Chingati Msiska (Suing in his capacity as Secretary General of Zambia Union of Financial Institute of Allied workers) and Ors v Yescash Zambia Limited (COMP No. IRC LK/332/2019) [2023] ZMHC 38 (25 July 2023)

IN THE HIGH COURT FOR ZAMBIA COMP No. IRC LK/332/2019 AT THE PRINCIPAL REGISTRY HOLDEN AT LUSAKA BETWE EN: CHINGATI MSISKA (Suing in his capacity as Secretary General of Zambia Union of Financial Institute of Allied workers} GEORGE CHAINDA AND 35 OTHERS 2 nd COMPLAINANT AND YESCASH ZAMBIA LIMITED RESPONDENT Coram: Chigali Mikalile, J this 25th day of July, 2023 For the Com plainants: Mr. V. Map ulan ga - Messrs M . B Christoph er Legal Practitioners For the Respondent: Mr. L. Yeta - Messrs Central Chambers JUDG:IVI E:NT Legislation referred to 1. The Emp loyment Code Act No.3 of 201 9 2. The Industrial Relations Court Rules, Cap 269 J 1 Cases referred to: 1. Masauso Zulu v. Avondale Housing Project Limited ( 1982) ZR 172 2. Sobek Lodges Limited v. Zambia Wildlife Authority (2011) 2 ZR 235 3. Frank Malichupa & Others v. Tanzania Zambia Railways (2008) 2 ZR 112. 4. National Milling Corporation v. Silwamba, Appeal No. 171 /2015 5. Chilanga Cement Plc v. Kasote Singogo (2009) ZR 122 Works referred to 1. Garner. Black's Law Dictionarv (8th Edition): Thompson West, 2004, USA 2. N. M. Selwyn, Selwyn's Law of Employment (14th Edition) 2006, Oxford University Press Introduction 1. By an amended Notice of Complaint filed on 15th March, 2021, the complainants, the General Secretary of the Zambia Union of Financial Institutions and Allied Workers (ZUFIAW) and 36 employees of the respondent, are seeking the following reliefs:- 1. An order to the effect that the purported redundancies in respect of the 36 complainants are null and void for being in violation of clause 5 Appendix A of the Recognition Agreement entered into and signed by the parties to negotiate and agree on redundancy packages payable to the affected employees u. An order directing the respondent to negotiate and mutually agree on redundancy packages payable to the 36 complainants. uz. An order directing the respondent to pay full salaries to the 36 complainants from the purported date of redundancy to date of conclusion of negotiations and subsequent full payments of negotiated redundancy packages. iv. Interest on the amounts due at current bank lending rate. v. Any other relief the Court may deem fit vi. Costs Affidavit evidence ., 3. The affidavit in support of the notice of complaint was sworn by Chingati Msiska, the 1st complainant and George Chainda, one of the employees (the 2nd complainants). 4. It was deposed that the 2 nd complainants have been employees of the respondent, Yescash Zambia Limited trading as Express Credit Zrunbia, employed on diverse dates in 2018 as sales champions. 5. On or about 17th December, 2018, the respondent and the complainants entered into a Recognition Agreement wherein the respondent recognized the 1st complainant as the sole representative and exclusive bargaining agent for the eligible employees. 6. Sometime in May 2019, the 1st complainant, in his capacity as General Secretary received an undated letter from the respondent notifying the trade union of impending redundancies in respect J 3 11. On 24th July, the I st complainant wrote to the respondent (exhibit "CM8") and also to the Labour Commissioner earlier on 12th July, 2019 (exhibit "CM911 ) expressing concern regarding the procedure the respondent was adopting in handling the redundancies before negotiations could commence. 12. On 24th July, 2019, the office of the Labour Commissioner wrote to both the 1st complainant and the respondent confirming receipt of the complaint on handling the redundancy and further called for a meeting on 31 s l July, 2019. The letter is exhibited as "CM 1 O". According to the 1st complainant, on 31st July, 2019, the respondent and the 1s t complainant met to commence the negotiations in respect of the redundancy packages payable. At the said meeting the respondent insisted on paying the redundancy package by 2 months' salary per year as indicated in the exhibit marked "CM 11 ". 13. The meeting of 31 s t July was as a result of the guidance by the Labour Commissioner that the parties should sit and negotiate the redundancy packages payable to the unionized workers before effecting redundancies. The confirmation letter is exhibited as "CM 12". 14. Notwithstanding this guidance, the respondent proceeded to effect payment of redundancy packages by crediting the accounts of the 2 nd complainants as noted in the letter of complaint to the labour office (exhibit "CM 13"). In addition, the respondent JS issued pay slips to the employees reflecting redundancy payments with a number of anomalies. Exhibited as "CM14" are some of the pay slips. 15. The respondent relied on the answer and affidavit filed on 30th December, 2019. The affidavit was sworn by Simon Mwambazi, the respondent's Human Resources Manager. 16. Mr. Mwambazi deposed that the respondent had been experiencing an economic downturn which led to a weakened financial position and challenges with liquidity flow. I 7. In February, 2019, the Bank of Zambia (BOZ), conducted its regulatory compliance inspection on the respondent and issued a final examination report wherein the respondent was declared insolvent and was directed to put measures in place to improve its financial position. Exhibited to the affidavit and marked "SMl" is the letter enclosing the final examination report. 18. Following the directive from BOZ, the respondent held a number of meetings and explored several solutions, including but not limited to offering the employees alternative employment or agency contracts. 19. Later in May, 2019, the respondent resolved to reduce the number of sales champions required to carry out particular kind of work in some selected branches. J 6 ... . . . . 20. Subsequently, on 27th May, 2019, the respondent delivered a letter (exhibited as "SM2") to the Ministry of Labour giving 60 days' notice to the authorized officer, of the respondent's intention to terminate employees by reason of redundancy. The notice highlighted reasons for the termination, the number of categories of employees likely to be affected, the period within which the redundancy would be effected and the nature of the redundancy package. A copy of the letter of notice (exhibit "SM3") was also delivered to the 1st complainant. 21. On 29th May 2019, the 1st complainant met with the management of the respondent to discuss measures to be taken to minimize the adverse effects of the impending redundancy; During the meeting, the respondent was notified by the 1st complainant of the need to discuss the quantum of the redundancy package for the 2 nd complainants in accordance with the recognition agreement between the parties dated 17th December, 2018. The Recognition Agreement is exhibited as "SM4". 22. It was deposed that between 31 st May, 2019 and 13th June, 2019, there was an exchange of correspondence between the 1st complainant and the respondent relating to the negotiations of the redundancy. The letters are exhibited as "SMS" to "SM8". 23. Owing to the delay and the failure by the 1st complainant in responding to the respondent's letter dated 13th June ("SM8"), the J7 respondent through a letter dated 27th June, 2019 ("SM9") gave another 30 days' notice of the impending redundancy. Additionally, the respondent advised the 1st complainant of its availability for further negotiations to avert the redundancy. 24. On 3rd July, 2019, the 1st complainant responded to "SM9" and proposed a redundancy package of 4.7 months for each year served, a 50% loan write off and one year full medical cover. The proposed redundancy package letter is exhibited as "SM 1 O". 25. On 10th July, 2019, the respondent wrote ("SMI l") to the 1st complainant advising on its inability to pay the 2 nd complainants the proposed redundancy package and enclosed its financial statements (exhibited as "SM 12") to allow the 1st complainant to independently assess the respondent's financial capacity. 26. Mr. Mwambazi attested that following the disclosure of the respondent's financial position, the 1st Complainant neglected or refused to respond to the respondent. Instead, the 1st complainant proceeded to report the respondent to the Ministry of Labour for allegedly mishandling the redundancy process as evidenced by the exhibit marked "SM13". 27. Owing to its weakened financial position, the respondent, through a letter dated 17th July, 2019 ("SM 14'') applied to the Ministry of Labour for an exemption from paying the redundancy packages as a lumpsum. Further, the respondent wrote another letter dated 19th July, 2019 ("SMIS"), to the Ministry of Labour J 8 32. In conclusion, it was deposed that the complainants had received their redundancy packages and other contractual benefits in accordance with the law and therefore not entitled to the claims prayed for. Evidence at the hearing 33. Two witnesses testified m total, one for the complainants and one for the respondent. 34. The complainants' witness was Danny Lyempe who relied entirely on the affidavit evidence before Court. 35. In cross examination, Mr. Lyempe clarified that the complainants were asking the Court to declare the redundancy null and void because of clause 5 appendix A of the recognition agreement. He stated that that they did receive a memorandum on 23rd July, 2019 informing them about the redundancy. He, however, conceded that the respondent did not have to notify them but the 1st complainant, their union representative. 36. Still in cross examination, Mr. Lyempe stated that the complainants' contention was that they did not receive the correct packages. To exemplify this, the witness informed Court that his package should have been K 9,300.00 but his pay slip was showing K 6,200.00. He, however, admitted that he had no J 10 .. . . document to substantiate this allegation. He acknowledged that he signed a contract on 5 th November, 2018 and only worked for the respondent for 7 months. He conceded that 7 months was not a full year. 37. Mr. Lyempe stated that when the bargaining agreement does not provide for a particular situation, resort was to be had to the law of the land. He disputed the assertion that there were talks between the respondent and the representative of the complainants. 38. When referred to exhibits "SMS to SM9", Mr. Lyempe admitted that it was correspondence between the parties and an indication that parties were in talks. He then conceded that section 55(2)(b) of the Employment Code Act had been satisfied. 39. When referred to section 55(3) of the Employment Code, the witness admitted that the law does provide that where there is no agreement, the minimum shall apply which is 2 months' pay for each year served. 40. Further in cross examination, the witness acknowledged that the respondent was within its rights to say no to a package they could not afford to pay. He confirmed that there was no agreement between the parties and that the respondent went ahead to pay the complainants 2 months for each year served. He Jll declined to confirm that the 3 rd claim ought to fall off since redundancy was in accordance with the law. 41. In re-examination Mr. Lyempe reiterated that there was no negotiation of the package between the respondent and the 1st complainant. 42. The respondent's witness was Simon Mwambazi who also relied entirely on the affidavit he had sworn. 43. In cross examination Mr. Mwambazi stated that a negotiation is a discussion between two parties with a view to agree. He stated that not all negotiations end with mutual agreement between the parties involved. 44. When referred to section 55(3)(a) of the Employment Code, he confirmed that the respondent did pay the complainants 2 months' pay for each year served and the respondent had pay slips to prove the said payment. He, however, acknowledged that the proof of payment was not attached to the affidavit in support of answer. 45. In further cross examination, Mr. Mwambazi stated that the recognition agreement between the parties did not indicate that they needed to conclude or agree before the respondent could proceed to make payment. J 12 46 . He reiterated that following the guidance from the labour office, the parties met at the respondent's office for negotiations. Each party gave its position. Thereafter, the respondent informed the complainants that the respondent was unable to meet the complainants' demands due to a poor financial position and would pay in accordance with the law. 47. He further explained that it was never the intention of the respondent to pay the complainants in accordance with the law. It is just that the respondent was incapacitated by financial hardship. The I st complainant was given the audited financial records for 2018 in order to make the 2nd complainants understand the situation. 48. Mr. Mwambazi further stated that BOZ declared the respondent insolvent which meant that the respondent had no financial muscle to meet the complainants' demands. This was the reason why the respondent applied to the Ministry of Labour not to pay the redundancy packages as a lumpsum. 49. When referred to exhibit "SM4", he disputed the assertion that it is possible to follow what is provided for by law and contravene the agreement. He added that favourable terms must be agreed to by both parties. Submissions J 13 50. Mr. Mapulanga, counsel for the complainants, submitted that exchange of letters between the 1st complainant and respondent did not amount to a negotiation in its ordinary meaning and intent. To this end, reliance was placed on Black's Law Dictionary's which defines negotiation as: A consensual bargaining process in which the parties attempt to reach agreement on a disputed or potentially disputed matter. Negotiation usually involves complete autonomy for the parties involved, without the intervention of third parties. 51. Based on this definition, it was contended that the respondent did not intend to negotiate with the complainants in the spirit of the Recognition Agreement save to insist from the onset that the statutory minimum be applied. This can be deduced from the letters marked "CM2" to "CM8" and "CM 11" to "CM12" of the complainants' affidavit 1n support of the Complaint. 52. Mr. Mapulanga submitted that the procedure for redundancy is provided for under sections 55 to 57 of the Employment Code Act. He cited section 55(3) which provides that: Subject to section 57, an employee whose contract of employment has been terminated by reason of redundancy shall - (a) unless better terms are agreed between the employer and the employee concerned or the employee's representative, be entitled J 14 completed year served. The complainants, it was submitted, were just angry because they did not negotiate a higher term. He emphasized that redundancy was one of the modes of termination and it was correctly invoked by the respondent. 64. On whether the respondent breached the recognition agreement, Mr. Yeta's contention was that if clause 5 Appendix A is carefully examined, this Court will come to the inescapable conclusion that the complainants completely misapprehended the effect of this clause. He asked Court to take judicial notice of the fact that construction of any document requires that the literal interpretation be used, in short, the words be given their ordinary meaning. According to counsel, what clause 5 provided was merely that redundancy is one of the subjects that was open to negotiations. 65. It was counsel's submission that nowhere in clause 5 or indeed elsewhere in the collective agreement does it expressly stipulate that the negotiations where supposed be accepted by the complainants first before they could be valid. It was averred that this position was not only inconsistent with the recognition agreement but also implied that employees could force an unwilling employer to pay fees outsides the confines of the law which was not tenable at law. To buttress this argument counsel relied on the case of Frank Malichupa & Others v. Tanzania Zambia Railways Authority(3J. J 18 L 66. In summary, Mr. Yeta submitted that a perusal of the entire notice of complaint and the affidavit in support reveals that there is in fact no reasonable cause of action as the complainants were duly terminated and duly paid and this was acknowledged by their witness. Consequently, the complainants were not entitled to any reliefs claimed as none of the allegations had been proved. He also submitted that due to the manner in which this matter was brought before Court, costs ought to be granted to the respondent. Consideration and decision 6 7. I have carefully examined the evidence on record, the written submissions and the authorities cited therein for which I am indebted to counsel. 68. From the record, it is undisputed that the 2 nd complainants were unionized employees of the respondent. It is also undisputed that the respondent recognized ZUFIA W as the bargaining agent for the 2 nd complainants. It is a fact that the 2°d complainants were declared redundant and the respondent effected redundancy payments. 69. What is in dispute is whether or not, in the redundancy process, the law and the recognition agreement between the parties were breached. Furthermore, there is disagreement regarding the payments made. J 19 70. Thus, the is sues for determination as I see them are as follows: r. Whether the respondent breached section 55 of the Employment Code Act. ll . Whether the respondent breached the recognition agreement. m. Whether the 2 nd complainants were paid the redundancy package in full. {i) Whether the respondent breached section 55 of the Employment Code Act 71. The complainants assail the implementation of the redundancy. To put the issue into proper perspective, it 1s cardinal to examine section 55 which provides for redundancy. 72. The evidence on record reveals that the respon dent embarked on redundancy for the reason that the respondent had financial challenges which resulted in it resolving to reduce the number of employees to carry out work of a particular kind. Thus, the redundancy herein was carried out pursuant to section 55( 1 )(b) which states: An employer is considered to have terminated a contract of employment of an employee by reason of redundancy if the termination is wholly or in part due to - J 20 ... ., before any engagement could be had and remained adamant that it would pay in accordance with the Employment Code. 80. On its part, the respondent stated that the 1st complainant ·was engaged. Counsel made reference to several letters between the parties. A perusal of the letters (SM3,SM5 to SM8), however, reveals that it was the actual notification of the impending redundancies and exchanges on trying to agree on when and where the parties could meet to discuss the redundancies . 81. According to the learned author of Selwyn's Law of Employment at paragraph 18.45, page 462, a warning that the redundancies are being contemplated, coupled with an indication of the selection procedure, does not satisfy the requirements of a fair procedure. Consultations must be fair and genuine. An opportunity must be given to the affected employees to express their views. 82. Further, 1n the case of National Milling Corporation v. Angela Chileshe Bwembya Silwamba(4J, it was held that a redundancy effected without proper consultation with the employee would be considered to have been done in bad faith. 83. In another case of Chilanga Cement Pie v. Kasote Singogo(5l the Supreme Court guided that "redundancies are planned activities. Being a planned activity, the employee needs to be prepared for the loss of a job. Reasonable measures which J 23 II .:, 88. The respondent did restate that the basis of the mass redundancies was the financial downturn the company was experiencing hence the inability to financially sustain all of its current employees. It is undisputed that the respondent also availed the financial statements for the year ending 2018. 89. The evidence further reveals that a meeting took place on 31 st July, 2019. This is evident from correspondence from the respondent dated 2 nd August, 2019 which reads as follows: We thanlc you most sincerely for taking time to come to our offices on 31 st July, 2019 as well as for the constructive engagement during the negotiation regarding the redundancy package for your members. We wish to reiterate our final position as advised in the meeting that the company is not in a financial position to pay more than 2 months for each year served plus any other contractual entitlements as redundancy package. This position is borne out by the .financial statements of the company which we have shared previously with your union. We regret to advise that on the basis of the foregoing the company is not in a position to adjust the proposed redundancy package upwards as any such upward adjustment will negatively affect the continued viability of YesCash Zambia Limited as a going concern, to the detriment of the remaining employees, some of whom are members of your union. 90. The forgoing correspondence is significant as it shows that contrary to the allegation that the respondent failed to negotiate the redundancy packages, the parties met and discussed the issue. J 25 91. The letters which discussed the package and the counter proposal are in my view a valid form of engagement. The respondent not only gave a reason why it could not take on board the counter proposal but also provided evidence to support its financial position. 92. This position is confirmed by the review of the respondent's financials by Bank of Zambia. Exhibit marked "SM 1", a cover letter from BOZ, described its findings of the respondent's finances in the following terms: The current examination detennined that the financial performance and condition of YesCash was unsatisfactory on account of weakened capital position and high liquidity risk a situation that has resulted in the institution failing to meet its weekly loan obligations as they fall due. 93. In light of this position, I cannot see what else the respondent could have done. Holding further discussions without there being a positive change in the respondent's financial situation would not have yielded different results. As rightly argued by the respondent, the employees cannot force an unwilling employer to pay beyond what is provided for by the law. 94. The employees were given an opportunity to express their views through their representative and they were heard. The fact J 26 that they did not get what they wanted does not mean the process was unfair. 95. Thus I am of the view that the assertion that the recognition agreement was breached lacks merit. In the same vein, I ma satisfied that section 55(2)(b) was adhered to. (iii) Whether the 2 nd complainants were paid the redundancy package in full. 96. It was submitted on behalf of the complainants that the respondent had failed to prove its alleged compliance with the statutory provisions as regards the payment of the statutory minimum payments for redundancy packages. 97. I must mention here that this allegation is misguided. It is the complainants making a claim and they needed to prove that the respondent did not pay the statutory minimum. 98. In any case, the complainants' evidence establishes that the 2 nd complainants were duly paid. The letter dated 8 th August, 2019 \Vritten by the 1st complainant proves this. It reads in part: We write to express our displeasure in the manner in which Express Credit Zambia has handled the redundancy process for affected unionized members of staff. The union and management met on 31 st July, 2019 for negotiations over the redundancy package for affected unionized employees and the two parties did not reach an agreement. Management proceeded to go ahead erroneously credit the accounts of J 27 the members 2 (two) months pay for each year served even before the bargaining unit could reach an agreement. 99. In light of the acknowledgment that the respondent paid the members, the allegation that the respondent did not pay in accordance with section 55(3) cannot stand. 100. I now turn to the allegation that there were anomalies with the redundancy payments. 101. Pay slips were produced which pay slips show the redundancy payments. Some of these pay slips have hand written notes at the bottom stating that the payment received was less than the net pay showing on the respective pay slip. However, no bank statements or indeed any other documents were produced by the complainants to show that they received less than what was stated on these pay slips. 102. Without such proof, this Court cannot find for a fact that there were underpayments. The claim is thus dismissed for want of merit. J 28 Conclusion and orders 103. Having carefully reviewed the evidence on record, I am satisfied that the respondent terminated the 2 nd complainants' contracts of employment by way of redundancy. This is a legal way to terminate an employment relationship as provided for by the Employment Code Act. 104. I am further satisfied that the procedure provided for by the law was duly followed. Consequently, there was no breach of clause 5 Appendix A of the Recognition Agreement between the parties as negotiations took place, which, unfortunately did not yield the complainants' desired results. The evidence does not suggest bad faith on the part of the respondent in its failure to yield to the complainants' demands. Rather it shows that the respondent was incapacitated by a weak financial position. 105. In the circumstances, the complainants' claim fails 1n its entirety. 106. As for costs, I am disinclined to condemn the complainants in costs as there was no unreasonable conduct on their part to warrant such an order as per Rule 44 of the Industrial Relations Court Rules. Thus, each party shall bear own costs. 107. Parties are informed of their right of appeal. Dated at Lusaka this 25th day of July, 2023 ....... ~ . .' M. C Mikalile HIGH COURT JUDGE J 29