Nitrogen Chemicals of Zambia Limited v Boyd Chomba Mutambo and Ors (SCZ SELECTED JUDGMENT NO. 44 OF 2016) [2016] ZMSC 291 (1 December 2016)

.. SCZ SELECTED JUDGMENT NO. 44 OF 2016 IN THE SUPREME COURT OF ZAMBIA HOLDEN AT KABWE (Civil Jurisdiction) APPEAL NO.75/2014 SCZ/8/310/2013 BETWEEN: NITROGEN CHEMICALS OF ZAMBIA LIMITED APPELLANT AND BOYD CHOMBA MUTAMBO PEGGY CHIKOLELA DARIUS MUSOLO 1 STRESPONDENT 2 ND RESPONDENT 3Ro RESPONDENT CORAM: Mwanamwambwa, DCJ and Kaoma and Musonda, JJS On 1st November, 2016 and 1st December, 2016 For the Appellant: N/ A For the Respondents: Mr. K. Wishimanga of A. M. Wood & Co . JUDGMENT KAOMA, JS , delivered the Judgment of the Court. Cases referred to : 1. Chileshe v Zambia Consolidated Copper Mines (1995/97) Z. R. 148 2. Meloville v William Freeman & Co Limited (1983) EAT 609/83 3. Expenses Lifts Co. Limited V Bowels (1977)IRCR 99 4. Mazoka and others v Mwanawasa and others (2005) Z. R. 138 5. Robinson v Crompton Parkinson Limited (1978) ICR 401 6. Western Excavating (ECC) Limited v Sharp (CA) (1978) 221 7. Posts and Telecommunication Corporation v Phiri (1995/97) Z. R. 61 8. Chilanga Cement Pie v Singogo (2009) Z. R. 122 9. Kitwe City Council v Ng'uni (2005) Z. R. 57 10. Moonjel Ouseph Joseph v. DSV (Investments) Ltd (2004) Z. R. 68 11. Ngandwe and others v Zamox Ltd and another (1999) Z. R. 90 ' ' . J2 12. Masiye v MEC for Education Mpumalanga (J3340/2012) (2013) ZAL CJHB 13. Rigby v Ferudo Ltd (1988) ICR 29 14. Hogg v Dover College (1990) ICR 39 Legislation and other works referred to: Industrial and Labour Relations Act, Cap 269, section 108 1. Employment Act, Cap 268, sections 48(2) and 55(a) 2. 3. Chitty on Contract, Volume 2, 25th Edition, para. 3511, page 733 , 4. Butterworths Employment Law: Practice, Procedure and Precedents, 5. page 498 IDS Wages Employment Law Handbook, Redundancy (2008), Chapters 2 and 3 The facts leading to this appeal are that the respondents were employed by the appellant on various dates and in different positions . The 1st respondent was a non-unionised employee. He resigned from employment on 30t h June, 2009. The 2 n d and 3 rd respondents were unionised employees. The 2 n d respondent also resigned from employment on 15th December, 2008 while the 3 rd respondent was discharged from employment for absenteeism on 12 th October, 2009 . The appellant started experiencing liquidity problems in 1996 resulting in delays in the payment of salaries. The problem worsened around 2004. According to the respondents , they would go for 2 to 4 months or even 6 months without salaries . Sometimes they had to stage demonstrations for them to get their pay. Now, clause 16.1 of the Collective Agreement and clause . ' . J3 13.2 of the Conditions of Service for Non-represented employees provided that salaries would be paid on the 23 rd of every month or earlier if there was a weekend or public holiday . Clause 4.3.2 of the Collective Agreement and clause 10.2.1 of the Conditions of Service for Non-represented Employees also provided that an employee may request for service retirement at management's discretion after serving for 10 years continuously. On 22nd May, 2008 the 1st respondent applied for service retirement, citing personal family problems . In a response dated 29 th August, 2008 the appellant rejected the application on the basis that the 1st respondent's services were still needed and management had suspended service and early retirement due to liquidity problems. The 1st respondent appealed to the General Manager as he felt that the condition was discriminatory. He also felt that he was not able to utilise his new skills diligently (after he returned from college) , as his key role was to ensure that the plant was prepared for the next production but because there were no spares due to funding, he found himself just sitting and waiting for spares and he could not give his juniors work. J4 The General Manager's verbal response was negative . The 1st respondent then wrote to the Chief Executive Officer, who never replied. Meanwhile, the 1st respondent took paid leave of about 3 months. When the leave was exhausted, he got 4 months' unpaid leave. About March/ April, 2009 he secured a job with Lafarge. On 18 th May, 2009 he was recalled from leave which was to end on 30 th June , 2009. His services were urgently required during rehabilitation of the plant in preparation of a startup and subsequent production of D-compound fertilizer for the 2009/2010 farming season. He was requested to r e port for work on 20 th May, 2009. On that date , the 1st respondent wrote to the Managing Director, essentially refusing to return to work and demanding that he be put on service retirement. In his resignation letter dated 10t h June, 2009, he stated that he was left with no option but to resign with immediate effect as he was finding it increasingly difficult to continue committing himself to a company that did not seem to consider his plight even after his lengthy and loyal service. JS The 2 n d respondent also applied for service retirement on 10 th November, 2008. On 18 th November, 2008 she got the same response as that given to the 1st respondent. In another letter to the appellant dated 27 th November, 2008 she termed management's decision to deny her service retirement as unfair and an abuse of discretion and she reiterated her request for service retirement and her willingness to terminate her services on the date earlier indicated. In her resignation letter dated 15 t h December, 2008, she indicated that she was resigning due to the unfair treatment even when her conditions of service allowed her to go on service retirement. But in her evidence, she stated that she resigned because she saw serious financial problems and that their salaries were coming late. The 3 r d respondent too applied for service retirement on 22 nd May, 2008. He got the same response on 16 th October, 2008. He appealed to the General Manager. The response was negative. He appealed to the Chief Executive Officer on 14th December, 2008. He did not get a response. Meanwhile, he took paid leave from 1st August, 2008 to 28 th February, 2009 and unpaid leave from 1st March 2009 to 31 st July, 2009. During his unpaid leave, he J6 worked for Lusaka Water and Sewerage Company for 5 months. In a letter to the Human Resource Manager dated 24th July, 2009 he wrote that following the non-response to his appeal letter to the Chief Executive Officer, he was tendering in his service retirement with effect from 31 st July, 2009 . He took it that his appeal had been considered favourably as silence meant consent. On 10th August, 2009 he received two letters: one from the Chief Executive Officer, declining service retirement and the other one from the Manager Human Resource, declining service retirement for the reasons earlier given , and indicating that the delayed response from the Chief Executive Officer did not imply consent to the appeal for service retirement. He was directe d to report for work with immediate effect as failure to do so would amount to a chargeable offence of desertion after absenting himself from work for more than ten days. He did not return to work. On 31 st August, 2009 he was charged with absenteeism and on 12th October, 2009 he was dismissed from employment with immediate effect. According to him, the charge was baseless since he had given his last working day as 31 st July, 2009. J7 Subsequently, on 5 t h May, the respondents commenced proceedings against the appellant in the High Court by way of writ of summons seeking, inter alia, an order that they be declared redundant employees of the appellant; an order that the 1st and 3 rd respondents were constructively dismissed ; payment of a redundancy package; terminal benefits payable to them; and damages for breach of the contracts of employ ment. In its defence, the appellant, in the main , denied the claims made by the respondents. The learned trial Judge heard the parties and received submissions. In a judgment delivered on 27 th September, 2013 she dismissed the claim for redundancy and redundancy package and the 1s t respondent's claim that redundancy occurred when the appellant changed the conditions of service for non-unionised employees, and introduced education allowance which he did not consent to, thus creating a repudiation of the contract. The Judge also considered a claim by the respondents that there was discrimination when the appellant refused to pay them service retirement but later paid the General Manager after Board approval. She found that discrimination did occur against the 1s t J8 and 2 nd respondents and agreed with them that the appellant ignored the provisions of section 108(1) of Act No . 30 of 1997 , which prohibits an employer from, inter alia, "disadvantaging" an employee on grounds that include status. She referred to the case of Chileshe v Zambia Consolidated Copper Mines 1 which dealt with the issue of discrimination and found that the appellant exercised "inexcusable unfairness" on the 1st and 2 nd respondents as regards service retirement, and ordered that they should be paid the same. Regarding the 3 r d respondent, the trial Judge found that he was also entitled to service retirement because he too had been unfairly treated and that the charge of desertion was not correctly employed by the appellant who from its conduct expected the 3 rd respondent to return to work while his plea for service retirement was ignored by management. In respect of the claim for constructive dismissal , the Judge found that this arose against the three respondents and ordered that they be compensated for it. J9 Concerning the claim for terminal benefits, she found that the respondents being entitled to early retirement were also entitled to terminal benefits due as they had opted to separate from the appellant when the conditions of their employment changed to their disadvantage; and that the appellant breached the employment conditions by not complying with the obligation to pay salary as per Collective Agreement and adjusting the education allowance which the 1st respondent did not consent to. On the claim for damages for breach of contract, the trial Judge found that the respondents were within their right to claim and that the breach by the appellant not to respect the promise to pay salaries on time warranted an award of damages . She ordered that the respondents be paid damages to be assessed. She also awarded interest at the ruling Bank of Zambia lending rate from the date of writ to the date of judgment. Dissatisfied with the decision, the appellant filed this appeal advancing six grounds but only the first four grounds have been argued which allege that: 1. The trial court erred in law and fact when it held that the plaintiffs were entitled to service retirement without considering the exercise of discretion on the part of the defendant and that service retirement was granted at the discretion of the defendant. JlO 2. The trial court erred in law and in fact when it found that there was discrimination on the part of the defendant, with regard to service retirement, when discrimination was neither pleaded nor was evidence led by the plaintiffs on it. 3. The trial court misconducted itself in law and fact in holding that the plaintiffs being entitled to the terminal benefits were also entitled to the terminal benefits due as they had opted to separate from the defendant when the conditions of their employment changed to their disadvantage when this is against the weight of evidence. 4. The trial court erred in law and fact when it found that the plaintiffs were constructively dismissed without considering the real reason for the separation between the plaintiffs and the defendant. Counsel for the appellant did not attend the hearing of the appeal. However, the appellant had filed heads of argument, in support of the appeal , which we have taken into account. The gist of the appellant's argument on ground 1 is that the discretion to accept or not accept a service or early retirement application, was a widened contractual authority in terms of clause 4.3.2 of the Collective Agreement and clause 10.2 of the Non-unionised employees conditions of service which were part of the respondents' conditions of employment, and that this could not bring about any breach of the contracts of employment. The case of Meloville v William Freeman & Co Ltd2 was cited, where it was argued, that the company reserved the right to alter or change boundaries or territories in a flexibility clause '- Jll and it was held to be an acceptable exercise of express contractual authority by the employer. In the same regard , the case of Expenses Lifts Co. Ltd v Bowels3 , was also referred to , where a clause from a Collective Agreement, which stipulated that it was recognised by both workers and management in the industry that workers in it were to be mobile and ordinarily willing to work in any part of the United Kingdom was incorporated in a contract of employment as an implied term and it was held that the employee's resignation in the face of his employer's insistence that he works away from home was not a constructive dismissal as the employer had implied contractual authority for the insistence. In respect of ground 2 , the appellant contended that the respondents did not plead discrimination on account of social status, or lead evidence on the point and, therefore; it should not have found itself in the judgment of the court below. The case of Mazoka and others v Mwanawasa and others4 was referred to where we pronounced ourselves on the function of pleadings. The essence of the appellant's argument on ground 3 is that the respondents left employment when they started working for J12 other employers and not when their conditions of service change d to their disadvantage. That it was in fact the respondents who repudiated their contracts of employment by taking up employment with other employers whilst in the appellant's employment. Passages were cited from the respondents ' evidence regarding their separation; to show that they were already in employment with other employers at the date of applying for service retirement; and to show that the 3 rd respondent was dismissed for desertion. The case of Robinson v Crompton Parkinson Limited5 was also quoted where , it was argued , Kilner Brown noted that an obligation of trust and confidence might b e mutual and applied it to cases of constructive dismissal. In ground 4, it was argued that it is not every fundamental breach or fundamental breach of a term of a contract of employment by the employer that amounts to repudiation of the contract by the employer and that the fundamental breach has to be judged on the circumstances of each case. Further, that in terms of breach to pay remuneration on an agreed date or within an agreed time frame, the repudiation would only arise , if the delay to pay the remuneration was not condoned or waived by J13 the employee for a substantial period; and that it must show that the employer does not therefore , intend to honour the contract of employment. The case of Western Excavating (ECC) Limited v Sharp6 was referred to where the court stated that: "If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance" It was contended that the evidence in the court below did not meet the legal essentials or degree for constructive dismissal and further, that while the 1st and 3 rd respondents claime d to h ave been constructively dismissed , the 2 nd responde nt did not . We were urged to allow the appeal with costs. In opposing the appeal, Mr. Wishimanga, counsel for the respondents, also filed heads of argument on which he relied . He also endeavoured to answer the que stions put to him by the Court. He responded to grounds 1 and 2 together. In doing so, he submitted that the court is not precluded from considering unpleaded matters as state d in the case of Mazoka and others v Mwanawasa and others4 . He argued that evidence was, in fact led, to the effect that there was discrimination and that there was ' . J14 no objection by the appellant, and therefore, the trial court was entitled to consider the matter. It was further submitted that notwithstanding the appellant's discretion in granting service retirement, it exercised the discretion 1n a discriminatory manner against the respondents , as the Board granted service retirement to the General Manager and RW 1 failed to explain the difference in the treatment. He cited, inter alia, the cases of Posts and Telecommunication Corporation Ltd v Phiri7 and Chileshe v Zambia Consolidated Copper Mines 1 . However, due to the position we have taken on the issue of discrimination , we do not intend to go into any detail regarding the arguments on the issue . Grounds 3 and 4 were also responded to together. It was submitted that the court below was on firm ground when it found that the respondents were constructively dismissed . In this regard, the cases of Chilanga Cement Plc v Singogo 8 and Kitwe City Council v Ng'uni9 were cited where we explained the test for constructive dismissal. Counsel also quoted the definition of constructive dismissal from Chitty on Contract, Volume 2, 25 th Edition, para. 3511 and the expose of Lord Denning in Western I • JlS Excavating (ECC) Limited v Sharp6 which is cited in Chilanga Cement v Singogo 8 at page 128, and with which we agreed. It was argued that the appellant breached a fundamental term of the contracts of employment by failing to pay the respondents their salaries which prompted them to apply for service retirement. Reference was made to section 48(2) of the Employment Act, Cap 268 which, according to counsel makes the payment of a salary a fundamental term of an employment contract. Butterworths Employment Law: Practice, Procedure and Precedents was also cited, where the learned author states at page 1498 that it is often accepted that the most important term in any employment contract is that relating to pay and that even a small reduction may amount to a repudiatory breach which would justify resignation. The case of Moonjel Ouseph Joseph v DSV (Investments) Limited 10 was also referred to; where we held that the lack of a regular salary can also mean the absence of employment. We also stated that under section 48 of the Employment Act, no one can be employed to work without receiving a wage as per the contract as that would be illegal; and that on the basis of the statutory "· ' J16 and mandatory provisions of the Act, we could not take judicial notice of the fact that workers in this Country, including civil servants, of which we form an integral part, go for long periods without pay because such a proposition is not true in reality. On the basis of these authorities, it was submitted that the non-payment of salaries was a material breach of the contracts of employment which led the respondents to leave and find work elsewhere, thus being constructively dismissed. In addition, it was argued that the appellant breached the respondents' contracts by unilaterally varying the terms and basic conditions of their employment, without their consent, such as education allowance, and that in particular, the 1st respondent asserted that he refused to sign the documents varying the allowance. The case of Peter Ngandwe and others v Zamox Ltd and another 11 was cited where we held that if an employer varies the basic conditions without the consent of the employee then the contract of employment terminates. In his supplementary heads of argument, Mr. Wishimanga referred to section SS(a) of the Employment Act which proscribes any person from employing or continuing to employ . .. ...:.. ' 1611 any employee without intending to pay, or without having reasonable grounds for believing that he can pay the wages of such employee as they become payable. He also cited a South African case of Masiye v MEC for Education Mpumalanga 12 , where the applicant was seeking an order declaring the non payment of salaries by the respondent to be unlawful and an order to effect payment of the outstanding salaries. In deciding the case, the Johannesburg Labour Court stated as follows: " .... there is a well-established common law principle that in an employment relationship, the duty of an employee is to render services, and on the other hand, the duty of an employer is to pay wages for services rendered. It would ordinarily follow that failure by an employer to pay wages when they are due, amounts to breach of contract. In that case, the options available to an employee whose wages have not been paid, is either to accept such a breach and terminate the employment relationship or by holding the employer to the terms of the contract and claim the outstanding wages." Counsel further cited the following text from a book titled IDS Wages Employment Law Handbook, Redundancy (2008): in full "Employees should generally be paid for the work performed because they are entitled to be paid remuneration for their work. This is because the contract of employment is characterised by the wage-work bargain and pay to the employee represents the principal 'consideration' provided by the employer in return for which the employee offers service in accordance with the duties specified by the contract. Thus, regarding constructive dismissal due to non-payment of wages, if an employer does not pay wages due under the contract of employment, this amounts to breach and the employee is entitled to the following remedies: , , .. J18 1. The employee may continue to work under protest and sue for the shortfall in wages, 2. The employee may resign and claim that he or she has been constructively dismissed." Further reference was made to the cases of Rigby v Ferudo Ltd 13 where, it was argued, that the House of Lords considered a claim for constructive dismissal where the employer had changed the terms of the employment contract by unilaterally imposing a pay cut; a number of staff continued to work but expressly refused to accept the change to the rate of pay and commenced legal proceedings. The following passage is quoted from that case : 'The employees, in continuing to work under protest, had not accepted the employer's purported change in the terms and conditions and were therefore entitled to sue for the amount of wages they should have received during their underpayment." On the basis of this case, it was submitted that even if the respondents continued to work despite not being paid their salaries, it did not mean that they accepted the situation . The case of Hogg v Dover College 14 was also cite d , wh er e it was argued , that the court held that the fact that an employm en t relationship continued with the same employer after the alteration of the contract of employment did not m ean that th e old contract was still subsisting. The kernel of the respondent s ' argument is that despite the appellant undergoing liquidity I I J19 issues, it did not justify the non payment of salaries and that if the appellant was no longer capable of paying their salaries, as it was supposed to do, it should have terminated their contracts by giving proper notice and or renegotiated new contracts with new terms such as low salaries. Finally, it was submitted that the court below was on firm ground when it held that the respondents were constructively dismissed. We have very carefully considered the record of appeal, the judgment appealed against and the arguments by counsel. We shall deal with grounds 1 and 2 at once and also grounds 3 and 4 together as they are related. In respect of grounds 1 and 2, it is common cause that the appellant had discretion in the grant of service or early retirement under the applicable conditions of service. It is also accepted by the respondents that they did not plead discrimination . Indeed, in the case of Mazoka and others v Mwanawasa and others4, we dealt with the issue of the function of pleadings which is very well known. We also stated that where a matter that is not pleaded is let in evidence and not objected to , the court is not precluded from considering it. " . \ J20 It is also trite that under section 108(1) of the Industrial and Labour Relations Act, Cap 269 an employer is proscribed from terminating the services of an employee or imposing any other penalty or disadvantage on any employee , on grounds that include the social status of the employee. In terms of sub-section (2) , an employee who has reasonable cause to believe that his or her services have been terminated or that he or she has suffered any other penalty or disadvantage on any of the grounds set out in subsection (1), may, within 30 days of the occurrence which gives rise to such belief, lay a complaint before the court. The court is defined under the Act as the Industrial Relations Court. In this case , the respondents took out the action in the High Court and not the Industrial Relations Court, which under section 108(2) of the Industrial and Labour Relations Act, had jurisdiction to deal with complaints of discrimination on any of the grounds set out in subsection (1), and which , under section 85 of the Act, had the mandate to dispense substantial justice. The respondents cited the cases of Chileshe v Zambia Consolidated Copper Mines 1 and Posts and Telecommunications Corporation Ltd v Phiri7. It is obvious , ,, J21 that in those cases, the complaints alleging discrimination on account of social status and or sex were issued out of the Industrial Relations Court. In the former case, the opening paragraph of the judgment shows that the Industrial Relations Court had a statutory jurisdiction, among other things, to entertain complaints based on discrimination which is based on section 108 of the Industrial and Labour Relations Act. In the latter case, we said that if anybody is disadvantaged on account of social status or sex, there must be application to the Industrial Relations Court which can make an order for compensation or reinstatement depending on the severity of the circumstances. Our view is that despite the unlimited jurisdiction conferred on the High Court by the Constitution, the trial Judge lacked jurisdiction to delve into matters of discrimination under section 108 of the Industrial and Labour Relations Act. This explains why discrimination was not even pleaded. Besides, the evidence let in by the 2 nd respondent was insufficient to prove social status discrimination. Moreover, service retirement involved an exercise of discretion, which the trial Judge seems not to have taken into account. For these reasons, we find merit in grounds 1 and 2. . ' J22 We now turn to grounds 3 and 4 which attack the award of terminal benefits and the finding that the respondents were constructively d ismisse d . In Chilanga Cement v Singogo8 , we held, inter alia , that: 1. In constructive dismissal, an employee leaves employment promptly or by notice , as a result of the conduct of his employer . 2 . An employee can claim to have been constructively dismissed if he resigned or was forced to leave employment as a result of his employer's unlawful conduct , which conduct amounts to a fundamental breach of contract of employment. It the employee who makes the decision to leave. is We also stated that the notion of constructive dismissal is anchored on the concept that an employer must treat his employee fairly and should not act in a manner that will compel the employee to flee his job. However, it is clear from the above authority and the case of Western Excavating (ECC) Ltd v Sharp6 referred to earlier, that the employer's conduct must b e - unlawful and must go right to the heart of the contract. It is also p lain that there are three basic requirements for a constructive dismissal claim: (1) the employee must resign ; (2 ) the resignation must be in response to a fundamental breach of contract and; (3) the employee must act promptly a nd in response to the breach , so that he or she is not taken to have implicitly agreed to continue with the contract. The time of J23 resignation is critical because if the employee resigns too late, the employer can claim that he stayed on because he implicitly agreed to the breach or modification of contract. In this case, the respondents are right that the issue of pay is central to the employment relationship as there is an express or implied term in every contract of employment that the employer will pay the salary. In fact, the existence or absence of pay is one of the crucial tests of employment as we said in Moonjel Ouseph Joseph v DSV (Investments) Ltd 10. While we agree with the respondents that a persistent failure to pay salaries would entitle the employee to resign and claim constructive dismissal and a breach of contract as the employee cannot be expected to work for nothing, it is crucial to remember that a persistent failure to pay employees could be a pointer that a company is struggling. Thus, it is essential to distinguish between an employer's failure to pay, or delay in paying, and its deliberate refusal to pay. In our view, a deliberate refusal to pay would amount to a fundamental breach but delay in paying would not usually be a fundamental breach. The appellant is right that the fundamental ,Lt • I . . J24 breach must be judged on the circumstances of each case . The actions and intentions of the parties must be considered. The fact that the date of payment of salaries was specified in the conditions of service and the fact that the appellant had liquidity problems were common ground. The evidence shows that the problem of delayed salaries started around 1996 and escalated in 2004. However, the respondents did not act promptly and 1n response to a breach of the obligation to pay salaries on agreed dates. They continued working until 2008 when they applied for service retirement, which unfortunately was rejected since their services were still required and because of suspension of service retirement due to liquidity problems. Further, there is no evidence that the appellant continued to employ the respondents without intending to pay, or without having reasonable grounds for believing that it could pay them. The situation was more about lateness of pay rather than its total absence or deliberate refusal to pay or reduction in pay. In Rigby v Ferudo Ltd 13 , Ferodo Ltd cut wages by 5% to stay afloat. Rigby made it known that he did not accept the wage reduction. He continued to work and after over a year, he claimed I,, J25 for the shortfall. The House of Lords held that there had been a repudiatory breach of contract by the employer and so Rigby was entitled to claim his shortfall in wages. It was also stated that if the employee continued to work, this did not necessarily imply that he accepted the change, nor was it the case that the contract was automatically brought to an end . In Hogg v Dover College 14 , the claimant asserted unfair dismissal after his contract was changed. He accepted the change in writing under protest in order to mitigate his loss. He asserted that the change in his con tract terms was fundamental. The court agreed that the change in contract terms was sufficiently fundamental to amount to a repudiation of the contract and amounted to a dismissal. The court also stated that if an employee makes it clear that he is accepting a repudiation of his original contract, the fact that he agrees to be re-employed under the new contract may not prevent him from saying that he had been unfairly constructively dismissed under the old one. J26 In this case, we are not persuaded that the respondents did not accept the situation or that the appellant should have terminated their contracts and or renegotiated new contracts with new terms rather than not paying them at all. The totality of the evidence shows that the respondents remained 1n employment; they simply went on leave. They only left because they got employment elsewhere while still being employed by the appellant and after they were refused service retirement. The 1st and 3 rd respondents even conceded that they were not owed any salaries at the time they left. The 1st respondent only resigned after he was recalled from leave. He was also unhappy because he was unable to utilise his new skills diligently due to shortage of spares for the plant. The 2 n d respondent resigned due to what she perceived as unfair treatment even when her conditions of service allowed her to go on service retirement. Had she resigned because of her outstanding wages, she would have pleaded that she was constructively dismissed but she did not . The 3 rd respondent was discharged for absenteeism after the bid to go on service J27 retirement was rejected and the Judge found this to be in order. Therefore, he was not entitled to claim constructive dismissal. As we said above, service retirement involved an exercise of discretion; the respondents were not entitled to it as of right as portrayed by the trial Judge. We reject the notion that the refusal to put the respondents on service retirement was unlawful conduct or a fundamental breach of the contracts of employment which entitled the respondents to claim that they were constructively dismissed. In effect, as submitted by the appellant, the respondents must be taken to have implicitly agreed to continue with the contracts of employment as time is of the essence in a constructive dismissal claim. Furthermore, the refusal to put the respondents on service retirement and a breach of the obligation to pay salaries on the agreed date did not entitle the respondents to terminal benefits upon separation . Above all, the Judge had made a separate award for damages for breach of contract based on the same failure to pay salaries on time. Suffice to say that in order to be I. • J28 entitled to damages for breach of contract, the respondents must prove legitimate financial loss . Mr. Wishimanga tried to persuade us that they suffered loss because they borrowed from shylocks! ! On the unilateral variation of the education allowance for non-unionised employees, this again could not entitle the respondents to terminal benefits, which they did not prove. For the 1s t respondent, the Judge had earlier dismissed his claim that redundancy occurred when the appellant changed the conditions of service for non-unionised employees , and introduced education allowance which he did not consent to , thus creating a repudiation of the contract. We are also at a loss to understand how the 2 nd and 3 rd respondents could benefit from this award when they were not affected by the variation. Clearly, the trial Judge failed to make a proper assessment of the evidence and made contradictory findings of fact and duplicated awards which were not supported by the evidence and which we find very hard to sustain. Therefore , we find merit in grounds 3 and 4 of the appeal. ' . ' ' • - J29 In all , we allow the appeal with costs and set aside the orders made by the trial Judge . ~~-c=_ HON~OMA SUPREME COURT JUDGE ON. M. C. MUSONDA \ sl!REME COURT JUDGE (