Employees drag Lafarge to court
Employees at Lafarge Cement Malawi Limited have been outraged by the company’s failure to pay severance allowance accrued before the pensions law was changed in June 1, 2011.
The workers are demanding that the company should pay serving and retired employees the difference between accrued severance allowance and severance due entitlement after the change of employment and pensions laws.
However, in a questionnaire response on Wednesday, the company’s management denied owing the employees money in severance pay saying the matter was handled in line with the Pensions Act.
The employees discovered that the company was ignoring a clause in the contractual agreement that provides for severance pay after their colleague, Magita Palasi, who had worked for 34 years retired.
Clause 12 of the company’s Conditions of Service reads, “An employee on permanent terms whose employment is terminated by the company or dies in service or through mutual agreement with the company or is made redundant, retires early on attainment of 55 years of age or on medical grounds or on normal retirement on attainment of the age of 60 will be eligible for payment of severance allowance at the following rates.”
After the company refused to pay Palasi severance allowance upon his retirement, other employees still in service joined him in dragging the company to court for unfair labour practices and breach of legitimate expectation.
The disgruntled members of staff are arguing that the company failed to give written reason for the maintenance of clause 12 in the Conditions of Service while seeking to adopt a new order allegedly following the legislative changes.
One of the employees, who did not want to be named, said discussions between them and the management collapsed and that there was no option apart from seeking legal redress.
According to court documents filed at the Industrial Relations Court, the employees accuse Lafarge Cement Malawi Ltd of using the legal framework regulating pension as a means of defrauding the staff of their legitimate entitlement under the contracts.
The employees are asking the court to declare that on the true construction of the Pensions Act 2010 and the Employment (Amendment) Act 2010, the company’s sole obligation was to calculate and transmit to the National Pension Fund only the severance due entitlement for each of the staff.
In the matter, filed by 41 serving and three ex-employees, the court is requested to order the company, apart from paying the accrued severance allowance due at June 1, 2011 to be assessed, the allowance should also attract interest.
Lafarge Human Resources Manager Gabriel Masaiti said following the provision of Pensions Act, the company computed the pension for each employee and compared what would have been the severance allowance for each of them.
“Where severance was higher than pension, then we made arrangements to pay the difference into the employee’s pension fund account. Where the severance was lower than pension we did nothing. This is in line with Section 91 of the Pensions Act 2010,” said Masaiti.
Masaiti said management did not decline to resolve the matter internally and that it was surprised that the matter had been taken to court before mediation process was exhausted.
Lawyer representing the employees, Patrick Mpaka, on Tuesday confirmed filing the case but was quick to say the matter was still in its initial stages and that hearing has not started.
Pensions Act has been a controversial piece of legislation and Malawi Congress of Trade Unions (MCTU) pleaded with the Joyce Banda’s government to review the law to accommodate issues of employee protection.
