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Court slaps FDH Bank, appeal imminent

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The Industrial Relations Court sitting in Blantyre has determined that FDH Bank should pay employees who were fired on grounds of redundancy following the merging of FDH Bank with Malawi Savings Bank (MSB).

The employees, who are 212 in total, sued the financial services provider for unfair dismissal and unfair labour practices, among other grounds.

According to judgement dated April 13 2022, the court determined that the former employees were supposed to be consulted before termination of their work, the bank acted against its own assurances that people’s jobs would be secure and that the employees were entitled to compensation and redundancy benefits, which they were not given.

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The court further says the conduct of FDH Bank amounts to unfair and unsafe labour practices and the terminations amount to unfair dismissal, adding that the former employees are entitled to compensation, which must be assessed.

“The applicants were entitled to both redundancy benefits under the terms and conditions of their employment and also to a severance allowance under the Employment Act. The respondent only paid redundancy benefits. The severance allowance must be paid and assessed,” the judgement reads.

Lawyer representing FDH Bank Alfred Majamanda has, however, said they will appeal the ruling because the judgement overlooked some legal principles on redundancy and other evidence on how the retrenchment was carried out.

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He said he believed that the applicable law was duly followed when the retrenchment was being carried out.

“We believe, therefore, that the court erred at law in various respects and the judgement is generally against the weight of evidence that was placed before the court. You may wish to know that there is also a case, whose facts are similar to the instant, where redundancy was carried out in the same way,” he said.

The case he was referring to is FDH Bank Limited vs Limbani Msosa and Others [Civil Appeal No. 21 of 2020] where the High Court held that the retrenchment was properly carried out and reversed the order of the Industrial Relations Court, which had been made in favour of the applicants.

In July 2015, the Malawi Government disposed of its majority shareholding in MSB to FDH Financial Holdings, which became the majority shareholder.

The Reserve Bank of Malawi, applying requisite legal frameworks, then advised FDH Financial Holdings to merge MSB with its subsidiary FDH Bank, which led to loss of jobs, especially for MSB.

Then in 2016, Justin Chikaonda, Ezekiel Mangani and 210 others sued the bank.

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