Freeze Mpilipili v Stanbic Bank Zambia Limited (APPEAL NO. 28/2017) [2017] ZMCA 502 (5 October 2017)

IN THE COURT OF APPEAL FOR ZAMBIA APPEAL NO.28/2017 HOLDEN AT LUSAKA ( Civil Jurisdiction) BETWEEN: FREEZE MPILIPILI , APPELLANT AND STANBIC BANK ZAMBIA LIMITED RESPONDENT Coram: ~ - C. K Makungu, F . M. Chishimba, M. M. Kondolo J. J. A On 4 t h May, 2017 and 5 th October, 2017. > · > · > · .> · - -=- __ lor the App~Jl?-µt: Mr. A. M.b_ambara of Mes_s r s A. Mbambat.?- · « ~ - .. :'(. .,,.. For the Respondent: Mr. N. Nchito S . C of Messrs Nchito & Nchito . -Legal Practrtioners "'C\_ ... ~ .:"-!...: . ·=-· ,p --'~'-"'< • .,,_ ... ,p -:"";;•: ' - · ·- ·-""-""' ~ - ~ .,,.. .,,.. -r - . JUDGMENT C. K. MAKUNGU, JA delivered t h e Judgment of the Cour t. Cases referred to: 1. National Milling Company Ltd v Grace Simataa and Others (2000) ZR 91 2 . Mike Mu sonda Kabwe v B. P. Zambia Limited (1997) S. J 42 3. Newton Suilanda and Others v Food Corp Products Limited SCZ Judgment No. 9 of 2002 Other authorities referred to: 1. Chitty on Contracts, General Principles by Guest, A. G ( 19 77) Vol. 1, 24th edition. 2. Oxford Advanced Learners Dictionary (20 1 OJ A . S Homby1 8 th edition1 Oxford University Press: United Kingdom This is an appeal against a Judgment of the High Court, Industrial Relations Division delivered on 4 th October, 2016. The material facts are that the appellant wh o was employed as Account s Sales Officer by the respondent was with effect from 31 st October, 2014 declared r edundant. The a ppellant's conditions of service did not expressly provide for r edundancy. Before the fact, the a ppellant was informed at a 'Town Hall' meeting that the respondent was restructuring the Corporate Investment Banking (CIB) where h e was b a sed and this would result in a reduction of m embers of employees and enhancement ~-of roles and cfU:ties as n ew po·sts would be ->created. On 1 ~ - .:_,,"P .. :"';;..:; :· ~ -:.¼ ·•"""..-:. : ~ -~-;.~ -~ . ~ .:;~ -'-~< : . .. -~~ - ~ -.:: _:·· ..,.. August, 2014 ..,..an assessmenrr was done on..,...the appellant~ - suitability to be a Client Analyst which was the newly cr eated post for an Accounts Sales Officer but h e failed the interviews. He was advised to vie for other positions in the call cen tr e or pool but he declined. He was later paid a r edundancy package of two months salary for each completed year of service and all other dues s uch as pen sion . In his judgment, the learned trial Judge found that t h e contract of employm ent between the a ppellant and the respondent was varied to incorporate a separation by way of redundancy. That the a ppellant h a d acquiesced to the n ew conditions of employm ent which would include redundancy. He furth er found th at the a ppellant was fairly compensated for the r edundancy, the respondent h avin g borrowed th e formula for the t abulation -J2- thereof from 8.26 b of th e Employment Act Cap 268 of t h e Laws of Zambia. Dissatisfied wit h the above decision, th e appellant has now appealed to us advancing two grounds couched as follows: 1. The Court below erred in law and in fact when after determining that Section 26B of the Employment Act does not apply to employees and employers who e nte r into written contracts of employment but still proceeded to hold that the parties had infact agreed to vary the terms and conditions of service to include a redundancy provision when there was no evidence to s upport such holding. ~ -~ 1Jre.:C;J)_l£,Lt 6et&w- ~ j n Jaw find -~fq,c;J U}hen~~ thqt !he appellant had accepted the variation to his contract of e mployment when there was no evidence to that effect. At the h earing of the appeal, counsel for the appellant, Mr. Mbambara relied on t h e Heads of Argumen t file d h erein on 28th May, 20 1 7 wh er e in support of ground one, he r eferred us to Chitty on contracts 1 on the proposition that a contract is based on consent and that it can only be changed when all the parties to the contract conse nt. That a mere unilateral n otification by on e party in the a bsence of any agreement cann ot constitute a variation of the contract. In developing this proposition , h e referred us to the case of National Milling Company Limited v -J3- Grace Simataa and Others 111 where the Supreme Court held as follows: "The learned trial judge concluded, citing our decision in Kabwe v BP (Z) Limited ( 1) that any conditions that are introduced which are to the detriment of the workers do not bind the workers unless they consent to them. Of course, Kabwe did not specifically formulate any proposition in those terms, it having been concerned with an adverse downward alteration to a fundamental condition - namely the salary - which the employee had for a while already began to enjoy. The thrust of the holding in the Kabwe case, which cited .with approval A.he deci~ion i. A· Marriot v Qxford and .:_:,~ District- C~--d ~ra1:ive So~iet~:cfibited-(2), -~as :lhaLif_a~ employer varies in an adverse way a basic condition or basic conditions of employment without the consent of the employee then the contract of employment terminates and the employee is deemed to have been declared redundant or early retired - as may be appropriate - as at the date of the variation and the benefits are to be calculated on the salary applicable then." It was counsel's submission that the lower cour t on page 12 of the Judgment demonstrates that the parties must be in agreement before the terms and conditions are varied. He argued further that there was no evidence of an agreement between the -J4- appellant and the respondent to vary the contract of employm ent to include the provisions of redundancy . He went on to state that the town hall meeting that was h eld on 4 th July, 2014, referred to on page 13 of the Judgment and the one-on-one meetings h eld between the appellant and the respondent were held for purposes of informing the appellant of the new model that was introduced by the r espondent and also to inform h im of th e change in job descriptions. He argued that there was no m ention on the part of the r espondent of the changes in the contract of employment and what in essence occu rred was a mere unila teral notification to the appellant. This, ~ ~ stbmitted did .not1~nstitu te . pr:op/r-~ar.iation_ o(. th/~011,tract. . . ..,._-, ~ -~ . ..;- -..,..~ .• :'-'-~ ..;- . . . _x<--=,¢ ~~ . -r ' '<',~~ ",-:'-'-.....,: : ..;- ~-· -:.o:~ .. :""'e-.:, . -r In support of gr ound two, h e submitted that in the case of Mike Musonda Kabwe v B. P Zambia Limited 121 the Supreme Court h eld as follows: if an employer varies a basic condition or basic " conditions of employment without the consent of the employee then the contract of employment terminates and the employee is deemed to have been declared redundant on the date of such variation and must get a redundancy payment if the conditions of service provide for such payment. If the conditions of service provide -JS- for early retirement and not redundancy then the employee should be deemed to be on early retirement." Th e Suprem e Court in the same case stated thus: "As we see it the real issue is: "Did the appellant agree that his salary be reduced and if not what is the effect or consequence of an employer varying or cancelling a basic condition or basic conditions of service without the employee's consent?" Mr. Mbambara went on to highlight another p ortion in the same judgment as follows: /'-. /'-. /'- . /'- . "In the Marriot case ( 1 ), cited by Mr. Mubanga the facts are that the appellant was employed by the respondents as Electrical Maintenance Foreman. The Respondent decided to reduce the work force in its Works Department and wrote to the appellant that because of this his status would be reduced and that his salary would be reduced by £3 a week. The appellant protested and continued working. After sometime, the respondent wrote to him again that instead of reducing his wage by £3 they would reduce it by £1. The appellant protested again and gave a week's notice to take up another job. He claimed redundancy payment which was refused. He then took the matter to court. The trial court held that since he had continued working before taking up a new -J6- ~- - :~ -- -~ job he had accepted the new conditions and was therefore not entitled to a redundancy package. On appeal it was held that since the parties had not agreed to the variation of the appellant's wages and reduction in status the contract of employment terminated on the date of variation of the essential terms of the contract and that the appellant was entitled to a redundancy payment. We respectfully agree with that decision that if an employer varies a basic or basic conditions of employment without the consent of their employee then the contract of employment terminates the employee is deemed to have been declared redundant on ~ -· the date of such variation and must get a redundancy > · -~~~h --- - ..,,,.. payment. We would add here that if the conditions of pa:x~~: if _the ·c~,,etµ_e~s of se~-i~~-4~: provide.:._~ -- ~ - --- - ~ ... - - . ;.t. · ..,,...- -~ - - . service provide for early retirement and not redundancy then the employee should be deemed to be on early retirement." On the a bove a uthority, it was his submis sion tha t th e a ppellant did not agree to t h e variation of his con tr act and neithe r was ther e any acquiescence as the said variation w as n ever communicated to him giving him n o opportunity to accep t or d en y t h e same. In exp anding his submis sion h e defined acquies ce in a ccordanc e with the Oxford Advanced Learners Dictionary (2 l to m ean the follow ing : -J7- I "Accepting some thing without arguing, even if you really do not agree with it." In th e same vein , referen ce was made to the case of National Milling Company Limited v Grace Simaata and Others (1) as follows: In the same category fall the arguments about " acquiescence when there was no prior and real opportunity to the affected workers to affirm the contract with those precise variations. The position would have been otherwise if the evi dence was that clear yotice had b e e,_given coverin_, __ the alteration;_ _and ·tlult .t.b:~- ~orker~~w:ith( full kn.._e~l~g~e h ad -~~~4~ ~o ~ - continue in employment in the knowledge that their ~ - - ~ ·-- - ~ - - - terminal benefits would be on a reduced package if the separation came by was of redundancy. In this regard, we accept that to a person leaving employment the arrangements for terminal benefits - such as pension, gratuity, redundancy pay and the like - are most important and any unfavourable unilateral alteration to the disadvantage of the affected worker and which was not previously agreed is unjustifiable and in this connection it is unnecessary to place a label of basic or non - basic on it ... " In conclusion, he argued that there was no notice given to the appellant on the variation to include a redundancy clause. -JS- Further that, there was no real opportunity on the part of the appellant to accept or reject the said variation. That the evidence of the appellant on record shown on page 5 of the Record of Appeal clearly shows that he was informed that the job description would be changed but that jobs would not be lost and people were to be moved to different positions and he was assured that no one would lose their job as shown on page 10 of the record of proceedings. He went on to state that the appellant was not aware of the alleged redundancy or the abolishment of any position. That the new role as accounts analyst that was meant for the appellant,-1ncluded a few diore roles. It wati· his submissi~·that ~s a. ;~;Gl~f-the- q~a1i~~alu~ or ~st~fil;of .the- n~w~ Pbf~h-is position was improved to include a few other roles and it is for this reason that redundancy was not in anticipation by the appellant and that the appellant could not agree to something that he was not aware of. He argued further that the appellant's contract of employment was terminated on the date the contract was varied without agreement. That contract did not provide for redundancy or early retirement as a form of termination. Therefore, the appellant was wrongfully dismissed as the respondent terminated his contract without bringing any charges against him or according him an opportunity to be heard. Mr. Mbambara's oral arguments were that his client is entitled to 36 months salary as damages for wrongful termination of -J9- employment. Since there was a prov1s10n for retirement in the appellant's conditions of service the respondent should have opted for early retirement. That even if a retirement package might be inferior to the redundancy benefits already paid, his client should be awarded lesser damages. Coun sel for the respondent, Mr. Nchito's oral arguments were that even if this court were to hold th at the appellant was unfairly treated, the compen sation he was paid would suffice. He went to state that retirement has a qualification in terms of age. Since the appellant was 42 at the material time he would not have qualified for retirement. There was no provision for early ..,._ . , _j/1._ . In response to ground one, Mr. Nchito also relied on h is written Heads of Arguments thus, there is no relationship between Section 26B of the Employment Act and the findings of the lower Court th at the parties agreed to vary the terms and conditions of employmen t. Page 21 of the record of appeal shows the lower court's findings as follows: "The impression we are left with is that the complainant was agreeable or at least acquiesced to the programme. In this manner, therefore, we find that the contract of employment between the Complainant and the respondent was varied to incorporate separation by way -JlO- of redundancy and the Complainant c annot be seen to be complaining after the e v e nt." In light of th e foregoing, counsel submitted that the lower Court was on firm ground when it found that the appellant had acquiesced to the change in his employment contract to introduce redundancy as the findings were suppor ted by the evidence on record . Further that, the learned trial judge analysed the evidence that was led at trial as shown on p age 20 of the record of appeal as follows: JI,_· "The evide_Ace is t~at th~_ Complainant >..long w ith hi~-->-· ~~ ·-- _ ,. -~~ -;:~ :··workriiafes:;'.:\ve~ _notifieli:;i ri _th_e Tiiw-n;=-ttall . of -the -~ : restructuring exercise. He became aware that the position of sales support officer was to be replaced by the position of client analyst which would come with some enhanced roles. He was also aware that he and other employees were going to be assessed in interviews for capacity to take up the enhanced roles. It was not in dispute that Machungwa was taken on as Client Analyst after interview. The Complainant did not protest or raise query with t he respondent over these developments." He argued that the appellant did not adduce any evidence to show that he had challenged the process that the respondent had -Jl 1- invoked for restructuring its operations. Therefore, the appellant cannot now protest after the fact. In developing this argument, counsel submitted th at the appellant, under cross-examination a t page 252 lines 1 to 9, became aware that there was an ongoing reduction in the number of people working in his unit from 20 to 13. In addition , lines 1 t o 5 on page 253 of the record, shows that the a ppellant did not obj ect to the exercise and n either did h e reject the payment of the r edundancy p ackage and yet h e alleges that h e did not know the b asis. That there was sufficient proof of th e a ppellant's acquiescen ce to the inclus ion of redundancy to th e terms and conditions of his employment. It was therefore his submission that the a ppeal lacks m erit and must be dismissed. ,. :;,;~ ~~are-s s:n ~~i1.dtwo, ~ ;>~~fiito asser~e~liti1{·rs s1m:1tfo-> :. ground one . He reiterated what was argued in ground one th at the a ppellant did not raise any issues with the procedure that was employed by t h e respondent despite knowing th e repercussions. The lower Court found as a fact th a t he continued to work even after his contract was varied to include termination of employ m ent by redundancy and h e cannot complain after the event. To support his argument , h e referred us to th e case of Newton Suilanda and Others v Food Corp Products Limitedl3l wherein the Supreme Court h eld as follows: "The cases of Kabwe v BP (Zambia) Limited ( 1) and Marriot v Oxford and District Co-operative Society Limited (2) were called in aid. Yet those cases can only -J12- arise if there has been a termination of employment to the alleged breach. The cases are inapplicable in the case of those who choose to continue working and are still opting to accept or acquiesce in the changes." It was counsel's s u bmission t h at RWl testified at page 260 of t h e record of app eal, lines 8 - 13 as follows: "A series of meetings were held with the employees in CIB. In July 2014, a town hall was held specifically for the unit to explain the new business model and the impact in terms of head counting. In addition one to . ( one discud;ions were hel<f.-" He therefor e argued t h at the appellant had an opportunity to raise any issues regarding th e number s of staff being r edu ced and h e knew t h at t h e terms of h is employmen t were ch anging to in clude redundancy. He con cluded th at the appellant was adequately comp ensated for th e loss of em p loyment. Th e evidence on page 182 of t h e record of app eal clearly s h ows that the appellant was paid a total of fourteen month's salary for the seven years h e served at the respondent's bank. Therefore the lower Court was on firm ground when it found that th e payment was adequate and as such h e urged us to d ismiss th e appeal for lack of merit. -J13- We have scrutinised the record of appe al and the submissions made. In our view the grounds of appeal are interdependent therefore we shall deal with them concurrently. First and foremost, the lower court's finding that Section 26 B of the Employment Act does not apply to written contracts of employment h ad no bearing on the other findings that the complain ant was agreeable or at least acquiesced to the restructuring programme. Th er efore the contract of employment between the parties was varied to incorporate separation by way of redundancy and the complainant cannot be seen to be ~ ~-- ·i<.""'~ - ~ '< . complaining after the event. Evidence on record shows that the . .,a~ppellant . 11,~d ~a: r_eal oppqrtut·ity_ and st111ple'"\ime to pr~~te~-- ·r-_---~ -~ . ,. .... -._~ - ~ again.sf the restructuring for being inconsistent with nis contr acr - ·-.s.""'~ - ~ --~--< . -.... ~ . . of employment. He would have done so at the townhall meeting, at the one-on -one meeting or when he was invited to attend an interview. Page 260 of th e record of appeal lines 8 -20 show th e appellant's evidence as follows: "A series of meetings were held with employees in CIB. In July 2014, a town hall was held specifically for the unit to explain the new business model and the impact terms of head counting. In addition to one on one discussions which were held. -Jl4- ~ .-:-, . ......... - -;,iii' ->~ #,-~ ·-·,,;· • . ¾~ -~ _,...# _r ., ,- .,,."- ., . . But in order to arrive at the numbers which would meet the expected results and the skills required to deliver on the new business model, the employees were subjected to an assessment in order to determine the skills required to deliver on the new business model." It is for this reason that the Simaata case 111 cited above is distinguished from this case. This case is also distinguishable from the Mariot case in that the appellant h erein did not protest against th e introduction of the new conditions of serve . Instead he con tinued working after he was well informe d of the restructuring programme. He even attended interviews where he . JI, . . Wa§_ i:-f--~~sessed for:_ t~1 ·n~w post oL_c!fe~t _analyst '¥:P~c-"t.i. iq_volved .. ·., ..... , )£ - ~~ . ~ .. - -.... ~ .• :"'a~ . ..,,,,, . - - enhanced roles from th e post that he was holding. • -,,;_• ~ ~~ . ..,., . ·-- - - - .... - ~ o,-~ ~ - • . . - . JI,_. The appellant's evidence under cross examination as indicated on page 252 of the record of appeal lines 1-9 and page 253 lines 1-5 was as follows: "I became aware that there was going to be a reduction in members in our unit. I do not recall the exact number to which the positions were to be reduced. The head count in the unit was 20. This was to be reduced to 13. Seven people were to fall off." "I did not object to the exercise we were told about on 31st August, 2014 I had no power to do so. I did -J15- .- :.. J(I -~ -- :~• .,.,._._. ~<"·· ~ -- .r ~~\? .... . . · ~ J question the fact that redundancy was not provided for in our conditions of service. I did so orally. I did not object to receiving t he redundan cy package even though I did not know the basis. It was paid in the account. " Therefore the appellant's argument th at he was assured that nobody would be retrenched is unsustainable. We therefore have no doubt that the case of Newton Suilanda and Others v . Food Corp. Products Limited (3 l applies to this case. There is evidence on r ecord that the respondent had advanced in its retz'enchment exeroise to an extent~hereby t_hey h~· obtained tni-;~app;~va1- ;f:.~~~ 1:;eour r cb"m~~ione.r. r 11\·~"rirer~, th ; respondent had the legal right to retrench th e appellant. The 1.>-· .:.-=.. .. ~ ·-::~ · appellant's argument that he was wrongly dismissed 1s 1n our measured view misconceived. The lower court rightly found on page J 14 that "He was r etr enched and paid what in our view 1s fair compensation for the retrenchment. " We therefore accept Mr. Nchito's submission that the respondent had no option to retire th e appellant under the circu mstances. Although the retrenchment package was not agreed upon between the parties. The defe ndant exercised its discretion to borrow the formula from Section 26B of the Employment Act. They cannot b e condemned for that beca u se they came up with a reasonable and a dequate package for the a ppellant. -J16- In sum the lower court's judgment is sound. We find no merit in the appeal and hereby dismiss it. Each party shall bear its own costs. Dated this ... S:.~ .... day of ...... C .. · .. :·,.)? .. ·, ... 2017. rv~\J--tc.. ~ ........ -~ ............... . ...... . C. K. MAKUNGU COURT OF APPEAL JUDGE \.... - ..j. A• -~-~ - ..,,,--- -- F. M. CHISHIMBA COURT OF APPEAL JUDGE ~--======== ... z::. ...... -.......... . M. M. KONDOLO, SC COURT OF APPEAL JUDGE -J17-