Two years after being compensated for unfair dismissal, some former employees of Malawi Revenue Authority (MRA) are now demanding K90 million from the public tax collector on the basis that calculations were erroneous.
In October 2014, the Industrial Relations Court (IRC) in Blantyre ordered MRA to pay about K500 million as compensation to over 170 ex-employees after the court determined that they were unfairly dismissed.
Yesterday, a representative of the aggrieved former workers, Frank Ngagwe, claimed that MRA management deducted pay as you earn (Paye) tax amounting to K90 million using a wrong formula which was against the tax regime.
He argued that by deducting Paye on their compensation, the public tax collector acted contrary to general tax exemptions as stipulated in the First Schedule, Section C of the Taxation Act.
According to the Laws of Malawi Chapter 41:01 the cited section reads that there shall be exempt from income tax in “any amount received… as an award, benefit or compensation paid under any law of Malawi in respect of injury, disease or disablement suffered in employment”.
Said Ngagwe: “Our understanding of this law is that we were not supposed to be deducted tax because we received the compensation due to the injury we suffered at the hands of MRA for their unfair dismissal as per the court’s determination.”
However, he said the former members of staff have engaged tax consultants to help them recover their deducted money.
MRA deputy director of corporate affairs Steve Kapoloma requested for a written questionnaire when contacted, but did not respond to it as we went to press.
In January 2014 ruled that MRA’s decision to terminate services of the employees was unilateral, unfair and without consultations as the law demands.
About 170 former MRA employees benefitted from the compensation with the highest paid getting K10 530 000 while the lowest carted home K750 000.