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FDH, ex-managers tussle

The tremor is becoming stronger for FDH Bank plc. With 212 ex-Malawi Savings Bank (MSB) Limited employees already on its neck demanding compensation for unfair dismissal, the Industrial Relations Court (IRC) has ordered the bank to pay damages to 22 of its former managers.

But the bank has obtained a stay order. 

In its 15-page ruling, the court found the bank’s decision to backtrack from its promise that there would be no retrenchment during the merger of MSB with FDH Bank to be without justice and equity.  The merger was necessitated by FDH Financial Holdings Limited’s acquisition of majority shareholding in MSB.

“The respondent, [FDH Bank] in view of all the discussion above, unfairly terminated the services of those applicants [ex-employees] from middle management and below. Therefore, only those applicants fitting in those posts are entitled to compensation for unfair dismissal,” reads part of the judgement co-signed by former IRC deputy chairperson Anneline Lidamlendo and employee panellists Getrude Masambo and Frank Chikanga.

The ex-managers sued the bank, claiming unjust dismissal because they were not consulted after management had assured and made commitment to all staff stating the transition strategy would be applied “consistently, transparently and through consultations”.

FDH Bank acquired MSB on July 3 2016

They argued that there was no “slightest intimation” of job losses given by management, as such, the assurance created a legitimate expectation that the integration would not result in job losses and should circumstances change and the need to retrench arose, it would be done as per the assurance.

The sacked workers further argued that they thought it was pointless to avail themselves available on the job market or start looking for new jobs when management had not made the “aforesaid undertakings, assurance and commitment”.

According to IRC judgement on the matter number IRC PR 239 of 2017, between Limbani Msosa and 21 others against FDH Bank—a subsidiary of FDH Financial Holdings Limited founded in 2008—the disgruntled ex-workers were not challenging the validity of their retrenchment but the procedure followed in effecting the same.

As such, they sought relief from the court to determine whether the termination of their contracts of employment amounted to unfair dismissal and whether they were entitled to an order of compensation and/or any other relief the court deemed fit.

The ex-workers also wanted the court to determine whether FDH Bank was legally obliged to consult them before their retrenchment, whether the bank’s management consulted them before their retrenchments and also whether the bank’s conduct amounted to unfair and unsafe labour practices.

While the court observed it was generally expected during mergers some positions are likely to be redundant and others created, it was unnecessary for the bank to give out misleading information to the employees to secure optimum performance.

However, the court referred the matter to the registrar of IRC to fix a date and time for an assessment of the compensation and further gave any party aggrieved by the decision 30 days to apply to the High Court in accordance with Section 65 (2) of the Labour Relations Act.

Both FDH Bank lawyer Alfred Majamanda and Shepher Mumba, who is representing the applicants, confirmed in separate interviews the assessment could not be conducted because of the order.

Majamanda said FDH also appealed against the judgement to the High Court.

“They [FDH] are convinced that the court erred in a lot of respects. There was a genuine reason for the retrenchment and the requisite procedure for conducting a retrenchment was followed,” he said.

On his part, Mumba said the matter was before the High Court on appeal and they are just waiting for the court to schedule a date for hearing as all the documents are ready.

FDH Financial Holdings Limited acquired 80 percent shareholding in MSB, which was 100 percent wholly owned by the State, on July 2 2015 and the integration saw over 250 jobs declared redundant in both banks.

Immediately after the retrenchment, affected employees started a vigil at the office of now retired FDH Financial Holdings Limited chief executive officer Thom Mpinganjira which lasted for almost a week in a bid to force him to pay their pension and severance pay.

While the 22 former employees are smiling, on the other hand their 212 colleagues who also worked for the MSB are impatiently waiting for their fate as the IRC is yet to determine their 2016 case.

They have since petitioned Chief Justice Andrew Nyirenda demanding the removal of some judicial staff at the court for “irritatingly” delaying the discharge of justice.

The 212 disgruntled former workers complained in their letter that since their case started in 2016 (IRC matter number 222 of 2016) the court has failed to conclude the trial.

But in its statement issued on April 6 2016, FDH Financial Holdings Limited announced operational requirements and the need to fulfil their contractual obligations with government, in the sale and purchase agreement, resulted in some positions being declared redundant.

The bank said the process had been undertaken in consultation with the Ministry of Labour and in approving the merger, the Competitions and Fair Trading Commission (CFTC) also recognised the need for FDH to implement a redundancy initiative as part of “business optimisation process.”

Government started the process to sell its commercial bank in 2013 following the bank’s inability to meet liquidity requirements that resulted in both the International Monetary Fund (IMF) and World Bank recommending that the financial institution be sold.

At that time, the bank needed $48 million in new capital by June 2015 to avoid being de-licensed, according to a 2014 report by the Reserve Bank of Malawi.

The controversial deal also drew a widespread public backlash, especially from members of Parliament and civil society organisations, who strongly opposed the transaction.

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