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Employees of dissolved bank lose appeal on terminal benefits

Former Lesotho Agricultural Development Bank building

May 15, 2021 3 min read

3 min read

FORMER employees of the dissolved Lesotho Agricultural Development Bank (LADB) have their appeal for payment of terminal benefits dismissed by the Appeal Court on May 14 on grounds that the government is not liable.

The LADB, a parastatal bank, was liquidated in 1998 and the employees claim when the bank was liquidated they were promised terminal benefits by the government of Lesotho which was not fulfilled.

When the bank was liquidated, it had grown to have branches in all the districts of Lesotho and some mini towns and its closure left hundreds of employees jobless.

The employees of the bank had a pension fund in which they contributed 2 percent while the bank as the employer contributed 22 percent. When the bank was dissolved, the employees received 2 percent of their contributions from the pension fund but not the employer’s contribution of 22 percent.

The high court had found that the former employees could claim their entitlements from the pension fund and the employees argue the government must take responsibility as the owner of the employer – the dissolved bank.

The government disclaimed responsibility arguing the workers should have claimed their dues from the pension fund.

The former employees, led by former branch manager Likano Tšiu, claimed that the government had turned against the promise it made earlier that it would take responsibility and pay workers the remaining 22 percent of their pension.

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Before approaching the Appeal Court, the former employees accused Prime Minister Moeketsi Majoro of delaying the process of paying their remaining promised terminal benefits. However, the premier had vowed to order fresh investigations on how the employees lost part of their pensions and establish government’s liability, the proposal which the employees rejected as a mere delaying tactic. They claimed that the premier’s government had made a promise in the budget speech that funds would be allocated for the pensions of former LADB employees and that promise enflamed their genuine expectation that they would get payments.

The bank had a provident fund held by Metropolitan Insurance in South Africa and the premier said it had to be established first if the funds are still held by the insurance or were paid out and to who or ended up being unclaimed.

The former employees then approached the Appeal Court to order the government to pay arguing through their lawyer Advocate Tekane Maqaqachane that the government had made a promise that the benefits would be paid when the bank was dissolved. He said when the benefits were not paid the employees’ legitimate expectation was frustrated, especially after the parliament decided that the government would no longer pay the promised benefits.

He argued that the parliament’s decision was despite the fact that there was a promise and that there were indeed legal entitlements to the former employees; that the government is aware of the problems experienced by the bank and that government has constitutional responsibility as it guides policies.

In response to the argument by the former employees, the government through Advocate Motiea Teele KC submitted that the government did not promise to pay from the public purse but undertook to ensure that the LADB Pension Fund paid the outstanding benefits.

He argued the Appeal Court was being asked to do the impossible, which is to pay or order payment where the parliament had not appropriated funds. He said the bank’s pension fund was an independent persona who should have been joined in the case.

He said there was a structure in place where contributions were made and payment was guaranteed and he questioned why the former employees waited for so many years since the bank was dissolved in 1998.

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