Development of Policy, Legal, and Insitutional Framework for - ppiaf

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
permit an employee whose services had come to an end to collect his pension
and any additional sum by which the severance allowance exceeds the pension.
The Stanbic staff argued that they should receive both amounts in full and
sought redress from the courts. The High Court decided that the Minister had
power to amend the formula for calculating severance allowance payable but not
the eligibility criteria i.e. the Minister could not decree that an employee was no
longer entitled to the severance allowance. Consequently, employees now can
collect both their pension and the full severance allowance.
ISSUES:
This decision has made employers nervous as those who had sought to
insure themselves by taking out pension schemes are actually being
penalised. An appeal has been lodged with the Malawi Supreme Court but
legal opinion does not hold out much hope on this front. Efforts are in hand
to secure the amendment of the Act by Parliament. If this matter does not get
resolved, employers are considering dissolving pension schemes. We feel
that any private sector partner considering PPPs in Malawi will not feel
particularly encouraged by the state of the law vis-à-vis severance payments.
The Employment Act provides that upon winding up of a company,
employees’ terminal benefits take priority over other payments. This
however, contradicts the priority provided under the Companies Act in such
situations. This situation needs to be corrected.
The Employment Act demands that upon termination of employment,
pension must be paid out within six weeks. Generally, this is a matter
outside the control of the individual employer as most pension schemes are
managed by third parties. The employer in such a case is not in control of the
payment. Again, an appropriate amendment would be helpful.
Finally, the newly found freedoms which came with the new democratic
dispensation in 1994, brought with them new challenges. The Employment
Act for instance, provides for procedures for conducting strikes. However,
the majority of strikes are actually illegal. Legally established procedures
which need to be observed before staff may proceed on strike are usually
ignored. This needs to change to assure investors of predictability regarding
industrial action.
4. The Land Act, the Land Amendment Act, and the Registered Land Act and the
Land Policy
Firstly, we will discuss the Land Policy that was adopted by the Government a couple
of years ago. In general, many commentators perceive the Land Policy as a deterrent
to investment in industries with long gestation periods. The relatively short
leasehold period of 50 years that has now replaced the conventional 99 years is at the
centre of the growing view. Another concern is the ostensible discriminatory nature
of the policy in relation to the treatment of nationals as opposed to non-nationals.
In relation to the Land Laws, a number of issues come to the fore:
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 93