Salary cuts become billion-kwacha payouts

A 2020 decision to reduce executive salaries at the Reserve Bank of Malawi (RBM) has now turned into a costly compensation dispute, with former senior officials securing payments.

This is so as the Industrial Relations Court (IRC) has found that the 2020 salary reductions at the institution were unlawful.

For the affected executives, the dispute has been a long battle over money they say they were contractually entitled to receive. For RBM, however, the court ruling has created a significant financial liability, with reported compensation payments ranging from about MK800 million to MK1.5 billion.

The dispute stems from RBM’s decision in 2020 to revise executive salaries downwards, despite the Bank’s Board having approved a new executive salary structure in 2018.

One of the officials who challenged the decision was former Director of Administrative Services Clemence Chinkono, whose monthly salary was reduced from MK12,046,436 to MK9,885,937 after the salary revision was implemented on December 30, 2020.

In a judgment delivered on November 14, 2025, IRC Deputy Chairperson Annie Zinenani Gumulira found that RBM could determine employee remuneration but could not unlawfully reduce salaries that had already become contractual entitlements.

The court rejected RBM’s argument that the salary reductions were necessary to correct anomalies within its remuneration structure, describing the action as an unfair labour practice.

For Chinkono and other affected executives, the ruling effectively transformed a salary dispute into a fight for financial redress.

The court ordered that Chinkono be awarded the sums claimed, together with interest, while damages for unfair labour practices were to be assessed separately. The parties were also given the right to appeal to the High Court within 30 days.

The case could have consequences beyond Chinkono because several other current and former senior executives were reportedly affected by the same salary reductions.

Among those reportedly affected are Deputy Governor Henry Mathanga, Grant Kabango, William Matambo, Macdonald Mafuta Mwale, Mercy Kumbatira, Clemence Chinkono, Joseph Milner, Frazer Mdwazika, Ralph Tseka and Donnex Chitsonga.

The development also provides context to reports of an alleged MK1.5 billion payment to Mathanga, suggesting that the payment is connected to a wider compensation exercise involving officials affected by the salary changes rather than being an isolated payment.

For Forum for National Development National Coordinator Fryson Chodzi, the dispute raises questions about who ultimately bears the cost when decisions made by public institutions are later found to be unlawful.

“We cannot fault the recipients of the money or RBM for complying with a court order,” Chodzi said.

He said attention should instead focus on the decisions that created the liability and whether those responsible for unlawful actions should face greater accountability.

“Some of us warned at the time that these salary cuts were unlawful. The court has now confirmed that those concerns were valid,” Chodzi said.

The case therefore leaves two very different stories behind: for former executives, a court victory that could restore money they lost through salary reductions; and for the public institution, a costly reminder that decisions affecting employees’ contractual rights can have consequences years later.

As compensation claims involving other affected executives emerge, the RBM salary dispute is becoming more than a disagreement over pay. It is now a story about workers fighting to recover what they believe they were owed, and the growing public cost of decisions that the court ultimately found unlawful.