbabwe and Malawi.” It is significant that in this letter all
employees are referred as belonging to Wheels of Africa Ltd. There is no specification to a particular
subsidiary company. It is important to
quote what Chris Jackets wrote in this letter:
“...you
will be required to continue to serve the East African Operation where
arrangements are made to return to either Zimbabwe or Malawi, from where you were
seconded. On arrival at your home the
best and applicable reduction of staff will be applied.”
Once again the
inference is that, at least for Mr. Phoso, there was no cessation of employment
with Wheels of Africa Malawi Ltd. This
letter was followed by Chris Jackets letter of 23rd
March, 1995
written, this time around, on Sabot Hauliers (Property) Ltd letter head. This letter
is the second where Mr. Chris Jackets refers to secondment. The letter is to “all Wheels of Africa
employees in Kenya and Uganda.” It relates to the request of African Marketing
Services Ltd, the new owners of the East Africa Company and
Wheels of Africa
Ltd, to continue employing Wheels of Africa Ltd staff at the East African
Company. There is an important clause in the letter relating to the contention
that Mr. Phoso now raises that his salary is not what Wheels of Africa Malawi
Ltd used to calculate his entitlement under the redundancy settlement. Mr. Chris Jackets wrote: “your conditions of
services, wages bonuses, etc., will remain the same and Wheels of Africa will
return you to Harare within the next few
weeks.” Mr. Chris Jackets then refers to
that continuing with African Marketing services,
would, for purposes of employees from Zimbabwe, and as we shall see
later, Malawi, be secondment. As we
saw with other letters, Mr. Jackets wrote this letter on Sabot Hauliers Ltd.’s
letterhead.
The other
documents have little significance to liability. There is a document of 24th March 1995 under which the money based on
the disputed wheels of Africa Malawi Ltd.’s calculations was received. Two important issues arising in the oral
evidence should be captured. From oral
evidence, Mr. Phoso’s brother received money, as was done with the Malawi payments,
from Wheels of Africa Malawi Ltd. Secondly,
Wheels of Africa (Malawi) Ltd. paid Mr. Phoso himself or by proxy on the
following terms: “I the undersigned accept the amount dated above hereon as
full and final settlement from Wheels of Africa Malawi Ltd and its associate
companies.” All along Mr. Phoso disputed
the calculations. He on 4th
April, 1995 wrote Mr. Jackets indicating the correct payments under the
redundancy agreement. Little in the oral
testimony improves on matters the documentary evidence covered.
The first point taken for Wheels of Africa (Malawi) Limited concerns whether Wheels of Africa Malawi Limited still
employed Mr. Phoso when he left for Kenya. Mr. Kainja argues that, by
signing the letter of 5th
January 1995, the plaintiff accepted new employment and under the terms and
conditions of the new company, Wheels of Africa (Kenya)
Limited. Mr. Kainja argues, relying on Shutter Bridge Cooperation v Lloyds Bank Limited [1970] Ch
62, that the two corporate entities, even if they be
holding, permanent or subsidiary, companies, are separate. Mr. Kainja argument is that Mr. Phoso’s
employment with Wheels of Africa (Malawi) Limited
ended and a new contract of employment commenced with Wheels of Africa (Kenya)
Limited. Mr. Kainja argues, relying on Shaba v
Agricultural Development and Marketing Corporation Civ. Cas. No. 1194 of 1992, unreported, that Mr. Chris Jacket’s
instructions effecting the transfer were normal and
never affected the legal position. He
cites Mkandawire, J., where the judge said:-
“It is true the department
of statutory bodies did lay down procedure which all statutory bodies like the
defendant had to follow...The laying down of those procedures would not
minimise the fact of employment as between the plaintiff and the
defendant. It is true that there was no letter of appointment, but that in my considered view, cannot
change the factual position. My
finding on the matter is that the plaintiff’s employment was governed by
Agricultural Development and Marketing Corporation staff terms and conditions
of service but subject to the directions and instructions which the department
of statutory bodies gave from time to time.”
On
the factual premises laid earlier, I have real difficulties to find that Mr.
Phoso’s employment with Wheels of Africa (Malawi) Limited
terminated. I introduced excerpts to
show that the picture could not be one now contended. I
demonstrated that Wheels of Africa (Malawi) Limited letter sent to Mr.
Phoso could only be on the assumption, clearly demonstrated in that letter,
that Mr. Phoso was an employee of Wheels of Africa (Malawi) Limited. The
letters show that Mr. Phoso’s situation is distinguished from Mr. Shaba’s in the
case Mr. Kainja cited. There Government
issued a letter transferring Mr. Shaba from
Malawi Housing Corporation to another corporation, Agricultural Development and
Marketing Corporation. Nothing in that
letters suggested transfers between two sister entities. The letter points to a transfer between
places. In many passages in the two letters, it is clear Mr. Phoso retains his
employment with Wheels of Africa (Malawi) Limited.
The
passage from the Shaba case Mr.
Kainja cites, in my judgment lays down no principle. Justice Mkandawire relied on the evidence to
draw the emphasis and conclusions made about Mr. Shaba. I would think that, as to parent and
subsidiary company, while it is important to separate the legal entities for
purposes of employment, it is a question of fact, not law, whether transfer of
employees affects a particular contract of employment. This proposition
supports Justice Mkandawire’s findings in the Shaba
case. It would be wrong in principle to
suggest that a transfer between a parent and a subsidiary company terminates
employment. It is a question of fact in each case depending on the
understanding and intention of the parties of the agreement, oral or written,
between them. On this principle, the
fact of who pays salary may be determinative but certainly not conclusive. All depends on the intention of the parties.
Mr.
Kainja argues further for Wheels of Africa (Malawi) Limited that
Mr. Phoso was not seconded to Wheels of Africa (Kenya) Limited.
Mr. Kainja submits that, normally, on a secondment, the seconding company pays
the employee’s salary. The receiving
company refunds the seconding company salaries and benefits paid to the
employee. He argues that the contention Mr.
Phoso’s salary should be computed on the Kenyan Company’s salary is a strange
argument for two reasons.
First,
Mr. Kainja contends it is not Wheels of Africa (Malawi) Limited
that seconded the plaintiff to Kenya. Mr. Kainja submits that the Malawi Company
instructed the parent company identify an employee for the Kenyan company. He argues that there is in fact a contract between
Mr. Phoso and the Kenya company. Secondly Mr.
Kainja argues that the Kenyan company, not the Malawi company, paid Mr. Phoso’s salary. It would, he argues, be unfortunate to
require the Malawi company to pay on the Kenyan company’s salary.
On
the first aspect, it is inaccurate that the question of secondment arises from
the Kenyan company. As seen, secondment
arises in the letter Mr. Jackets wrote to many employees in the eastern
company. I concluded that the letter referred to suggests a transfer between
places. Nothing in it suggests
assignment of the employment contract or a transfer. Nothing in it suggests a new contract was
created. Apart from earlier observations,
this new agreement only stipulated the allowances, not the salary,
Mr. Phoso would receive in course of his transfer to Nairobi. This subsequent letter shows there was no
termination of employment between Wheels of Africa (Malawi) Limited
and Mr. Phoso.
My
understanding is that it is a lack of this new contract between Mr. Phoso and
Wheels of Africa (Kenya) Limited
that prompted Mr. Jackets to refer to Mr. Phoso’s new arrangement, indeed the other
arrangements, as secondments. If, as Mr.
Jackets suggests, the transfers were secondments the effect in my judgment
would be that the earlier contract of employment with Wheels of Africa Malawi
Limited subsisted uninterrupted by the secondment. The result would be exactly as I have
suggested that there was no employment contract between Mr. Phoso and Wheels of
Africa (Kenya) Limited.
This
is enough to dispose of Mr. Kainja’s first argument on the point that Wheels of
Africa (Malawi) Limited
had no power in the secondment of Mr. Phoso to Wheels of Africa (Kenya)
Limited. It is far true, as the letter
of transfer demonstrates that the Malawi Company simply helped identify an
employee who the Kenyan Company employed.
Mr. Jackets refers to conversation between Wheels of Africa (Malawi) Limited
and Mr. Phoso. In that letter Mr. Chris
suggest this was a transfer where a Kenyan company was looking for somebody to
employ. On the second point Mr. Kainja
relied on the Shaba case for
that where a new employer pays salaries to a seconded or transferred employee, the
employer enters into a new contract with the receiving company. Justice Mkandawire decided purely on the
facts. On the facts of that case, the
appropriate inference was that the employee entered into a new contract with
the receiving company. That inference
cannot be drawn on the facts of this case.
Mr.
Kainja submits for Wheels of Africa Malawi Ltd that, if anything, Mr. Phoso
should be grateful that Wheels of Africa Malawi Ltd paid him the sum Mr. Phoso
now disputes. He submits that, in spite that
the contract between Mr. Phoso and Wheels of Africa Malawi Ltd did not provide
for a redundancy payment, Wheels of Africa Malawi Ltd went all the way to apply
the terms under the new Employment Act providing for redundancy or severance
pay. He submits that under the former
Wages and Condition of Employment Act severance pay provisions never applied to
Mr. Phoso because his earnings were higher than those to which the Act
applied. He relies on the case of New
Honda Centre v Sagawa [1984-86] MLR 212.
There this Court decided that the employee is only entitled to the
benefits stipulated in the contract. So,
the argument goes, there being no redundancy pay in the contract of employment
between Phoso and Wheels of Africa Malawi Ltd, Wheels of Africa Malawi Ltd were
under no obligation to pay even what they paid. Consequently, the payment here
is ex gratia.
In
England, and now
in Malawi, statutes
regulate redundancy payments. At common
law a contract could provide for redundancy at termination of employment. The parties could agree such terms of
employment before hand, during or, at any right, just before termination of the
employment. Consequently, courts will,
like here enforce contracts for redundancy payments where parties agree
subsequent to the initial contract on ways to terminate the employment. This aspect distinguishes this case from New Honda Centre v Sagawa. This is not the case of somebody claiming for
something in the terms of contract of employment. This is somebody relying on a new contract
between employer and employee on terms agreed to terminate the employment
relationship.
Moreover this situation is equally
distinguished from those cases in England where
courts are reluctant to enforce such a contract for compromise of statutory
rights in the Employment Act and the Industrial Relations Act. At common law courts
respect and enforce contracts which are genuine agreement to terminate the
employment relationship in this way and are arrived at after considering
possible imbalances between the employer and employee or threats from the
employer. Construction of the agreement and circumstance around the agreement
determine whether courts enforce the agreement.
Without redundancy rights now created by statutes, Mr. Phoso can, at
common law, rely on an agreement conferring such rights. This court would be
duty bound at common law to enforce the agreement.
I would
add that the common law is not as slow to respond to changing situations as is
imagined. The common law responds
effectively to all changes in common society. The Legislature introduced
redundancy laws to regulate anomalies in the common law. The time could come, and it is now, that the
common law responds to problems of employees when employers terminate contracts
where there are no redundancy laws.
There may be difficulties at common law with calculating damages for
redundant employees. Where parties, like
here, have agreed on a mode of payment, the common law should clothe such arrangements
with legality. I, even sitting in my
common law jurisdiction, would not resist temptation to take the lead by the
legislature pinning the remedy to payment for a number of years served.
The
other point taken for the defendant is that Wheels of Africa (Malawi) Ltd. can
only be liable for what they agreed to pay to the plaintiff under the
employment contract with them. The point is made, relying on the Sagawa case, referred to earlier, Dudha v. North End Motors [1984-86] MLR
425 and Msiska v Malawi Dairy Industries, Civ. Cas. No. 1034 of 1995, unreported, that there was no
agreement between Wheels of Africa (Malawi) Limited
and Mr. Phoso for a salary of US$ 800 per month and living allowances of 35,000
shillings per month that Mr. Phoso received in Nairobi. On this point, Mr. Kainja revives matters covered earlier and that
there was no agreement for redundancy pay in the contract of employment between
Wheels of Africa (Malawi) Limited and Mr. Phoso.
I have
covered the latter point exhaustedly. I
can only repeat that, while there was indeed no provision for redundancy pay in
the original employment contract, Wheels of Africa (Malawi) Limited
and Mr. Phoso agreed to terminate their contract under terms referred to
earlier. This court will enforce
that. Wheels of Africa (Malawi) Ltd
argues repeatedly in the trial and submission that Mr. Phoso is not entitled to
800 US$ and 35 Shillings per month because the contract of employment between Mr.
Phoso and Wheels of Africa (Malawi) Limited
never provided for the payments. I
understood this argument to mean Mr. Phoso was eventually employed by Wheels of
Africa (Kenya) Limited
when he went to Mombassa under the letter we considered several times. That letter shows there was no termination
of employment for reasons indicated earlier.
What is
very important here, however, is what arose in course of the trial. Defence witnesses, officials from Wheels of
Africa (Malawi) Limited,
told this court on oath that Mr. Phoso continued to receive his Malawi salary
from Wheels of Africa (Malawi) Limited. It is accepted that Mr. Phoso also received
US$ 800 per month as a salary in Kenya. This to my mind shows that, while Mr. Phoso was in Kenya, he was for all intents and purposes under a
contract of employment with Wheels of Africa (Malawi) Limited. This discounts the defendant’s contention
that they paid Mr. Phoso the month’s salary simply because of sympathy because he
worked for the company before. Indeed as
we saw before, the letter written to Mr. Phoso, who was still an employee of
Wheels of Africa (Malawi) limited,
informs us the salary paid to Mr. Phoso on this transfer.
I have
referred to the particular provision previously. There is no harm however in repeating Clause
(d) reads:-
“Your remunerations payable in Malawi and
Kenya shall with effect from 1st January 1995 be in Malawi you shall
receive the taxable income of Malawi Kwacha K1875.00 per month in Mombassa you
shall receive taxable allowances of 35,000 Shillings per month.”
From this provision, Mr. Phoso’s
was paid in Malawi and in Kenya. That bit
referring to the remuneration paid in Malawi has been
deleted. It has not been substituted
with any payment in Malawi or
payment in Kenya or
payment in Malawi and Kenya. In my judgment, it is on the course of this
provision that Wheels of Africa (Malawi) Limited
continued to pay Mr. Phoso the salary in Malawi. It is very clear however that Mr. Phoso was
entitled to remuneration in Malawi and Kenya. From this it can be strongly inferred that Mr.
Photo’s salary comprised of sums payable in Malawi and Kenya.
Paragraph
(d) of the main draft, as we saw earlier, was typed in with the reference to remuneration
in Malawi
deleted. It might be useful to recast
the paragraph without the cancellation just mentioned. Recast it would mean there is no prevision
for salary in this letter. The salary
payable in Malawi and Kenya has
therefore to be proved by the plaintiff.
The plaintiff has shown in his evidence that he earned K 3750 per month
in Malawi as
salary. He earned US$ 800 per month as
salary and 35,000 Shillings as allowances in Kenya. His total earnings therefore were K3, 750, US$
800 and KS 35,000 per month.
These
payments being part of the conditions of service agreed with Mr. Phoso and at
the time of leaving Nairobi were
guaranteed by Wheels of Africa Ltd. In
the letter that Mr. Jackets wrote to all seconded staff from Zimbabwe and Malawi on 21st March, 1995, referred to earlier, Mr. Jackets
does not refer to the conditions of service as being agreed upon with Wheels of
Africa Kenya Ltd on whose letter head the letter was written. He refers to those conditions as those
“agreed previously between Wheels of Africa and yourself.” In that letter Mr. Jackets thanked all
employees on behalf of management of Wheels of Africa. In the letter two days latter to all Wheels
of Africa employees in Kenya and Uganda, Mr.
Jackets informs them about the desire of African Marketing Services to retain
some employees. Mr. Jackets informs all,
including Mr. Phoso that “your conditions of service, wages, bonuses, etc will
remain the same...” He then emphasizes
that Wheels of Africa not Wheels of Africa Kenya Ltd, “will guarantee your
payments until you return to Harare.” This letter is written on Sabot Hauliers
(Property) Ltd.’s letter head. The point
in all this is that the matter of Mr. Phoso’s salary has not been shown to have
been in a matter of concrete agreement. Mr.
Phoso’s salary was being negotiated from time to time. In fact Mr. Phoso introduced another
communication to Mr. Jackets suggesting changes of expatriate salaries. On the facts in this Court to which there is
no dispute, Mr. Phoso’s salary was K 3,750 and US$ 800 and allowances of KS 35,000.
The other
point taken for Wheels of Africa (Malawi) Ltd is
that Mr. Phoso, having accepted the money in full and final settlement, is
estopped from claiming any more monies beyond what he accepted. Mr. Kainja relies on Sembereka v City of Blantyre [1984-86]
MLR 372. Mr. Kainja relies on the
statement of Mtegha, J., as he then was, at page 381:
“Mr. Msisha has submitted
that since the plaintiff has received all that he contributed and all that the
defendant contributed, there is no more money from which his gratuity and
pension could emanate. In any case, he
is estopped from claiming a gratuity and pension. I agree with this submission. The plaintiff cannot approbate and reprobate. Only one could be chosen and the source of
his gratuity and pension was exhausted by the plaintiff himself accepting both
his own and the defendant’s contributions.”
The case of Sembereka v City of
Blantyre can be
distinguished. The question there was
whether the plaintiff could claim pension after he received gratuity. From the regulations, he could have either
gratuity or pension. In this case the
question is whether the plaintiff can recover at all having signed the sort of undertaking
he did. In principle and on clear
authority such agreement, subject to what I say shortly, binds the
parties. Courts, including this Court,
refuse to enforce such undertakings where they sense unfairness based on
inequality or imbalance, particularly where parties agree without advise from
counsel. Where the parties are balanced,
the risks of unfairness based on inequality are subsumed.
In Manda and others v City of Blantyre [1992]
15 MLR 228, Unyolo, J., as he then was, approved the following statements by
Somervell, L.J., in Biggin & Co Ltd v
Permanite Ltd [1951] 2 All ER 191 at 196:
“The law, in my opinion,
encourages reasonable settlements, particularly where, as here strict proof
would be a very expensive matter. The question in my opinion is: what evidence
is necessary to establish reasonableness? I think it is relevant to prove that
the settlement was made under legal advice.”
Lord Justice Singleton said at
199:
“It is a matter of
consideration that the settlement was arrived at under advice, the more so as
the party settling may be quite uncertain whether he can recover anything
against someone.”
This
court, English Courts and legal commentators agree that in a normal employer,
employee relationship, where the employer is not a small employer, the balance
tilts against the employee. There is a risk, when the employer with appropriate
legal advice forces agreement on an employee acting on the agreement without
legal advice. In this particular case
the plaintiff was acting without legal advice.
More importantly, as the evidence shows, Mr. Phoso acted through a proxy
and there was undue pressure for him to sign because Wheels of Africa Malawi
Ltd was under pressure to effect and close books. In my judgment it would be contrary to
principle and justice to stop Mr. Phoso from questioning the payment where, as
he argues, the computation would have been based on a different payment.
Even
if the approach in the previous paragraph is incorrect I would be very slow in
refusing Mr. Phoso the chances to question this payment. Mr. Phoso is not querying the principle of
the payment which, as the evidence shows, is an agreement between an employee
and employer for redundancy. The
agreement stipulated that the payment would be based on Mr. Phoso’s
salary. Whether that salary is wrongly
computed, unless it is shown clearly that the parties agreed on that wrong
salary, this court could as a matter of
principle do justice to bring a just end to that error.
I do not
know of any principle against the principle just stated. The problem in this case as I understand it
is what under the redundancy agreement made with Mr. W Phoso the correct salary
for purposes of payment is. The agreement
bases on the letter of 15th
March, 1995. Whatever the payment, it
is based on the substance of that letter and the payments stipulated
there.
The
only aspect of the payment arrangement concerning us here is stipulation in (a)
in the letter. Mr. Phoso worked for over
36 months and (a) (ii) applies to him. (A) (ii)
provides:
“If you have served the
company for over 36 months then you have been given one month’s salary for
every year served.”
Mr. Phoso’s disputed payment depends
on this provision. It is important to
notice that this letter refers to payment to Mr. Phoso so as to include the
time Mr. Phoso worked in Nairobi for
Wheels of Africa Kenya Ltd. This, as has
been said repeatedly confirms that there was no severance of the contract.
Wheels of Africa Malawi Ltd include in their calculations the whole period from
when Mr. Phoso started work with Wheels of Africa Malawi Ltd up to 15th March, 1995.
Let me dispose of the mentioned problem this provision refers to salary
and other provisions in the letter refer to other possible payment to Mr.
Phoso. There is no reference in the
letter that the calculation could be based on allowances. This means, assuming Wheels of Africa Malawi
Ltd have to pay for the payments Mr. Phoso received in Kenya; they
cannot pay for allowance in Kenya. It remains therefore to determine the salary
Mr. Phoso is entitled to as at 15th
March, 1995.
The
defendant’s vehement contention Mr. Phoso is entitled to K3, 750 per month and
only as ex gratia payment, can only be premised on severance of the contract of
employment into two namely the contract of employment with Wheels of Africa
Malawi Ltd and another with Wheels of Africa Kenya Ltd. Severance, on the
evidence, is untenable for reasons earlier expressed. Even if there was severance, it will not, in
my judgment, on the evidence before me, disentitle Mr. Phoso’s claim to the 800
US$ as basis for calculating his entitlement.
On the letter of 15th
March 1995, I concluded that the letter written to Mr. Phoso was written by
Wheel of Africa Ltd and not Wheels of Africa Malawi Ltd, although it is written
on the letter head of Wheels of Africa Malawi Ltd. This is abundantly clear when reading the
first paragraph through to the 5th paragraph.
Therefore, Mr. Miller signed this letter on behalf of Wheels of Africa
Malawi Ltd and Sabot Hauliers (Property) Ltd, the wider company with or under
Wheels of Africa. More importantly, if
the severance advocated was the case, Mr. Miller would have paid Mr. Phoso up
to the end of December when the said severance occurred. Mr. Miller was acknowledging Mr. Phoso’s
contribution to Wheels of Africa Ltd or Sabot Hauliers (Property) Ltd as a
whole as well as Wheels of Africa Malawi Ltd.
So much so that the reason why Mr. Phoso’s entitlement extend to 15th
March, 1995 because Mr. Phoso was while working for Wheels of Africa Kenya Ltd
part of the wider company. This letter
therefore is written on behalf of Wheels of Africa Malawi Ltd and Sabot
Hauliers (Property) Ltd. The latter, of
course, stand for Wheels of Africa Ltd.
On
receipt of this letter Mr. Phoso must have understood, correctly for that
matter, that Wheels of Africa Malawi Ltd and Sabot Hauliers will pay him on the
basis of a month’s salary for every year served. That salary, in my judgment, means what he was
earning as at 15th March 1995 which, as we have seen, is the amount he was
receiving in Malawi and the amount he was receiving in Kenya K3,750 and 800 US$
respectively. There is nothing in Mr.
Miller’s letter that Mr. Phoso’s payment was going to be based on the Malawi’s salary
or the salary received in Malawi to the
exclusion of the salary received in Kenya.
There
are problems with the severance submission.
It suggests that Mr. Phoso’s contract with Wheels of Africa Malawi Ltd
ended. Consequently Mr. Phoso had
another contract of employment with Wheels of Africa Kenya Ltd. This new contract had no conditions. We now know that the contract of employment
with Wheels of Africa Kenya Ltd ended.
It follows that for all practical purposes Mr. Phoso is not
employed. In the whole of this process
there is Mr. Jackets. He is responsible
for the end of employment contract between Mr. Phoso and Wheels of Africa
Malawi Ltd. He is there at the
assumption of the contract of employment between Mr. Phoso and Wheels of Africa
Kenya Ltd. He is also at the end of the
contract between Mr. Phoso and Wheels of Africa Kenya Ltd. At the end of this last arrangement, he
writes that Mr. Phoso should go back to Wheels of Africa Malawi Ltd. If, as it is argued, there was severance at
all, Mr. Phoso has to renegotiate his salary.
It cannot be said that he is to receive the salary at Wheels of Africa
Malawi Ltd., the contract of employment was
concluded. Mr. Chris Jackets having
offered 800 US$ to Mr. Phoso in Kenya cannot on any principle of fairness
transfer the employee to Wheels of Africa Malawi Ltd on the old salary. It would be inconceivable to compel Mr. Phoso
to receive the reduced salary. There is
no suggestion that the old salary was offered on this new contract after Mr.
Phoso left Wheels of Africa Kenya Ltd.
There is no doubt that Mr. Jackets who had earlier transferred Mr. Phoso
to Nairobi indicated that Mr. Phoso
should return to Wheels of Africa Malawi Ltd. If Mr. Phoso was transferred to
Wheels of Africa Malawi Ltd by Mr. Jackets, on the severance argument Mr.
Phoso’s salary is uncertain. The
assumption must be that Mr. Jackets will have to accept Mr. Phoso’s salary in Kenya as the
basis of entry into the new contract with Wheels of Africa Malawi Ltd. So much so that even if we accept the
severance concept it is not escapable that US$ 800 per month would be Mr.
Phoso’s salary as at 15th March 1995 and that should be the basis of the
calculations in the letter that Mr. Miller wrote to Mr. Phoso on behalf of the
Wheels of Africa Malawi Ltd and the wider company on 15th March, 1995.
There
is therefore the proper basis for Mr. Phoso’s action that US$ 800 be the basis
on calculating his salary under the redundancy pay agreement between Wheels of
Africa, not Wheels of Africa Malawi Ltd and Mr. Phoso. It matters less in my judgment that Wheels of
Africa Malawi Ltd were not responsible for the US$ 800 paid to Mr. Phoso. As far as Mr. Phoso was concerned his salary included
K3,750 paid in Malawi by Wheels of Africa Malawi Ltd and 800 US$ paid to him by
Wheels of Africa Kenya Ltd. Wheels of
Africa Malawi Ltd cannot properly escape their agency for both wheels of Africa
Ltd and Wheels of Africa Kenya Ltd.
As the
letter written by Mr. Jackets to Mr. Phoso upon transfer to wheels of Africa
Kenya Ltd shows, Wheels of Africa Malawi Ltd in the person of G.W. Miller was
involved in all the arrangements concerning Mr. Phoso’s transfer to Wheels of
Africa Kenya Ltd. It is evident that
there were tripartite arrangements that Mr. Phoso on the one hand of wheels of
Africa Ltd, Wheels of Africa Malawi Ltd and Wheels of Africa Kenya Ltd on the
other. What happened after these
arrangements clearly indicates this tripartite transaction in that it is Wheels
of Africa Ltd through the person of Mr. Jackets who introduced the transfer of Mr.
Phoso from Wheels of Africa Malawi Ltd.
The latter continue to pay Mr. Phoso even contrary to what is suggested
by severance; Mr. Phoso assumed work at Wheels of Africa Kenya Ltd. The contract itself indicated that the
transfer, not the employment with Wheels of Africa Malawi Ltd, could be
terminated at the discretion of management, whatever management was. The contract therefore provided for allowances
while Mr. Phoso was away from his base.
Mr.
Phoso’s action, therefore, succeeds with costs.
The defendant can appeal against the judgment.
Made in Open
Court this 21st Day of
November 2003
D. F.
Mwaungulu
JUDGE