Mahamo V Nedbank Lesotho Limited LAC/CIV/04/11 – A case on Severance Pay in Lesotho

Mahamo V Nedbank Lesotho Limited LAC/CIV/04/11 – A case on Severance Pay in Lesotho

They say karma has no menu, you get served what you deserve. Lesotho’s jurisprudence on severance pay may prove this statement to be false. The purpose of this paper is to enlighten employers and employees alike that it is not in all instances that an employee who is believed to have committed a misconduct will be denied his severance pay.

Perhaps it is important to start off by noting what severance pay is; According to Maqutu J in Lesotho Amalgamated Clothing and Textile Workers Union and Textile Workers Union v Lesotho Apparel (Pty) Ltd and Another CIV/APN/214/94, “we in Lesotho do not know the history of severance payments.” In his discussion, Maqutu J concludes that, since the English see it as compensation for loss of accrued rights in the job, while the South Africans see it as financial assistance to tidy employees who suddenly lost employment over the period of possible unemployment…Severance pay derives from ILO Convention 158 whose Article 12 (1) provides that a worker whose employment has terminated shall be entitled, in accordance to national law and practice, to a severance allowance or other separation benefits, the amount of which shall be based inter alia on length of service and level of wages and paid directly by employer or by fund (superannuation fund).

Our national law provides for severance pay. Section 79 (1) read with Section 79 (2) of the Labour Code Order provides that an employee who has completed more than a year of continuous service with the same employer shall be entitled to 2 (two) weeks wages for each completed year upon termination of her employment, however the employee who has been dismissed for misconduct shall not be entitled to severance pay. The formula used to calculate this is thus:

Number of years worked x 90 Hours (2 weeks) x Monthly Salary at the time of termination

 195 (Monthly hours)

As stated above, when an employee does bad he must receive bad; if an employee is dismissed for misconduct he cannot receive severance pay. The following case might send chill bumps down many employers spine as it has the potential of making them reward misconduct. In Mahamo V Nedbank Lesotho Limited LAC/CIV/04/11, Mahamo was an employee of Nedbank from 11th May 1992 and was suspended on the 10th day of March 2006. She was suspended because the employer was conducting some investigations. The initial investigations revealed that on the 8th day of May 2006 Mahamo ought to have had an imbalance/surplus of M 4000-00 because M 4000-00 was erroneously posted to her.

Mahamo decided to resign on the 3rd day of April 2006 whilst still on suspension, on the 4th day of April 2006 the Bank served her with a charges of gross dishonesty or theft in that she took M 4000-00 of the bank for her personal use. The bank further informed her that she was still considered employee until the disciplinary hearing had been finalised. Mahamo also informed the Bank before the hearing that she will not attend the hearing as she was no longer an employee; true to her word, she did not attend. The bank held the hearing in her absence and found her guilty. The bank then purported to dismiss her pursuant to the hearing and denied her severance pay.

Mahamo felt it was unjust for the Bank to deny her the severance pay; as a result she launched a number of cases to thwart her being denied her severance pay, the matter reached the Labour Appeal Court. The court had this issue to determine: whether even assuming Mahamo had committed the offence, it was competent for Nedbank to proceed against her with a disciplinary case after she had resigned.  Seeing that Mahamo resigned prior to the hearing but after an alleged misconduct the Bank was under the impression that the resignation was invalid hence they proceeded with the disciplinary hearing.

The court interrogated resignation and said resignation is a unilateral act that terminates employment and once it is given it cannot be withdrawn without employer’s consent. The employer cannot decline an employee’s resignation because the effect would amount to forced labour which is contrary to Section 9 of the Constitution of Lesotho, so the employee simply has to communicate his resignation to the employer, even if it is at the eve of a disciplinary hearing.

It was held that Mahamo’s resignation was valid. The court then explained that in order to determine whether Mahamo is entitled to severance pay the issue is whether Mahamo had been fairly or unfairly dismissed from employment. It was found that she will be entitled to severance pay because her dismissal was nullity, that is to say, if the dismissal is unfair the employee is entitled to severance pay, if there is no dismissal an employee is equally entitled to severance pay. It should be noted that the court opined that the fact that Mahamo committed an offence had no bearing on whether the employer can hold a disciplinary hearing for her post her resignation.

Mahamo’s case is testimony to the fact that even if an employee can commit an offence, the offence has no bearing on whether or not an employee can resign or not. Secondly if the employee commits an offence and the employer unfairly dismiss her, maybe procedurally, the employee will be entitled to her severance pay.  Lastly, and more importantly, Mahamo’s case is clear that if an employee resigns she is entitled to her severance pay even if she resigned after committing a dismissible offence; what is important is the timing. Employee must resign after committing the offence but prior to a disciplinary hearing that way she will avoid Karma.

We can safely say that our labour law jurisprudence proves that you can have your cake and eat it after all.

Prepared by the department of Labour, Industrial Relations and Property Management at Sello-Mafatle Attorneys. For more information contact us on 22317748 or emails us sellomafatle@leo.co.ls/corporatelegal@sellomafatle.com

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