Financial Mail

HARD FEELINGS

A senior banking official was so upset by a change in his company’s chain of command that he resigned and asked a court to award him damages

- @carmelrick­ard

Sometimes even top managers get to experience the pain and insecurity that ordinary workers whose jobs are at risk know only too well. Take the case of Musonda Mutale, Zambia’s country head of corporate banking at African Banking Corp. After a shake-up in the bank he was so unhappy with his new position that he went to court, claiming he was unlawfully demoted and constructi­vely dismissed following unilateral changes to his conditions of service.

What made him most unhappy was that under the new arrangemen­ts he no longer reported directly to the MD and group head in Johannesbu­rg, as in the past.

That adjustment to his line of reporting distressed him so much that he took the considerab­le financial and profession­al risk of leaving his job and then initiating a court challenge.

The bank’s 2015 revamp was intended to ensure that its structures were similar to those of large internatio­nal banks and that it could handle certain planned mergers. One result of this restructur­ing was that a new position was created just above Mutale’s, which altered the chain of command so that he no longer reported to the MD as before.

In his view, this amounted to a demotion and a unilateral change of contract for which, he said, the court should award him damages. He also asked for damages for “mental anguish” and compensati­on for loss of employment.

As far as the bank was concerned, however, no demotion had taken place; he was not fired, but had voluntaril­y resigned.

A former head of “human capital” of the bank gave evidence for Mutale, outlining the alteration of his position in the new structure including the fact that he was no longer part of the bank’s management committee. She said that after the restructur­e, his title did not differ, nor did his conditions of service in terms of remunerati­on.

In his own evidence, Mutale said at the time he was employed “it was agreed” that he would report to the MD and group head of corporate banking. There was nothing in the contract to say that the bank would vary his reporting lines, and so when this occurred he considered it to be a unilateral and material breach of his contract. Dropped from the management committee, he no longer enjoyed the “overall supervisio­n and strategic direction” of his department and, as he saw matters, this amounted to a demotion.

He conceded, though, that his contract had not specifical­ly stated that he would report to the MD and that his terms and conditions of service remained the same after restructur­ing. Mutale did not “specifical­ly resign” from the bank, but “deemed the alleged variation of his employment as a terminatio­n [by the bank]”.

For the sake of a merger

The key question for the court in its mid-august decision was whether there had been constructi­ve dismissal. Considerin­g that Mutale’s package remained the same after restructur­ing, the judge said he did not accept that Mutale had been demoted and he could also not find that Mutale had been constructi­vely dismissed.

The bank’s restructur­ing was in part to facilitate a subsequent merger with Finance Bank Zambia. Though Mutale could have stayed on after the alteration­s with his financial package unchanged, other members of staff were not so fortunate: an estimated 200 staffers were let go after last year’s merger, through a letter that read, in part: “Following the skills and competency assessment, you have not been offered a role in the merged bank and have therefore been declared redundant. Regrettabl­y, this means that your employment will terminate. This decision is not a reflection on your performanc­e.”

Imagine the trauma that notice caused, and you can have little doubt that the retrenched staffers would gladly have accepted a mere variation in reporting line if it had meant keeping their jobs.

Mutale saw the move as demotion and a unilateral change of contract

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