Zambia Railways Ltd v Likando and Ors (Appeal 168 of 2000) [2001] ZMSC 158 (6 November 2001)

IN THE SUPREME COURT FOR ZAMBIA APPEAL NO. 168/2000 HOLDEN AT KABWE (CIVIL JURISDICTION) ZAMBIA RAILWAYS LIMITED AND I. L. LIKANDO AND OTHERS CORAM: NGULUBE, CL, LEWANIKA, MAMBILIMA JJS On 17th and 18th April, 2001 and 6th November 2001. For the Appellant - M. NSEFU, Company Secretary, Zambia Railways For the Respondents - M. L. SIKATANA of Veritas Chambers. _________________________ JUDGMENT_________________________ LEWANIKA JS delivered the judgment of the court. This is an appeal against the decision of a Judge of the High Court as decided that the Respondents were entitled to the salary appraisals made in 1992 under the ZIMCO Conditions of Service and that they were entitled to the employer’s contribution under the Pension scheme which was run by their employers. There is also a cross appeal by the Respondent against the holding by the court below that they were not entitled to 100% of their annual salary as repatriation allowances on termination of employment, and that they were - J2 - not entitled to six months pay in lieu of notice and the dismissal of their claim for compensation for premature termination of employment. The evidence on record is that the Respondents were employees of the Appellant who were all in management scales and served under the ZIMCO Conditions of Service. Earlier on there had been an attempt in 1987 by the Appellant to put the Respondents under the unionised conditions of service but this was resisted by the Respondents and subsequently abandoned. The evidence on record also shows that the Appellant was undergoing a restructuring programme and downsizing its labour force. The respondents received retrenchment letters in August, 1992 and this litigation concerns what benefits were due to the Respondents as a result of the retrenchment. The first ground of appeal relates to the finding by the learned trial Judge that the Respondents were entitled to the salary appraisals for the year 1992. Counsel for the Appellant submits that this finding was erroneuos as there was a circular issued by ZIMCO dated 11th May, 1992 which prohibited the award of salary appraisals for that year. Counsel argued that the learned trial Judge’s implicit finding that the deferrement of the salary appraisals was unilateral implies that this should have involved assent or - J3 - negotiations with the Respondents, an assertion which totally ignores that management conditions were dictated by ZIMCO and were not negotiable. He said that the ZIMCO conditions of service were tailored by ZIMCO from time to time for the benefit of non-represented employees like the Respondents. That it would be incredible to imagine that the Appellant should have been bound to effect ZIMCO conditions when it came to increase salaries for the Respondents and that when it came to other conditions of service, the authority of ZIMCO should be ignored. Counsel urged us to allow the appeal and set aside this award. On the other hand counsel for the Respondents argued that the entitlement of salary appraisals was contained in conditions of service that could not be unilaterally reduced or changed by the employer. He said that under the conditions of service, once an employee has performed for a minimum period of six months, the employee was entitled to an appraisal i.e. assess the employee’s performance over a period and award the employee an appraisal of a maximum of three notches plus two automatic notches. He said that the Appellant had not disputed the existence of such a condition of service but had argued that during 1992 the provision for the appraisal for - 4 - the year had been deferred on account of financial constraints. Counsel for the Respondents argued that there was no provision under the conditions of service whereby the employer could unilaterally defer enforcement of the appraisal. We have considered the submissions advanced by counsel for the Appellant and for the Respondents and we are satisfied that the Judge in the court below was on firm ground when he found that there was no provision on the ZIMCO Conditions of Service that would entitle the Appellant to unilaterally alter a condition of service to the detriment of the Respondents. We have also previously held that inability to pay on the part of the employer is not sufficient cause. This ground of appeal cannot succeed. The second ground of appeal relates to the employer’s contributions to the pension scheme which the learned judge ordered to be paid to the Respondents. Counsel for the Appellant argues that the fourth schedule to the Income Tax Act makes it illegal to refund the employer’s contributions and that this is the practice the world over. He said that the Appellant could not be allowed by this court to challenge the award of employer’s contributions by the Industrial Relations Court in the case of P. P. KAUNDA - J5 - AND OTHERS VS ZAMBIA RAILWAYS LTD SCZ APPEAL NO. 147 OF 1998 because the issue was coated in findings of fact which could not be appealed against. That it was therefore erroneous for the learned Judge to have been influenced by the decision of that case. Further, that the Rules of the Zambia Railways Limited Pension Scheme clearly spelt out the procedures to be followed in a situation such as the Respondents. That Rule 9 of the said Rules is applicable to the Respondents and does not allow a refund of the employer’s contributions to members who opt to be refunded their contributions before the normal retirement date. We have looked at Section 37 of the Income Tax Act Cap 323 of the Laws of Zambia and the fourth schedule to the Act which deal with approved fund deductions and approved funds. We cannot find any support for the assertions made by counsel for the Appellant. And in any case as was correctly pointed out by the learned trial Judge, there was no evidence on record that this was an “approved pension fund” within the meaning ascribed to it by the income Tax Act. This ground of appeal cannot succeed as well. Turning to the cross-appeal, Counsel for the Respondents submitted that the learned trial Judge misdirected himself by declaring the Respondents - J6 - redundant when there was no redundancy in the Appellant’s employment, and that instead the Judge should have categorised the Respondents as having gone on early retirement at the request of the employer. Counsel further submitted that the benefits that the Respondents would have enjoyed under early retirement are superior to those under redundancy and he referred us to Clause 30.4 of the ZIMCO Conditions of Service. Counsel for the Respondents was mistaken in this regard as Clause 30.4 of the ZIMCO Conditions of Service deals with the question of long service gratuity and an employee’s eligibility thereto. In truth an examination of the ZIMCO Conditions of Service reveals that they do not provide for early * retirement but only premature retirement in Clause 39 which provides as follows:- 39. PREMATURE RETIREMENT (a) where an employee is required to retire in the national interest then benefits will, where applicable, be as laid down in the ZIMCO pension fund. (b) any other premature retirement will be treated as termination of service. - J7 - The premature retirement referred to above does not apply to the Respondents whereas Clause 40 of the same conditions of service contains provisions for redundancy. The learned trial Judge in the court below dealt with this issue and on the basis of our decision in the case of KABWE VS B. P.(ZAMBIA) LTD, Z. R. (1995-97) 218 found that the Respondents were deemed to have been declared redundant. However, on the question of the repatriation benefits the learned trial Judge had construed Clause 11-1 of ZIMCO Conditions to mean that only those employees who had been retired or were retirees were entitled to repatriation allowances. This Clause provides as follows:- 11.1 PASSAGE Between place of recruitment and place of work paid for by the company for employee and his dependants at the beginning and end of employment. Further in case of Zambians, the company shall bear the cost of repatriation of employee to his home on retirement at the prevailing Zambia Railways/United Bus Company of Zambia fares but not on separation or disciplinary grounds. Transportation relating to personal effects will be restricted to 100% of employee’s annual salary. We have examined this clause and we are satisfied that the learned trial Judge was in error in construing this Clause as he did as this Clause does not preclude the repatriation of employees terminated by the employer other than on grounds of retirement. Although the Respondents were - J8 - deemed to have been declared redundant, they are entitled to the repatriation allowances set out in Clause 11.1 of the ZIMCO Conditions of Service. This ground of the cross appeal succeeds to that extent. The second ground in the cross appeal relates to the salary increment of 300% made by ZIMCO in July, 1992. The evidence on record is that this increment was reduced to 130% from 300% and was to be effective from lsl October, 1992. The argument in the court below was that the Respondents could not benefit from this increment as at the time when it became effective they had already been retrenched. It was not in dispute that the Respondents were retrenched on 18 August, 1992 and were paid three months pay in lieu of notice. The learned trial Judge found that the period of notice ran from 18th August, to 18th November, 1992 and that the Respondents were entitled to benefit from the 130% increment. Counsel for the Respondents is suggesting that the Respondents be entitled to the full increment of 300% with effect from 1sl July, 1992. This argument is untenable for the simple reason that there is no dispute on the evidence on record that the increment was reduced to 130% and the effective date was 1st October, 1992. This ground of appeal in the cross appeal cannot succeed. - J9 - As the cross appeal has succeeded in part, we order that the costs of the appeal and the cross appeal are to be borne by the Appellants, to be taxed in default of agreement. M. M. S. W. NGULUBE CHIEF JUSTICE D. M. LEWANIKA DEPUTY CHIEF JUSTICE I. M. C. MAMBILIMA ACTING SUPREME COURT JUDGE