Kafironda Ltd v Hamakumba and Ors (Appeal 40 of 1999) [2000] ZMSC 155 (27 January 2000)

IN THE SUPREME COURT FOR ZAMBIA HOLDEN AT LUSAKA APPEAL NO. 40/99 (CIVIL JURISDICTION) BETWEEN: KAFIRONDA LIMITED APPELLANT AND PATRICK HAMAKUMBA AND 40 OTHERS RESPONDENT Coram: Chirwa, Lewanika and Cliibesakunda, JJS On 28lh September 1999 and 27th January 2000 For the Appellant: For the Respondent: Mr Mushingwa of A M Mushingwa & Associates Mr A M Wood of A M Wood & Company JUDGEMENT Chibesakunda JS, delivered the Judgement in Court Cases referred to: 2 Development Bank of Zambia V Dominic Mambo SCZ Judgement No 13 of 1995 . C Kapansa and 47 Others V. Zambia Copper Mines Limited SCZ Appeal No. 112 of 1995 In this appeal, Kafironda Limited (the defendants in the original claim now the appellants) are appealing against Kabamba J’s judgement in favour of Patrick Hamakumba and 40 Others (now the respondents) by ordering that the 1995 Collective Agreement between the appellants and the National Union of Commercial and Industrial Workers (NCIUW) to apply Mutatis Mutandis to the collective agreement of 1997. - J2 - The facts before the court on which there was no dispute were that the appellants had negotiated a collective agreement with NCIUW and had entered into an agreement in 1993 to end in March 1995. This same agreement was renegotiated in 1995 to commence in April 1995 to end in May 1997. The same agreement was renegotiated at the beginning of 1997. Clause 10 of the 1993 Collective Agreement stated inter alia: . “RETIREMENT 10.1 The normal retirement age shall be 55 years for both males and females or 20 years of continuous service whichever is earlier. An employee due for retirement shall be notified in writing 6 months in advance. Application for longer service may be considered at the discretion of the Company 10.2 Early retirement Some employees age more rapidly than others and before they reach normal retirement age, cease to be capable of performing the full duties of the their job In the event of such a situation the Company shall, not without consultation with the Union, retire the employee early but this will not be a right on the part of the employee. 10.3 Provided that An employee has served the Company for a minimum of fifteen (15) years continuous service and is over the age of 40 years, he may apply for voluntary retirement. This shall apply to both males and females.” The same clause reappeared in the 1995 Collective Agreement as Clause 11 (1), (2) and (3) and inter alia said:- .0 “RETIREMENT 11.1 The normal retirement age shall be 55 year for both males and females or 20 years of continuous service, whichever is earlier. An employee due for retirement shall be notified in writing 6 months in advance. Application for longer service may be considered at the discretion of the Company. - J3 - 11.2 Early retirement Some employees age more rapidly than others and before they reach normal retirement age, cease to be capable of performing the full duties of their job. In the event of such a situation the Company shall, not without consultation with the Union, retire the employee early but that will not be a right on the part of the employee. 11.3 PROVIDED THAT An employee who has served the Company for a minimum of fifteen (15) years continuous service and is over the age of 40 years, he may apply for voluntary retirement This shall apply to both males and females. ” Although there was no evidence before the court as to the provision of 1997 Collective Agreement one can reasonably infer that this clause was in 1997 collective agreement. In early 1995 the appellants as per clause 10.1 of 1993 Collective Agreement issued retirement notices to all the workers who had either reached the age of 55 years or had worked for 20 years giving them six months’ notice. One of such notices to Mr Hamakumba, one of the respondents, was dated 26th January 1995 and it says:- “Mr P Hamakumba Kafironda Limited P O Box 40092 MUFULIRA Dear Sir RETIREMENT NOTICE I wish to bring to your attention that our records show that you have clocked more than 20 years service todate. - J4 - According to clause 10.1 of the Collective Agreement you are due for retirement and Management is giving you six months notice in advance. Your last working day will be 31st July 1995. The Management Accountant will work out your terminal benefits in accordance with the Collective agreement You are free to apply for an extension of service but this longer service may be considered at the discretion of the company. Finally we thank you most sincerely for the services you have rendered to the company and wish you a happy settlement in your new life. Yours sincerely (Signed) P Saikolo MANAGER - HUMAN RESOURCES ’ The respondents in response to these notices responded individually, indicating their willingness to retire either under the 20 years’ service or 55 years old rule or voluntary retirement - (Clauses 10 of 1993 agreement or under Clause 10.3 voluntary retirement. The respondents’ workers union in the meantime and subsequent to these notices which were sent to all the respondents made several representations and held a number of meetings with the appellants. One such representation is in the letter from the Union to the appellants dated 9lh February 1995. It says:- “The General Manager Kafironda Limited P O Box 40092 MUFURILA Dear Sir RE: EARLY RETIREMENT ISSUE: This minute is in reference to the subject matter above with a view to bring to your attention the resolution passed at the general meeting held at the factory on - J5 - Friday 3rd of February 1995. Employees refused to accept management’s suggestion to put 112 employees on early retirement. According to the existing collective agreement there is no provision for either party to force the other to go as a result let management meet us and bring their proposed package after which we should set up a package which should be given to those employees those that will be interested shall accept. In the meantime your management is advised to withdraw those letters given to the workers. As management you should look at the repercussions this may bring in relation to politics as this may lead to you being misunderstood. Could you please treat the issue with urgency by meeting us and the withdrawal of those letters. Yours faithfully NUCIW (Signed) B K CHOTA DEPUTY GENERAL SECRETARY FOR/GENERAL SECRETARY” The Union managed to persuade the appellants. The appellants then withdrew these notices and informed the respondents. One such letter to one of the respondents dated 14th February 1995 says:- “Mr P Hamakumba Acid Plant Kafironda Limited P O Box 40092 MUFUR1LA Dear Sir RETIREMENT NOTICE 1 refer to my letter dated 26lh January 1995 on the above subject. - J6 - The National Union of Commercial and Industrial Workers have requested Management to withdraw the above letter. Management agreed to follow this suggestion. The letter of 26 January 1995 to you on Retirement is hereby withdrawn. Please take note that you have clocked more than 20 years service and under Clause 10.1 of the Collective Agreement you are still entitled to retirement under the condition set out in Clause 10.1. If you therefore wish to make use of the opportunity to retire under Clause 10.1 you are free to approach the Personal Department and in consultation with your Department head Management will decide whether it is possible to allow you to retire (underlined for emphasis) This withdrawal does not mean that Clause 10 1 is no longer applicable. Management can still use this Clause if it so wishes. Yours faithfully KAFIRONDA LIMITED (Signed) P SAIKULU MANAGER HUMAN RESOURCES” There was common ground that three agreements provided for three types of retirement - normal retirement, early and voluntary retirement. Normal retirement as stated in Clause 10.1 of 1993 Collective Agreement and Clause 11.1 of 1995 Collective Agreement applied only when an employee had either clocked 20 years continuous service or reached the age of 55 years and that the employers/appellants gave him six months’ notice in writing in advance. The employee had to be asked to retire. Early retirement as envisaged in Clause 10.2 of 1993 or 11.2 of 1995 Collective Agreement applied when an employee either because of ill health or being unable to perform his duties given to him is forced to retire by the - J7 - employer/appellants. Voluntary retirement as envisaged in clause 10.3 of 1993 or 11.3 of 1995 only applied when an employee took the initiative and applied for retirement, either on 15 years service or 40 years of age. It was equally not disputed that in both clauses 10.1 of 1993 and 11.1 of 1995 Collective Agreement, an employee due for such retirement had to be given six months’ notice in advance, whereas for an employee retiring under clauses 10.3 of 1993 and 11.3 of 1995 Collective Agreement (those employees applying for voluntary retirement) no notice of six months’ was required. It was established before the trial court that subsequent to the appellants withdrawing the notices sent to the respondents of January 1995, the appellants sent circular letters dated 15 September 1995 reflected on page 259 of the appeal record to all respondents advising them of the possible closure of Nitro-glycerine Plant and informing them that the appellants would be holding discussions with the NCIUW and ZIMCO representatives’ group to carry out the exercise of job reduction by inviting voluntary offers to either retire under normal retirement rule or early retirement rule. In other words, the appellants assured the respondents that they would reduce the work force in accordance with the Collective Agreement in existent at the time. It was also established that subsequent to this circular letter of 15th September 1996 the respondents individually applied to the appellants in November 1996 indicating the type of retirement they were applying for. Three of such letters are quoted: - J8 - “Mr Patrick H Hamakumba WRS No 23 14 5th 1 1-96 Re: RETIREMENT Dear Sir, I write to give six months notice to retire from my regular employment with your company after serving 23 1/2 yrs unbreakable service. This retirement is effective 31st May 1997 or any other date you may thing is good. 1 should be grateful if the application will receive your favourable consideration. Yours faithfully Signed 2314” E MWAMBA WORKS NO 232 2. The Human Resources Manager Kafironda Limited Box 40092 Mufulira APPLICATION FOR RETIREMENT Dear Sir 1 hereby applying if you may please kindly allow me to retire. I have served the company for 23 years. I have written to you in order to fulfill what management has said. May you please kindly help me, your consideration will be highly appreciated. Yours E Mwamba Works No. 2327 - J9 - 3. The Human Resources Manager, Dear Sir, Re: Application For Early Retirement Kafironda Limited, Security Department, P O Box 40092, Mufulira. 8lh November, 1996 I hereby submit an application for an early retirement upon which the management wishes I do so. 1 have now served the company for almost fourteen (14) years since 1 joined the company on 22-11-82. With this, I have decided to give a six (6) months’ notice. 1 sincerely hope my application will be considered. Yours faithfully D Nyambe Works No. 2897 (Signed)” On 24 January 1997 the appellants sent another circular memorandum to all employees which stated as follows:- “MEMORANDUM TO: ALL EMPLOYEES FROM: OPERATIONS MANAGER CE: 3/3 DATE: 24 JANUARY 1997 VOLUNTARY DISPLACEMENT - J10 - As you are aware the Nitroglycerine Operations have been closed as advised in my letter dated 13 September 1996. As a consequence, we have started reducing the surplus labour by using voluntary means such as Normal/Early Retirement. Applications are therefore being asked from employees who wish to go on Voluntary Displacement. However, the acceptance of applications will be at the discretion of Management and not a right on the part of the employee. The package for Unionised employees will be as per Clause 24.3 Retirement Benefits of the Collective Agreement signed between Kafironda Limited and National Union of Commercial and Industrial Workers. The package for Z1MC0 staff will be as per Revised Compensation Package for Surplus Labour for employees serving on Z1MC0 conditions of service as per Circular dated 25 July 1993 effective from 1 April 1993. Any further clarifications regarding the package, please contact the Manager Human Resources of Senior Human Resources Officer. The closing date for receiving applications will be 30 January 1997. Signed I D Hill” Pursuant to the respondents’ applications the appellants approved the respondents applications in the letters to them dated January/February 1997 and paid the respondents their terminal benefits under the then existing Collective Agreement of 1995 as per pay slips of document 261 - 298. The appellants based their payments on two grounds: 1) that the respondents were not entitled to six months notice because clause 11.3 of 1995 collective agreement did not provide for such notice, - J11 - 2) that the respondents were not entitled to benefits under the 1997 collective agreement because at the time it came into force the respondents had ceased to be the appellants’ employees by February 1997 under then the 1995 collective agreement. Kabamba J ruled in favour of some of the respondents because he held that the retirement was under 1993 collective agreement and that the calculations for each of the respondents’ benefits had to be calculated Mutatis Mutandis. In other words, he ruled that the calculated Mutatis Mutandis benefits were under clause 10.1 and 10.3 of 1993 collective agreement. The appellants have appealed to this court advancing three grounds of appeal 1st Ground of appeal: That the learned trial Judge erred in law in holding that the 1995 collective agreement between the appellants and the National Union of Commercial and Industrial Workers applied Mutatis Mutandis to the 1997 collective agreement between the same parties. Mr Wood, Counsel for the appellant, explained this ground of appeal by submitting that the notices issued by the appellants dated 26lh January 1995 were issued pursuant to the existing agreement of 1993 which was to expire in March 1995. The respondents’ union managed to get the appellants to withdraw after a series of meetings and representations. Therefore, when the notices were then reissued on th24 of February 1997 these again must have been made pursuant to - J12 - clause 11.3 of 1995 being the clause dealing with voluntary retirement and that this clause unlike clause 10.1 of the 1993 collective agreement does not provide for a six months notice period. He went on to submit that as in the case of Development Bank of Zambia V. Dominic Mambo (1), the respondent cannot possibly claim to benefit from a future collective agreement which was not in force when they retired. According to him the law in C Kapansa and 47 Others V. Zambia Consolidated Copper Mines (2) did not apply because of the period of time between November 1996 when the respondents applied for retirement and January/February 1997 when the appellants approved the respondents’ applications. He argued that the period did not merge into a period covered by the 1997 Collective Agreement. 2nd Ground of appeal: Is that the learned trial Judge erred in law in holding that clause 24 (3) of the 1995 collective agreement had to be read with clause 11.1 of the same collective agreement. According to him, clause 24.3 could only be read with clause 11.1 in the context of employees retiring under clause 11.1 and not retiring under clause 11.3 because clause 11.3 does not require the appellants to give six months notice, the respondents having already applied to retire under that clause. - J13 - 3rd Ground of appeal is that: The learned trial judge misdirected himself by not considering the consequences and binding nature of clause 11.3 of the 1995 collective agreement in finding that the respondents were forced to retire and that the respondents should have been treated to have had normal retirement, and as such were entitled to six months notice or payment in lieu of notice. According to him, the learned trial judge did not consider the elements of offer and acceptance leading to retirement of the respondents. He argued that by the appellant’s management notice dated 24th January 1997 the respondent were invited to retire. By the respondents’ individual letters in November 1996, the documents cited supra, the respondents offered to retire and the appellants accepted the respondents’ offer. Such offer and acceptance amounted to binding agreement as the same was made voluntarily without duress. Therefore, there was misdirection by the learned trial judge not to have accepted this new contract between the two parties. Mr Mushingwa for the respondents arguing also in cross appeal had advanced the following grounds. He argued that the learned trial judge was on firm ground in ruling for the respondent and ordering that the 1995 collective agreement between the appellant and the National Union of Commercial and Industrial Workers be applied Mutatis Mutandis to the 1997 collective agreement between the same parties. He submitted that the respondents are only dissatisfied with - J14 - the order made by the learned trial Judge because of the three main grounds 1) that the learned trial judge having found the respondents’ separation from the employment was supposed to be effected in August 1997 under the new collective agreement, ought to have ordered that the six months salary in lieu of notice ought to have been calculated in accordance with the salaries applicable after April 1997 when the new 1997 collective agreement came into effect; 2) The learned trial judge having found that the appellants invited the respondents to retire and having made an offer to them and the offer was accepted, was wrong to find that only those who served 20 years or more should have been entitled to six months pay in lieu of notice, as the contract applied to all those who were covered by the collective agreement and who fell into the category of those who were to be given notices in 1995; and 3) Interest should have been awarded from the date the respondent retired and should have ordered to have accrued from the said dated up to the Supreme Court judgement and thereafter six per cent (6%) to the date of settlement. We have looked at the arguments advanced by both learned counsels. - JI5 - From the facts on which generally there was common ground we are satisfied that the appellants, as per article 10.1 of 1993 collective agreement, did give a notice of six months to the employees who qualified by attaining the age of 55 or by having worked for them for a period of 20 years. They (employees) were to go on normal retirement. In our view, the appellants correctly gave six months’ notice for such retirement. We are equally satisfied that the appellants withdrew this notice. By law, therefore, the notices had no legal effect, because in the letters from the appellants, which we have quoted on J6 in this judgement, the appellants in most unambiguous terms informed the respondents that the status quo before the January 1995 notices were sent to them, was restored. According to this letter from the appellants, the respondents were now to be treated as if they had not clocked 20 years of service or reached the age of 55 years. They still had the right in Clause 10.1 of 1993 Collective Agreement at a later date to be given notice of six months’ if they applied to go under clause 10.1 of 1993 agreement. According to our reading of that letter, of the appellants of 14 February 1995, the respondents were not to be treated as if they were under an obligation to retire from service but were to continue undisturbed. In our view, thus the letter of 14th February 1995 offered to the respondents a new package of what the respondents were to be entitled to were they to apply for retirement at a later date. Therefore, when the respondents who qualified under Clause 10 of 1993 Collective Agreement applied in November 1996, in our view, that amounted to acceptance of the - JI6 - offer made by the appellants in their letter dated 14lh February 1995 (page 258), thus entering into binding contract entitling the respondents to six months’ notice and the benefits as stipulated in clause 24.3 of the 1993 Collective agreement. The appellants were duty bound to treat the respondents in accordance with the provisions of clause 10 of the 1993 Collective Agreement, i.e. to give them notice of six months for those who qualified for normal retirement and to give other dues to those retiring voluntarily. In November 1996 when the respondents applied, the 1995 Collective Agreement was in existence as it came into existence in April 1995. We therefore do not accept Mr Wood’s argument that the learned trial Judge misdirected himself when he ruled that the 1995 Collective Agreement applied to the respondents. Consequentially, we hold the view that since the respondents who came under the category of normal retirement under clause 10.1 were entitled to six months' notice, thus six months’ notice from November 1996 would make them still to be regarded as employees of the appellants up to May 1997. With that normal calculation of the period the respondents would be covered by the Collective Agreement of 1997 as the 1997 Collective Agreement would have commenced in April 1997. This in our view would invoke the law in C Kampansa and 47 Other Vs. Zambia Consolidated Copper Mines (2). Mr Mushangwa has argued that the learned trial Judge misdirected himself by holding that the appellants having invited the respondents and having made the offer and that the respondents having accepted the offer, that only those who served 20 years or reached 55 years of age, were the - J17- ones entitled to six months’ pay notice, as according to him the contract covered all the respondents by the collective agreement which come in force in 1995. We agree with that argument, nonetheless, we note that there were some respondents who had not qualified to retire under clause 10.1 of 1993 which was clause 11.1 of 1995 agreement. For instance, document 194 of the record of appeal (the employee had only served the appellants a period of 14 years). The learned trial Judge took, all these into account and hence his order that only those who qualified to retire under clauses 10.1 of 1993 and 11.1 of 1995 Collective Agreement would benefit from this order. In our considered view, the learned trial Judge was on firm ground and did not misdirect himself in holding that the 1995 collective agreement between the appellant and the union be applied to the 1997 Collective Agreement for respondents who qualified under the provisions of clause 11.1 of the 1995 Collective Agreement. Mr Wood, in his second argument, has argued that the learned trial Judge erred in law in holding that clause 24.3 of the 1993 collective agreement applied to the respondents who came under the category of normal retirement as provided in clauses 10.1 of 1993 and 11.1 of 1995 collective agreement. We confirm that view. Only the employees retiring under these clauses can benefit Clause 24.3 of 1995 Collective Agreement, which says:- “An employee who retires as stipulated will receive three months basic pay for each year of service from the date of engagement.” - J18 - In conclusion we hold that there was no misdirection on the part of the learned trial Judge in interpreting the fundamental elements of the contract. He found as we have that the elements of offer by the appellants and acceptance by the respondents offered in November 1995 were binding. We do not accept the memorandum notice of January 1997 was an offer. We are of the view that by then the offer had been made by the appellants, which offer the respondents accepted in November 1996. Because we are satisfied that the respondents would not have written the letters which they did in November 1996 if the offer came as late as January 1997. Our judgement, therefore, is that for those respondents who did fall within the definition of normal retirement as provided by clauses 10.1 of 1993 and 11.1 of 1995 Collective Agreement, their dues must be calculated Mutatis Mutandis with 1997 collective agreement, and for those respondents who did not fall within but opted for voluntary retirement under clauses 10.3 of 1993 and 11.3 of 1995 Collective Agreement, their entitlement as stated in their contracts. We therefore partially find merit in the appeal. We order that the matter be sent to the learned Deputy Registrar for assessment of damages for those who qualify under normal retirement rule. We therefore order costs to be borne fifty per cent (50%) by the appellants to be agreed upon, in default to be taxed. J19 D K Chirwa SUPREME COURT JUDGE D M Lewanika SUPREME COURT JUDGE L P Chibesakunda SUPREME COURT JUDGE