Zambia State Insurance Corporation Ltd v Mwaba and Ors (Appeal 135 of 2004) [2005] ZMSC 27 (30 November 2005)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT KABWE (CIVIL JURISDICTION) APPEAL NO. 135/2004 BETWEEN: ZAMBIA STATE INSURANCE CORPORATION LIMITED APPELLANT AND GEORGE MWABA AND OTHERS RESPONDENT CORAM: LEWANIKA, DCJ., CHIBESAKUNDA, CHITENGI JJS On 2nd November 2004 and 30th November, 2005 For the Appellant: For the Respondent: K. MBAMBARA, Legal Counsel, Zambia State Insurance Corporation M. LISIMBA of Lisimba & Co. S JUDGMENT LEWANIKA, DCJ delivered the judgment of the court This is an appeal against the decision of the Industrial Relations Court, which awarded the Respondents their claims for profit sharing, and t o payment of three months salary in lieu of notice. There is also a cross appeal by the Respondents against the refusal by the Industrial Relations Court to grant their claims for the employer’s pension contribution and long service award. In this appeal we shall refer to the Appellant as the Respondent and the Respondents as complainants, which is what they were in the court below. The evidence on record is that the complainants were all employed by the Respondent in various capacities and some of them were unionised S’ whilst the others were non-unionised. Early in 1991 the management of the Respondent decided to restructure the company and this involved a reduction in the number of the employees. In order to choose which employees would be shed off, the management prepared and circulated a retirement and placement questionnaire to all its employees including the | 0 complainants. The questionnaire was to be submitted to the employee’s head of department before 22nd February, 1991 who would in turn forward it to the Director of Human Resources before 28lh February, 1991. There is evidence on record that all the complainants completed the questionnaire. By a letter dated 29th April, 1991 the Respondent advised the complainants I S' that their employment was being terminated on early retirement and setting out the retirement package that was due to them. The complainants were not satisfied with the retirement package and instituted proceedings in the Industrial Relations Court claiming the following reliefs:- 1. payment of three months salary lieu of notice; STo K) 2. 3. 4. 5. 6. payment of profit sharing; payment of long service awards; payment of housing allowances for three months on owner occupier housing allowance payment of pension contributions by the Respondent S payment of repatriation allowances at the rate of K500,000.00 or actual cost of transportation to the villages of complainants, whichever shall be higher. The court granted the complainants their claims for profit sharing and payment of three months salary in lieu of notice and disallowed the other claims, hence the appeal and cross-appeal. Counsel for the Respondent has filed four grounds of appeal, namely:- 1. that the trial court misdirected itself in law and in fact when it concluded that the Replacement Committee omitted to include notice of termination in the retirement package when the court had earlier made a finding of act that c the agreed upon retirement package ousted the existing collective agreement ’ which had less favourable terms; 2. that the trial court misdirected itself in law when it held that ‘it is a standard practice to give an employee notice prior to termination ' without according due consideration to the fact that the Appellant and workers’ representatives mutually agreed to a retirement package which did not include three months pay in lieu of notice and further, it was a misdirection by the court to include an item of retirement not agreed upon by the parties; 3. that the trial court misdirected itself in fact when it found that the com­ plainants had not been paid profit sharing, when the record clearly shows that the complainants were paid profit sharing; 4. that the trial court misdirected itself in fact and in law when it entered judgment for the complainants on three months salary in lieu of notice, when no evidence whatsoever supports this holding. An examination of the grounds of appeal shows that in reality, there are only two grounds of appeal as grounds 1, 2 and 4 are interrelated and deal with the same subject. We therefore intend to deal with these three grounds together. At the hearing of the appeal Counsel for the Respondent said that he would rely on his heads of argument save that on the claim relating to the profit sharing, he submitted that the complainants were paid in March, 1991 IO as shown on the documents appearing on pages 107 and 108 of the case relating to Appeal No. 142/2004. We will deal first with the claim relating to the payment of three months salary in lieu of notice. In h.is heads of argument Counsel for the Respondent submitted that it was a misdirection on the part of the court I below to hold that the replacement committee omitted to include a notice of retirement in the retirement package. He said that the replacement committee as deposed to in the evidence of DW 1 was making an improved retirement package for all the affected workers be it unionised or non unionized as the existing collective agreement had inferior terms. That what o was left out of the package was consciously left out, and that this included 12. such other items and applicable allowances and payment in lieu of notice; He said that in their place, the replacement committee chose to enrich the package by including such things as use of welfare facilities, granting of agency licences, the Respondent writing off Ioans and advances, employees being sold cars at book value and the Respondent settling 50% of payable S tax on behalf of the employees. He submitted that it was therefore a misdirection by the court below to hold that the committee sub consciously omitted to include notice of termination. That in any case, if the court below felt strongly that the notice ought to have been included under any circumstances, the court should have been guided by the conditions of 10 service which appear on page 78 of the record where notice for termination is 30 days. Counsel for the Respondent further submitted that it was a mis direction in law on the part of the court below to hold that “it was standard practice’’ to give an employee notice prior to termination. He said that this IS case is distinguishable from others where this court has held that where the contract makes no provision for notice of termination, reasonable notice ought to be given. That in this particular case, the parties sat down in a series of meetings to work out a better and enriched package for employees proceeding on early retirement and the finding of the court cannot reasonably be applied to this set of circumstances. Counsel for the Respondent further submitted that the complainants never laid any evidence whatsoever to support the claim for three months payment in lieu of notice. That this award was made in the absence of any S“ evidence and should be set aside. In reply Counsel for the complainants submitted that the court below was on firm ground when it held that the Respondent never gave adequate notice to the complainants. He said that this was a finding of fact, which was fully supported by the evidence on record. He referred us to the letters । q written to the complainants dated 29th April, 1991, one of which appears on page 103 of the record in Appeal No. 142/2004 as well as the letter appearing on page 109 of the same record dated 15th August, 1997 written by the Respondent’s Director of Human Resources to one of the complainants. That Section 97 of the Industrial and Labour Relations Act i S provides that an appeal to this court must be on a point of law or mixed law and fact and that the Respondents have not shown any mixture of law and facts or any law in their ground of appeal. He urged us to dismiss grounds 1, 2 and 4 of the Respondent’s grounds of appeal. I We have considered the submissions of Counsel for the Respondent and for the complainants in relation to grounds 1, 2 and 4 as well as the evidence on record. It is common cause that the complainants’ employment was terminated by a letter dated 29th April 1991 when they were placed on early retirement. This letter informed the complainants that their early S retirement was with immediate effect and were to proceed on fifteen days leave while their terminal benefits were being worked out, and that the terminal benefits would be ready for payment by 15th May 1991. It is also common cause that the complainants consisted of unionised and non unionised employees of the Respondent. We note from the Collective | 0 Agreement entered into between the Respondent and the Zambia Union of Financial Institutions appearing on pages 77 to 93 of the record clause 2 thereof provides as follows 3. TERMINATION OF EMPOYMENT a. upon confirmation of appointment, employment may be ' S terminated by either party giving thirty days notice or payment of equivalent salary in lieu of notice thereof; We also note that the Respondents’ conditions of employment appearing on pages 110 to 11'3 of the record of appeal that Clause 2 thereof provides as follows:- 1. NORMAL TERMINATION OF SERVICE Xo An employee who is on the senior staff may terminate his or her service by giving the corporation three months’ notice, and an employee on the junior staff may terminate his or her service by giving the corporation one month’s notice. The corporation may also give three months’ notice to a junior staff employee, or pay S the employee three months wages in lieu of notice in the case of the senior employee and one month’s wages to staff junior employees. Thus, it is clear to us that in the normal cause of events those complainants who were unionised would be entitled to one month’s notice on termination whilst those who were non-unionised would be entitled to three months’ notice. The case for the Respondent is that the complainants agreed to forego the requirement for notice for a more attractive separation package. We have examined the sample letters on record that were written to some of the complainants and we note that they do not contain a provision for the 1 S complainants to signify their acceptance of the separation package. Indeed none of the letters were signed by any of the complainants and we note that they do not contain a provision for the complainants to signify their acceptance of the separation package. Indeed none of the letters were signed by any of the complainants and in the circumstances we cannot find any 5^0 evidence on record that the complainants accepted the “enrichedpackage" and agreed to forego the requirement for notice of payment in lieu. The court below was therefore on firm ground in finding that the complainants were entitled to payment in lieu of notice. But we shall vary the Order of the court below to the extent that we order that those complainants who were unionized are entitled to one month’s pay in lieu of notice, whilst those who are non unionized are entitled to three months’ pay in lieu of notice. To that extent only, do grounds 1,2 and 4 succeed. We now turn to ground 3 of the Respondent which deals with the S profit sharing scheme. Counsel for the Respondent drew our attention to the “pay slips” on pages 107 and 108 of the record and said that these documents showed quite clearly that the complainants were paid their profit sharing scheme payments due to them on 30th March, 1991. That the court below ignored this piece of evidence and went on to hold that the \ c> complainants be paid the profit sharing when in fact, the same had been paid. In reply Counsel for the complainants contended that no payments were made for the profit sharing scheme. He disputed the documents appearing on pages 107 and 108 and drew our attention to the payslips for t S the complainants appearing on pages 116 to 168 in the record relating to Appeal No. 135/2004 which do not show that any such payments were made. For our part, the only comment we can make is that it is partently obvious that the documents appearing on pages 107 and 108 are not payslips but merely indicate what was due to the two complainants by way of profit To sharing, they are not proof that the amounts indicated there were paid to the two complainants in issue. In any case, we do not see what the difficulty is, it should be easy for the Respondent to show that the monies for the profit sharing scheme were paid to the complainants, if in fact they were paid. For the purposes of this appeal, it is sufficient for us to state that the S complainants were entitled to payment of the profit sharing scheme and we do not envisage any difficulties in the parties getting together to ascertain whether these payments were made. We now turn to the complainant’s cross appeal. The first ground of appeal in the cross appeal is that the court below erred in law and in fact \ q when it refused to allow the complainants the employer’s pension contribution. We have examined clause 11(e) of the Collective Agreement between the Respondent and the Zambian Union of Financial Institutions appearing on pages 77 to 93 of the record and the Rules of Zambia Industrial and Mining Corporation Limited Staff Pension Fund, in particular Rule 8, \ S appearing on pages 294 to 305 of the record of appeal. Under both of these pension schemes, the employer’s contribution can only be paid to a member who has left employment upon attaining the normal retirement age. In this case, it is common cause that all tire complainants were retired before attaining normal retirement age and the court below was on firm ground in ‘T.o holding that they were not entitled to the payment of the Respondent’s contribution. This ground in the cross appeal cannot succeed. The second ground in the cross appeal is that the trial court erred in law and in fact in not awarding the complainants long service gratuity awards. We have perused the record and cannot find any evidence to S’ support this claim. The court below was on firm ground in rejecting it and this ground cannot succeed as well. The court below had awarded interest on the awards at Bank of Zambia lending rate from the date of severance till payment is made. Although there is no appeal against the award of interest, we shall vary it as i q it runs counter to the provisions of the Judgments Act, as amended. We order that whatever amounts are found due to be payable to the complainants will eam interest at the average short term deposit rate as determined by the Bank of Zambia from the date of severance to the date of judgment in the court below and thereafter at the lending rate as determined by the Bank of I S Zambia. As to the question of costs, we believe that given the circumstances of this case, the interests of justice would best be served if we made no order as to costs. D. M. Lewanika DEPUTY CHIEF JUSTICE L. P. Chibesakunda SUPREME COURT JUDGE P. C. Chitengi SUPREME COURT JUDGE IN THE INDUSTRIAL RELATIONS COURT COMP/83/96 HOLDEN AT LUSAKA (CIVIL JURISDICTION) BETWEEN: GEORGE MWABA & OTHERS PLAINTIFFS AND ZAMBIA STATE INSURANCE CORPORATION DEFENDANT S NOTICE OF TAXATION PURSUANT TO THE JUDGMENT OF 14™ JULY, 2004 AND PURSUANT TO STATUTORY INSTRUMENT NO. 9 OF 2001 TAKE NOTICE that the Plaintiffs' costs pursuant to Judgment of the Honourable Justice N. M Mwanza dated 14th July, 2004 will be taxed by the Taxing Master /jAr/MiSs/Mrs & o ", on the^day of hours in the 4vV£) noon or soon thereafter in Room TAKE FURTHER NOTICE that the Taxation will follow the Bill of Costs accompanying this Notice. Dated the day o^(U\vq£j2006 Per: LISlMB/qa COMPANY 6rH FLOOR, GODFREY HOUSE KABELENGA ROAD pjo. BOX 35929 LUSAKA ADVOCATES FOR THE PLAINTIFF TO: THE DEFENDANT & ITS ADVOCATES THE LEGAL COUNSEL ZAMBIA STATE INSURANCE CORPORATION LIMITED PREMIUM HOUSE DEDANI KIAAATHI ROAD LUSAKA