First Quantum Mining and Operations Ltd v Sydney Mulenga and 43 Ors (APPEAL 172/2023) [2025] ZMCA 115 (19 August 2025)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT NDOLA (Civil Jurisdiction) APPEAL 172/2023 BETWEEN: FIRST QUANTUM MINING AND OPERATIONS LIMITED APPELLANT AND SYDNEY MULENGA AND 43 OTHERS RESPONDENT CORAM: KONDOLO, MAKUNGU AND CHEMBE JJA On 13th August 2025 and 19th August 2025 For the Appellant Mr. H. Pasi and Ms. F. Munsanje - Messrs Mando Pasi and Associates For the Respondent Mrs. L. K. Mbaluku - Messrs L. K. Mbaluku and Co. JUDGMENT Chembe JA delivered th e judgm en t of th e Court. Cases referred to: 1. Care International Zambia and Mis heck Tembo SCZ Appeal No 57 of 2016 2. Marriott v Oxford and District Co operative Society Limited ( 1970) QB 186 3. Mike Musonda Kabwe v BP Zambia Limited (1997) ZR SJ 42 (SC} 4. M"adison Investment, Property and Advisory Company Limited v Peter Kanyinji SCZ selected Judgment No 48 of 2018 5. Redrilza Limited v Abu id Nkanzi Judgment No 7I2011 J1 6. Nsansa School Education Trust v Musamba (201 OJ Vol 1 ZR 457 7. Kasote Singongo v Lafarge Zambia Plc (2009) ZR 122 8. Southern Water and Sewerage Company Limited v Sanford Mweene SCZ Appeal No 14 of 2007 9. Margret Simeza and 52 Others v Society for Family Health SCZ Appeal No . 155/201 1 10. FredahKabaso Phiri vDavies Tembo SCZNo 4/2 012 11. Josiah Subakanya and Others v The Attorney General SCZ Appeal No. 19/2015 12. Lawrence Mwalye v Bank of Zambia SCZ Judgment No. 22/2010 13. Anthony Khetani Phiri v Workers Compensation Fund Control Board SCZ Judgment No.2 of 2003 14. ZCCM v Richard Kangwa SCZ Appeal No. 169/ 1999 Legislation referred to: 1. The Employment Code Act No. 3 of 2019 2. The Court of Appeal Act No. 7 of 2016 Other Works referred to: 1. Winnie Sithole Mwenda and Chanda Chungu A Comprehensive Guide to Employment Law in Zambia (LexisNexis, Johannesburg, 2025) Second Edition 2. W. S. Mwenda Employment Law in Zambia Cases and Materials (UNZA Press, Lusaka, 2011) Revised Edition 1.0 INTRODUCTION 1.1 Th is is an appeal against th e judgment of Mulanda J dated 6 th Decem ber 2022. In th e said judgm ent, th e learned J u dge fou nd that th e termination of th e Responden ts' em ployment by redun dancy was wrongful and unlawful. J2 2.0 BACKGROUND 2.1 The Respondents who are all former employees of the Appellant whose contracts of employment were terminated by redundancy challenged the terminations by commencing proceedings in the High Court. 2 .2 The Respondents sought a declaration that the redundancies based on the closure of the maintenance department were wTongful and unlawful together with an order for reinstatement and damages. 2.3 According to the statement of claim, the Respondent stated that they were all employed on permanent and pensionable conditions under the Appellant's Maintenance Department in the mining division. At some point the Appellant advised the Labour Commissioner that the Maintenance Department was being closed and as a result the workers there would be declared redundant. 2.4 Th e Respondents were declared redundant on 31 st January 2019 and given one month notice. It was averred that the Maintenance Department, however, was not closed and J3 continued operating. A group of about 15 of the Respondents were immediately offered contracts under First Quantum Mining and Operations limited Roads Division and given one year contracts. The second group of the Respondents were offered one year contracts under Kansanshi Mining PLC where they continued to perform their old functions in the Maintenance Department using the same equipment. 2. 5 The only difference was that their salaries were reduced from K12 848.30 to K9 000.00. The Respondents' contracts of employment were terminated after the expiry of the one year period and other people were employed in their positions. 2.6 As for the rest of the Respondents, these were not offered any employment contract after they were declared redundant. They alleged that their positions which continued to exist were filled by other people. 2 .7 The Respondent argued that the redundancies were not genuine as the Maintenance Department remained operational and they were merely transferred to First Quantum Roads Division and Kansanshi Mining PLC Limited. They maintained that there was no redundancy as the first group continued working in the J4 Maintenance Department on the same machines. They maintained the same mine numbers, identity cards, work suits and payslips. The spare parts used were drawn from the same stores and everything remained the same. They also pointed out that their letters of redundancy were written by the same Human Resource Officer who wrote their letters of reappointment. 2.8 The Respondents' position was that the purported redundancies were wrongful and unlawful as the Maintenance Department continued operating and was merely used to reduce their earnings and terminate their contracts. 2.9 The Appellant in its defence denied that the redundancies were unlawful. It maintained that it was a mere contractor to Kansanshi Mining PLC which was a separate company. The Appellant's position was that certain functions were reverted to Kansanshi Mining PLC which had determined that its Maintenance Division would cease to exist. 2. 10 The Appellant explained that some of the Respondents were reemployed by the Roads Division and that the conditions of service were altered in the restructuring process. The Appellant JS denied that it employed new people for the positions which had been declared redundant. It was also argued that the Respondents had not suffered any loss as they were paid their terminal benefits. 3.0 DECISION OF THE COURT BELOW 3. 1 After considering the evidence before her, the learned trial Judge identified the issue for determination as being whether or not the Appellant's termination of the Respondents' employment by reason of redundancy was wrongful and unlawful. In resolving the issue, the Court below considered whether the reasons for redundancy had occurred in respect of the positions the Respondents had held. 3.2 She found that other than altering the Respondents' conditions of service by removing them from permanent and pensionable employment to short term contracts and reducing their salaries, the Respondents who were reemployed retained the same mine numbers, place of work and functions . She held that their jobs had continued to exist. J6 3.3 Regarding the Respondents who were not offered contracts, the trial Judge found that there was compelling evidence that the Appellant had advertised the jobs and that some of the Respondents had attended interviews aimed at filling the positions which they vacated. 3.4 With respect to the argument by the Appellant that Kanshashi Mining PLC which offered the Respondent new contracts was a separate legal entity, the learned trial Judge found that the Respondents who were reemployed in the Roads Division remained with the Appellant. The Roads Division was a department in the Appellant Company. The Court below acknowledged that the Appellant, being a subsidiary company, was a separate legal entity from Kansanshi Mining PLC. However, she surmised that the two companies were under the same management and given that the reemployed Respondents retained the same payslips and nature of work, the two companies operated as one company with regard to reemployment and redundancy. 3.5 The learned trial Judge concluded the Respondents' jobs were not abolished and the purported redundancies were a sham. J7 She found that the real reasons for the redundancies was to alter the conditions of service for the Respondents, she held that the terminations of the Respondents' employment by way of redundancy was wrongful and unlawful. She awarded the Respondents damages but declined the claim for reinstatement. 4.0 THE APPEAL 4.1 Aggrieved with the decision of the Court below, the Appellant has appealed to this Court advancing the following grounds: 1. The Court below erred in law when it held that the Respondents' summary dismissal was wrongful and therefore unlawful when the Appellant complied with all the applicable and prescribed procedures for redundancy and the procedures prescribed by law. 2. The Court erred in law when it held that the Appellant and Kansanshi Mining PLC were one and the same employer of the Respondents. 3 . The Court below erred in law when it awarded damages to the Respondent without establishing that they had suffered loss and damage. 5.0 APPELLANT'S ARGUMENT 5.1 The Appellant filed its heads of argument on 7 th June 2023. Under ground one, the Appellant submitted that the lower JS Court erred when it held that the termination of the Respondents' employment by way of redundancy was wrongful despite finding that the Appellant complied with legal requirements relating to redundancy. It was argued that the only question the Court ought to have considered was whether the procedure was followed as a holding of a wrongful termination must be preceded by a finding that there was breach of contract. 5 .2 Relying on the definition of wrongful dismissal as held in the case of Care International Zambia and Misheck Tembo 1 , it was argued that no evidence was adduced by the Respondents to prove that the stipulated procedures regarding redundancy were not followed. We were urged to set aside the holding that the Respondents' employment was wrongfully terminated by way of redundancy. 5.3 The Appellant attacked the finding by the Court below that the termination of the Respondents' employment by way of redundancy was unlawful because the Appellant and Kansanshi Mining PLC are one and the same. It was submitted that the holding was not sound law. The Appellant submitted J9 further that an employer was entitled to change an employee's conditions of service with his consent. 5.4 The Appellant surmised that the fact that the Respondents readily accepted the redundancy pay and the offer of fixed term contracts shows that they consented to the alteration or reduction of their conditions of service. Reference was made to the case Marriott v Oxford and District Cooperative Society Limited2 and Mike Musonda Kabwe v BP Zambia Limited3 We were also referred to section 36 (3) of the Employment Act which provided operational requirements as one of the grounds for terminating a contract of employment. 5.5 With respect to ground 2, the Appellant submitted that the Appellant and Kansanshi Mining PLC were distinct con1panies which were incorporated differently. Further, it was argued that the pleadings did not include a request to pierce the corporate veil to establish that the two companies were one and that the threshold for treating two distinct companies as one was not met. 5.6 Reference was made to the case of Madison Investment, Property and Advisory Company Limited v Peter Kanyinji4 JlO which decided that the two elements to lifting the corporate veil were concealment an.d evasion. Our attention was also drawn to the case of Redrilza Limited v Abuid Nkanzi5 where the Supreme Court addressed the issue of lifting the corporate veil. The Appellant denied that the termination clause was maliciously invoked as the redundancy did occur. 5.7 ]n relation to ground 3, the Appellant argued that the Court should not have awarded damages to the Respondents as they were paid redundancy benefits and therefore did not suffer loss. It was submitted that the Court below fell into error when it found that the Respondents were given the requisite one month period but went on to ward one month notice as damages. 5.8 We were referred to the cases of Nsansa School Education Trust v Musamba6 and Kasote Singongo v Lafarge Zambia Plc7 where the quantum of damages for wrongful termination was limited to the notice period. We were urged to allow the appeal. 6.0 RESPONDENTS' ARGUMENTS Jll 6.1 In the heads of argument in response filed on 9 th October 2023, the Respondents supported the judgment of the court below. In relation to the 1st ground of appeal, the Respondents submitted that the procedure followed was not the only consideration for determining whether the redundancy was lawful. It was contended that the law required that the reason for the redundancy must be genuine and a redundancy situation must exist before a redundancy can be declared. We were referred to the case of Margret Simeza and 52 Others v Society for Family Health9 in which the Supreme Court stated that the two main redundancy situations were closure of business and reduction in the workforce. 6.2 The Respondents also argued that in a redundancy situation where an employer decided that an employee's services were no longer required, the position needed to be abolished. The case of Fredah Kabaso Phiri v Davies Tembo 10 was cited in support of this position. They maintained that in their case their positions continued to exist as they were offered reemployment immediately after being declared redundant. It was argued that this resulted in the redundancies being a sham. Our attention J12 was drawn to the learned authors of 'A comprehensive Guide to Employment Law in Zambia' who state in their book that by declaring an employee redundant the employer declares that he does not need the employee for the job. 6.3 Relying on the cases of Josiah Subakanya and Others v The Attorney General11, Lawrence Mwalye v Bank of Zambia 12 and Anthony Khetani Phiri v Workers Compensation Fund Control Board13 ' the Respondents submitted that a redundancy cannot occur where a new position is offered and there is no break in employment. They maintained that there was no break in employment for majority of the Respondents as there were offered new positions. 6.4 A further argument by the Respondents was that the court has a duty to consider the appropriateness of the redundancies. To buttress this argument, the case of Chilanga Cement PLC v Kasote Singogo was referred to. 6.5 Regarding the 2 n d ground of appeal, the Respondents submitted that the Appellant and Kansanshi Mining PLC h eld themselves out as one employer. They pointed out that the managers who reemployed the Respondents represented both the Appellant J13 and Kansanshi Mining PLC and there was no break in service in the payslips on reemployment. The work stations remained the same and they continued to perform the same functions. 6.6 Our attention was drawn to the case of ZCCM v Richard Kangwa SCZ14 where the Supreme Court considered the operational style between ZCCM and its subsidiaries and found that there was no real division in how the employees were treated. It was submitted that because of its own conduct, the Appellant was estopped from claiming that it was a separate entity from Kansanshi Mining PLC. 6.7 Regarding the quantum of damages awarded by the court below, the Respondents submitted that they suffered loss as their permanent and pensionable contracts of employment were terminated and their salaries were reduced on reemployment. It was submitted further that the redundancy was wrongful as there was no redundancy situation to warrant it. Relying on the Kasote Singogo case, it was argued the notice p eriod was the normal measure of dan1ages for wrongful dismissal which is what the lower court awarded. We were urged to dismiss the appeal. J14 7.0 HEARING 7 .1 At the hearing, Counsel for the Appellant, Ms. Munsanje, emphasized that the Appellant followed the procedure for declaring redundancies and could not therefore be said to have wrongfully terminated the Respondents' contracts of employment. Mrs. Mbaluku for the Respondents maintained that the redundancies were a sham as the positions held by the Respondents continued to exist. She added that this was demonstrated by the evidence that the Respondents were threatened with disciplinary action if they did not return to work on less favourable conditions after there were declared redundant. 7.2 Mr. Pasi in reply denied that the court below made a finding on the alleged threats. He submitted that the finding by the Court below that the Appellant and Kansanshi Mining PLC were one entity was flawed as it was not pleaded and the remedy of lifting the corporate veil was not sought. He lamented that the Appellant was not given an opportunity to address the issue during the trial. He argued further that the threshold for lifting the corporate veil was not met. JlS 7.3 On the issue of damages, Mr. Pasi reiterated that no damages were due as the Respondents were paid in full and to mitigate any loss, they were reemployed at Kansanshi Mining PLC. 8 .0 CONSIDERATION AND DETERMINATION 8.1 We have considered the judgment impugned together with the record of appeal and the arguments by both sides. The issue raised by this appeal is whether a valid redundancy situation did arise at the Appellant Company resulting in the termination of the Respondents contracts of employment. The Court below held that the redundancies were a sham as the positions vacated by the Respondents continued to exist. 8.2 In considering the 1st ground of appeal, we need to address what r edundancy means. Although the Employment Code Act No 3 of 2019 does not define redundancy, it outlines the conditions under which an employee can be declared redundant. Section 55 ( 1) of the Act states that: "An employer is considered to have terminated a contract of employment of an employee by reason of J16 redundancy if the termination is wholly or in part due to- (a) the employer ceasing or intending to cease to carry on the business by virtue of which the employees were engaged; (b) the business ceasing or diminishing or expected ceasing or diminishing the requirement for the employees to carry out work of a particular kind in the place where the employees were engaged; or (c) an adverse alteration of the employee's conditions of service which the employee has not consented to." 8.3 According to the learned authors of 'A Comprehensive Guide to Employment Law in Zambia' redundancy occurs when an employer has ceased its operations in its entirety or at the place where the employee operates and or an employee's position or need for their services have ceased or diminished. 8.4 Redundancy can therefore be said to be a type of dismissal where an employee's job ceases to exist due to restructuring or closure of the undertaking. It is crucial for the employer to J17 demonstrate that the job or role is no longer required and it is not just a pretext for dismissing the employee for other reasons. In order for the redundancy to be lawful, the procedure outlined in the law or conditions of employment has to be followed . 8.5 The Court below found that redundancies declared by the Appellant in relation to the Respondents' jobs was a sham and therefore wrongful and unlawful. The Appellant has taken issue with the finding that the redundancies were wrongful when the Court accepted that the correct procedures were followed in declaring the Respondents redundant. 8 .6 The issue therefore is whether on the evidence presented, the Court below could make a finding that the termination of employment was wrongful. In the case of Care International Zambia v Misheck Tembo (supra), the Supreme Court explained the distinction between wrongful dismissal and unfair dismissal as fallows: "wrongful dismissal ... essentially is a dismissal which is contrary to the contract and its roots lie in common law. The remedy is usually limited to payment for the notice period.... (in contrast) unfair dismissal is dismissal contrary to statute." J18 8. 7 The gist of the finding of the Court below was that despite having following the procedure on redundancy correctly, the Appellant failed to satisfy the requirements of the law as the jobs or positions that were held by the Respondents continued to exist and were filled by other people. To the extent that the finding of the lower Court was that the termination of employment was contrary to statute, we agree with Appellant that the conclusion should not have been wrongful termination. We therefore agree that the Court below erred by holding that the termination of employment via redundancy was wrongful. 8.8 In the Care International Zambia case the Supreme Court cautioned Judges against the careless use of the words "unlawful termination', unfair dismissal and wrongful dismissal as they mean different things. In the present case the use of wrongful and unlawful by the lower Court was careless and incorrect. The correct finding should have been that the termination was unfair as the conditions for redundancy as set out in the Employment Code Act were not met. 8. 9 In relation to whether or not the redundancies were genuine, the Appellant's position was that the Respondents were J19 reemployed by Kansanshi Mining PLC which was a separate legal entity. However, the record of pr oceedings shows th at the learned trial J u dge fou nd that 15 of the Respondents were rehired by the Appellant under th e Roads Departm ent on less favourable terms. She held at page J35 of the judgment that: "There is undisputed evidence that a day after the 1st Plaintiffs were declared redundant by the Defendant, the Defendant redeployed them in its company. The only difference after being redeployed was that the 1st Plaintiffs were now said to fall under the Defendant's Roads Division, from the previous Mining Division. It is not in dispute that, other than the Defendant altering the conditions of service, such as reducing the salaries and moving the Plaintiffs from permanent and pensionable terms, the 1st Plaintiffs retained the same mine numbers, place of work and they performed the same funct ions they performed under the mining d ivision. " 8.10 The Appellant did not address this group of Respondents in its argument. The evidence adduced as recounted by the learned trial Judge above clearly showed that the Appellant did not abolish the positions occupied by the first group of 15 Respondents as it still required them to continue performing the same functions. The fact that they were reemployed on less favourable conditions lends credence to the finding that the J20 • declaration of redundancy was a sham and the Appellant intended to use it to alter the conditions of service. The Supreme Court in the case of Fridah Kabaso v Davies Tembo cited by the Respondents, emphasized that where an employer declares a redundancy because the employee's position is no longer required the position must be abolished. We are, therefore, of the view that there was no legally acceptable basis for declaring this group of Respondents redundant. 8.11 The learned author of 'Employment Law in Zambia Cases and Materials' cautioned that an employer who declares an employee redundant risks court action if he replaces him because the action of declaring the employee redundant is an announcement to the world that he does not need anybody for that job. 8.12 Although the Court below made the erroneous finding that the terminations were wrongful, we are empowered by section 24 (1) of the Court of Appeal Act to confirm, vary, amend or set aside the judgment appealed against. We accordingly amend the judgment of the Court below by substituting the finding that the termination of employment by way of redundancy was wrongful J21 with a finding that it was unfair and unlawful as the conditions for redundancy set out in section the Employment Act were not met. 8 . 13 In view of the foregoing, we find that the redundancies declared in respect of the Respondents who were reemployed by the Appellant were done contrary to the law and were, therefore, unfair and unlawful. We will address the findings on the other Respondents under the 2 nd ground of appeal. 8.14 With respect to the second ground of appeal, the Appellant faults the Court below for finding that the Appellant and Kansanshi Mining PLC are one and the same employer when the evidence adduced showed that they were separate legal entities. The question of whether the Appellant and Kansanshi Mining PLC were run as a single entity is an important one as it informed the decision on whether the rest of the Respondents were validly declared redundant. 8 . 15 The record of appeal shows that the trial Judge grappled with this issue at pages J36-J39. She acknowledged that the Appellant and Kanshashi Mining PLC were subsidiary companies of First Quantum Minerals Limited. She, however, J22 reasoned that because the Respondents who were offered employment by Kansanshi Mining PLC maintained the same mine numbers, payslips and nature and station of work together with the fact that the two companies shared the same Human Resource systems, they operated as one entity. 8 .16 We are of the view that the argument by the Appellant that the Court below held that Appellant and Kansanshi Mining PLC were one entity is misleading. The learned Judge reasoned on the evidence before her that the two companies were run or operated as one entity when it came to human resource issues. This reasoning is supported by the Supreme Court judgment of ZCCM v Richard Kangwa (supra) where it was stated that the operational style between ZCCM and its subsidiaries on the treatment of employees did not reveal any real division. 8 . 17 The Appellant relied on the case of Madison Investment Property and Advisory Company Limited v Peter Kanyinji (supra) to argue that the Court below had pierced the corporate veil in finding that it was a single entity with Kansanshi Mining PLC . In that case the Supreme Court substantively addressed the issue of lifting the corporate veil in situations where J23 companies in a group (su ch as the case h erein ) were operated as a single unit. Citing n umerous English authorities, th e Sup reme Court came to the conclusion that th e veil should not pierced merely because there was a grou p structu re. However , the Cou rt went on to hold th at th e corporate veil could be lifted where there was concealmen t or evasion of an obligation. 8.18 In relation the evasion principle, the Su preme Court stated as follows: "The evasion principle is premised on an individual or entity being under an existing legal obligation which he or it seeks to avoid by using the corporate personality which is under the control of the individual or entity." In the present case, the evidence showed th at the Appellant declared the redundancies in a bid to redu ce the wage bill whilst retaining the positions or functions performed by the Respondents. In our view, the Appellant was seeking to avoid its legal obligations to meet the Respondents' conditions of service . J24 8.19 In the present case, the Court below was entitled to pierce the veil as the Appellant was using the fact that Kansanshi Mining PLC which reemployed some of the Respondents was a separate legal entity to evade its obligations to them. 8 .20 In the case of Southern Water and Sewerage Company Limited v Sanford Mweene8 the Supreme Court held that: "The fact that there is a notice clause for terminating a contract without giving reason does not debar the Industrial relations Court from looking behind the termination to ascertain if some injustice was done by the employer when invoking the termination clause. This is the discretion the Industrial Relations Court invoked in this case and the Court was in this respect on.firm ground using this discretion." 8.21 In the present case, the Court below was therefore entitled to exercise its discretion to look behind the termination of contracts by way of redundancy. We agree with the Respondents' submission that the redundancy must be real and genuine and the court has a duty to determine whether the declaration of a redundancy situation was done in good faith. The fact that the jobs held by the Respondents were not abolished and continued being performed albeit under J25 • Kansanshi Mining PLC suggests that the Appellant acted maliciously in declaring them redundant. We find no merit in the 2 nd ground of appeal. 8.22 In ground 3, the Appellant charges that the Court below should not have awarded damages without establishing that the Respondents suffered loss. There was undisputed evidence that the Respondents were paid all their redundancy benefits together with all their dues at the end of the one year contracts where applicable. 8.23 We have found that the termination of employment by way of redundancy was unfair and unlawful as the intention of the Appellant was to alter the Respondents' conditions of service. The jobs which were held by the Respondents continued to exist hence the reemployment. The undisputed evidence is that the conditions of service for the Respondents were altered to their detriment in that their salaries were reduced from K12 800.00 per month to K9000.00 whilst the duration of the contracts were changed from permanent and pensionable to one year. 8.24 Although the Respondents did not lead evidence on the damages suffered, the evidence showed that they lost security J26 • ii of tenure and actual monetary loss from the reduced salaries. However, we agree that the loss was mitigated by the payment of redundancy benefits and reemployment for the majority of the Respondents. We are of the view that in the circumstances the Respondents are entitled to nominal damages only, which are adequately covered by 1 month salary awarded by the Court below. The third ground of appeal accordingly fails. 9.0 CONCLUSION 9.1 Having found no merit in all the grounds of appeal, the appeal is dismissed with costs. M. M. KONDOLO SC COURT OF APPEAL JUDGE C. K. MAKUNGU .................................... Y. CHEMBE COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE J27