The University of Malawi (Unima) Council is contemplating discontinuing its Service Gratuity Scheme after the system has proven to be financially unsustainable, we have established.
This comes after a financial impact report revealed that the gratuity burden for all tenured staff based on their employment contracts up to December 31 2019 amounted to K41.9 billion which included the K869 million for staff who retired but had not yet received their gratuity.
Unima Council Chairperson Reverend Billy Gama, confirmed in an interview Monday that the council is engaging various stakeholders on how best to handle the matter.
Unima Council introduced the Service Gratuity Scheme in 1983 to curb brain drain. The scheme is designed in such a way that staff members, upon retirement, would get pension and gratuity as part of their terminal packages.
In this respect, Service Gratuity became part of the conditions of service for tenured staff.
A situational analysis of the Service Gratuity Scheme has revealed that over a period of time, Unima has experienced challenges in terms of clearing those that have retired in the system due to insufficient gratuity funds.
The Finance Committee of Unima apparently reported the situation to the 115th Unima Council meeting on November 28 2019 and that the council’s chairperson was tasked to engage Treasury for support of the gratuity liability during the mid-year budget review session.
Unima Council met again on March 6 and 7 2020 where a follow-up on service gratuity arose and it was noted that the number of retirees had increased to 24 and the amount required was now K1.755 billion.
“Council at its sitting on 7th April 2020 painfully resolved to discontinue the service gratuity scheme with effect from 30th June, 2020,” part of the situation report reads.
It adds that the council, however, agreed to pay each employee their service gratuity on pro rata basis to honour the conditions of service up to June 30 this year.
“It should be noted that Council went an extra mile to include in the payment schedule even those that have not reached 20 years of service in honouring the conditions of service,” the report adds.
A draft report to unions and staff welfare committees indicates that Unima Council undertakes to pay these dues staggered over a period of four years.
“First year, (2020/21 financial year): this is for those who already retired by June 2020 but are on month-to-month contract of employment. These require K1,766,730,190.34 as at 1st July, 2020; (b) second year, (2021/22 financial year): this phase will be for those who will reach 20 years of service and above by June, 2020. The amount needed is K17,598,958,159.80 as at 1st July 2021.
“Third year (2022/23 financial year): this is for the cohort of 15 to 19 years and 11 months of service where the gratuity is frozen at 30th June 2020 totalling to K14,073,902,312.93 as at 1st July, 2022 and (d) fourth year (2023/24 financial year) K12, 617, 431 ,388.09 would be needed as at 1st July, 2023 to clear the fourth cohort of 10 to 15 years and 11 months of service where the gratuity growth is frozen as at 30th June, 2020,” the draft report says.
College of Medicine (CoM) Academics and Administrators Welfare Committee Interim Chairperson, Vincent Jumbe, yesterday said they are still discussing as a committee on the implications of such a decision.
We did not manage to get comments from unions or committees of Chancellor College (Chanco), Kamuzu College of Nursing (KCN) and The Polytechnic on their position regarding the decision by Unima Council.
The present Unima Council is overseeing the unbundling of the institution of higher learning which, after a bill was passed in Parliament, is expected to split as follows: The Polytechnic will become Malawi University of Business and Applied Sciences; CoM and KCN will become Malawi University of Health Sciences while Chanco will be University of Malawi.