State produce trader Agricultural Development and Marketing Corporation (Admarc) may have violated employment laws by retrenching its entire workforce and immediately recruiting replacements, legal and labour experts have cautioned.

In separate interviews yesterday, the experts further warned that the parastatal risks facing a hefty compensation claim due to the move.

But Attorney General Thabo Chakaka Nyirenda, in an interview yesterday, argued that government followed all procedures in the retrenchment process.

In February this year, Admarc published vacancies for chief executive officer (CEO) alongside directors of operations, finance and corporate affairs. It further said it planned to recruit 2 000 new staff as part of its restructuring process.

The announcement was made a fortnight after the State producer trader retrenched all its 4 000 workers due to what it termed restructuring process.

The vacancy advert indicates that Admarc is replacing the position of general manager with CEO.

Former AG Charles Mhango, in a written response to The Nation questionnaire, argued: “If the facts presented are true, then Admarc violated the Employment Act and Labour Relations Act.

Nyirenda: We followed all procedures

“The law doesn’t allow an employer to retrench staff and immediately employ replacement staff. In this case, it is not retrenchment but dismissal.”

Former Malawi Congress of Trade Unions president Luther Mambala also said the parastatal “has gravely violated the labour laws which demand that according to natural justice, the employees, if suspected of any wrongdoing, were supposed to be heard”.

He said: “This is a thing that never happened. These employees can take the parastatal to court if they wish to.”

Put to him that government said the workers were retrenched, Mambala argued: “Retrenchment entails that a company is going through economic hardship and to ease up that you retrench and don’t replace immediately. You only replace if the organisation has now started doing well.

“You don’t replace because you are in an economic turmoil you inform the Ministry of Labour so that it endorses the retrenchment after making its scrutiny and makes sure that the retrenched workers are paid accordingly in tandem with what the law stipulates.

“I can argue, according to what I have, that does it mean Admarc has now improved economically for it to replace the employees it retrenched?”

However, Nyirenda has argued that all procedures were followed.

He said: “Note that retrenchment happens when a company is unable to make profits which were the case with Admarc. The firm was unable to make profits and relied on Treasury for salaries. What should have happened in that situation?

“Redundancies happen when a company is reorganising itself and some posts are no longer required. In other words, excess employees are laid off.

“There was a combination of both retrenchment and redundancies at Admarc.”

On their part, the retrenched workers through their chairperson John Hassan said they are contemplating legal action against Admarc.

In an interview yesterday, he said they shared the views of the legal experts that they were dismissed.

“Imagine, the government said whoever report for work will be dealt with by the police. We were treated like animals,” Hassan said.

He said that they have consulted a lawyer whose  identity he declined to disclose.

“After he analyses the case, he will advise what course of action we need to take. The preliminary picture we got from the lawyer is that taking legal action is inevitable,” Hassan said.

Meanwhile, private practice lawyer Gladwell Majekete holds the view that the Admarc workers were dismissed and not retrenched.

“If it is true that the same positions have been advertised, it is clear Admarc has breached employment laws because Section 57 of the Employment Act grants one right to be heard which was not the case,” he argued in a telephone interview.

Section 57 (2) of the Act argues: “The employment of an employee shall not be terminated for reasons connected with his capacity or conduct before the employee is provided an opportunity to defend himself against the allegations made, unless the employer cannot reasonably be expected to provide the opportunity.”

Majekete said he once defended a court case in which employees were retrenched based on restructuring grounds and their positions were re-advertised immediately in different names.

He said: “The courts dismissed our defence that the positions were new as they had new names. The court said what we did was merely nomenclature.

“So, even if Admarc changes the names, if the ex-employees go to court, the parastatal will be exposed and end up paying hefty compensations.”

Following the retrenchment, the government said it expected Admarc to be on its feet by this month.

In a circular to the employees dated January 30 2023, Admarc acting general manager Ethel Zilirakhasu said the company was implementing a 100 percent retrenchment and the last working day for all staff was January 31 2023.

In September 2022, Ministry of Agriculture closed Admarc and sent its entire staff on paid leave to pave the way for restructuring. However, it continued to perform some social services with selected staff members.

The Ministry of Agriculture outlined the conflict between Admarc board of directors and management, leading to poor governance and abuse of company finances and theft by some employees, as some of the factors that influenced the decision.

However, following the development, government spent close to K3.750 billion on payments to Admarc staff for doing nothing over a period of five months as Admarc’s wage bill stood at K750 million per month.

Both Minister of Agriculture Sam Kawale and Admarc acting CEO had not responded to our questionnaire seeking an update on progress.

The post Admarc warned on mass retrenchment first appeared on The Nation Online.