Harrison Phiri v Akaal Engineering Limited (COMP/IRCLK/305/2017) [2024] ZMHC 258 (30 September 2024)

r >· .. · ,,IN THEHIGH COURT FOR ~AMBIA COMP/IRCLK/305/2017 AT THE INDUSTRIAL RELATIONS REGISTRY HOLDEN AT LUSAKA (Labour Jurisdiction) ., , ; . ; . 1 • • BETWEEN: HARRISON PHIRI AND AKAAL ENGINEERING LIMITE URTOF LUSAKA ( 3 0 SEP lm~ SEAL RfLATlO~ COMPLAINANT RESPONDENT Before Hon. Mr. Justice E. L. Musona on the 30th day of September 2024 For the Complainant: For the Respondent: No appearance Mr. M. Mweene, Messrs. Mweene & Partners. JUDGMENT Legislation Referred to: 1. The Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia. 2. The Employment Code, Act No. 3 of2019 Cases Referred to: 1. Redzilla Limited v Abuid Nkazi and Others SCZ Judgment No. 7 of 2011 2. ZESCO Limited v Kang'ombe (2004) ZR 67 3. Zambian Breweries Plc v Muka Nyirenda (2009) ZR 95 1.0 COMPLAINANT'S CASE 1.1 On 11 th August . 2017, the Complainant filed a Notice of Complaint and an Affidavit in Support of the Complaint pursuant to Section 85 (4) of the Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia. CamScanner J2 . :' . • • C/J/f 1~,~ . : ". /:;;_{. , .. 1.2 T}:le grounds upon which the Complaint was presented was that the Complainant was verbally employed by the Respondent on 3 rd April 2000 as a Foreman Metal Fabricator. 1.3 He claimed that he and other employees visited the Labour Office in 2006 because they had worked for six years without signing any contracts. The Respondent was directed to prepare contracts for the Complainant and other employees to sign as well as pay them for the years they had worked. 1. 4 The Complainant stated that the Respondent paid him K2,500 for the six years he had worked. He also claimed that the Respondent gave him his first written contract on 20th June 2009 despite promising to give him a contract to sign in 2006. It was a fixed contract meant to end on 20th June 2011. 1. 5 The Complainant averred that he signed two subsequent contracts; one from 20th June 2011 to 20th June 2013 and the other from 20th June 2013 to 20th June 2015. It was deposed that in 2015, the Respondent altered the length of the contracts to I-year contracts. Thus, he signed his fourth contract meant to run from 28th June 2015 to 28th June 2016 as shown by Exhibit 'HPl'. CamScanner J3 1.6 It was deposed that the Respondent unfairly terminated the Complainant's contract on 4 th February 2016, eight months after signing it. The complaint averred that he reported the matter to the Labour officer, who referred him to the Court. However, the Respondent recalled him to work and offered him a new contract without resolving the breach from the previous contract. 1. 7 The Complainant averred that he signed his fifth 2-years ; ' contract on 1st September 2016 as shown by Exhibit 'HP2'. 1.8 It was deposed that the Respondent unfairly and unlawfully terminated the Complainant's contract of employment on 18th May 2017 as shown by exhibit "HP3". Aggrieved by the Respondent's action, the Complainant reported the matter to the Labour Officer. When he could not get any assistance, he commenced the suit herein seeking the following reliefs: Leave pay for the last contract; i. Gratuity for the last contract; n. m. Notice pay; w. Breach of contract; v. Costs; and vz. Any other reliefs the court may deem fit. 2.0 RESPONDENT'S CASE 2.1 The Respondent filed an Answer to the Complaint and an Affidavit in support on 6 th November 2017 in which it was CamScanner J4 ' ,. alleged that the Complainant was employed as a casual worker in 2000 and the transferred to Stores as a trainee Store keeper; not a foreman as alleged. 2.2 The deponent, Hardyal Singh Ghataura, alleged that the Complainant was put under training as an Estimator, where he worked for five years. He denied the allegation that the Complainant and other employees reported the Respondent to the Labour Office after working for six years without contracts. He alleged that all employees were given contracts and paid since the date that the Respondent commenced its operations in 1996. See Exhibits 'HPl-2'. 2.3 The Respondent stated that the Complainant began to interact with the Respondent's customers 1n an unprofessional way to the extent that he accepted bribes occasionally. He also misconducted himself in the presence of management as shown by Exhibit 'HP3'. Consequently, he was dismissed and then rehired after he tendered an apology. The Respondent decided to shift the Complainant to the workshop as Foreman Fabrication in June 2013 when he produced a Craft Certificate as shown by Exhibits 'HP4-6'. CamScanner JS • I , /" . .. .( ., The Respondent requested the Court to verify the Craft Certificate. 2.4 Further, the deponent averred that the Complainant was absent from work for 18 days and produced fake sick reports, which were confirmed by a relevant clinic. See Exhibit 'HP7'. 2.5 It was deposed that the Complainant caused the Respondent to suffer losses when he mismeasured the kitchen canopy meant for Big Bite Restaurant. The intended purchaser rejected the canopy and did not pay for it. Further, the Complainant spoiled Amiran's arial mast to the extent that the Respondent had to make another mast, thereby costing the Respondent material, labour and machine hours. This is evidenced by Exhibits 'HP9-10'. 2.6 The Respondent admitted to dismissing the Complainant without granting him his benefits, in accordance with Clause 'g' of the contract of employment. Further, the Respondent stated that it withheld the Complainant's gratuity and leave pay as a form of compensation for the loss he caused. See Exhibit 'HPlO'. 2.7 It was admitted that the Complainant reported the dismissal to the Labour Office. It was deposed that the Respondent CamScanner f ,f I . •.• ' ' . i~ / .· I · ; · ! · { J6 replied to the complaint before the Labour Office, stating the reasons and presenting the evidence of the loss caused by the Complainant. However, the Labour Office decided in his favour and the Complainant was about to obtain his leave pay from the new accountant in the absence of the deponent. His application gratuity was denied. See Exhibits 'HPl 1-14'. 2.8 The Respondent requested the Court to help it recover K4,738, the value of the loss caused by the Complainant. 3.0 THE HEARING 3.1 The matter came up for hearing on 4th September 2024. The parties decided to proceed on Affidavit evidence. 4.0 SUBMISSIONS 4.1 The Respondent submitted detailed arguments to support its claims. I have taken account of the various arguments made. I will not repeat them but will make references as appropriate in my decision. 5.0 ISSUES FOR DETERMINATION 5.1 I have considered all the evidence and arguments on record. I garner that the issues for determinat~on are whether the Respondent is justified in withholding the Complainant's benefits after termination, as a form of compensation. CamScanner J7 5.2 I find it necessary to distinguish the term termination from dismissal because they have different meanings and implications. Needless to state that, these two terms do not refer to the same situation. There is a plethora of cases that elaborate on the distinction between the two terms including Redzilla Limited v Abuid Nkazi and Others 1 where the Supreme Court stated as follows: "Indeed, there is a difference between 'dismissal' and 'termination' and quite obviously the considerations required to be taken into account, vary. Simply put, loss of employment arising from 'dismissal' disciplinary action, while 'termination' allows the employer to terminate the contract of employment without invoking disciplinary action." involves 5.3 In the current case, the Respondent "terminated" the Complainant's contract of employment without invoking any disciplinary action. The ground for the termination is poor performance 1n accordance with clause 12.g of the Complainant's contract of employment. Clause 12. g provides as follows; "Termination of Employment Management reserves the right to terminate the employee's services for the following grounds without benefits; g. Poor performance/workmanship." 5.4 In the clause above, the Respondent was entitled to terminate the contract for the reasons given, without benefits. The CamScanner JS / ! . ' ! )' Respondent stated that it exercised its right to terminate the contract when it served the Complainant with the termination letter. However, the Complainant alleged that he was not given notice of the termination and is therefore, entitled to be paid his benefits including gratuity, leave pay, and notice pay. This evidence was not rebutted by the Respondent. I am inclined to consider it as in fact, not having occurred as there is no written notice on the record. What is on the record is a letter of termination with immediate effect dated 18th May, 2017. 5.5 There are several requirements that an employer is expected to meet or prove as having been done prior to terminating a contract of employment of its employee. These requirements are as follows: 5.6 The Manner in which the termination was effected: 5. 7 The law on termination of contracts of employment is found in Section 52 of the Employment Code which provides as follows: "(1) A contract of employment terminates in the manner stated in the contract of employment or in any other manner in which a contract of employment is deemed to terminate under this Act or any other law, except that where an employer terminates the contract, the employer shall give CamScanner :;. ..... _......,.,,,..,_ ~. -·::~ ... ·,r-.,: ·' ! /· . .. i .. J9 reasons to the employee employee's contract of employment." for the termination of the 5.8 My understanding of Section 52 (1) of the Employment Code cited above is that an employer who terminates a contract of employment must do so in the manner provided for in the contract of employment or in accordance with the Employment Code. 5.9 According to Clause 12 g. and Section 52(1) above, the Respondent was entitled to terminate the contract of employment for the reason it gave. 5.10 The Reasons for the termination: 5.11 Further, Section 52 (1) above makes it a requirement for an employer who terminates the contract of employment to give reasons to the employee for the termination. In the current case, the letter of termination stated that the Respondent terminated the contract of employment for poor performance which resulted in losses for the Respondent. 5.12 The validity of the reason for the termination; 5.13 Section 52 (2) of the Employment Code provides that the reason given for the termination should be valid if the termination is in relation to the conduct of the employee. It states as follows; CamScanner JlO '• . : (2) An employer shall not terminate a contract of employment of an employee without a valid reason for the termination connected with the capacity or conduct of the employee or based on the operational requirements of the undertaking. 5.14 The Respondent in this case alleged that the Complainant's actions caused the Respondent to suffer losses when he mismeasured the kitchen canopy meant for Big Bite Restaurant. This is because the intended purchaser rejected the canopy and did not pay for it. Further, the Complainant spoiled Amiran's arial mast to the extent that the Respondent had to make another mast, thereby costing the Respondent material, labour and machine hours. This amounted to poor performance in accordance with Clause 12. G of the Contract. 5.15 Seeing that the ground for the termination was provided for in the contract of employment and is supported by law, I find that the Respondent did not breach the contract of employment, more so that the Complainant did not dispute these allegations. 5.16 Opportunity to be heard: 5. 17 It is pertinent that an employer who intends to terminate an employee's contract must accord that employee an opportunity to be heard on the allegations levelled against CamScanner Jll • • ' I ' ' them. I am fortified by Section 52(3) of the Employment Code which provides as follows: (3) An employer shall not terminate the contract of employment of an employee for reasons related to an employee's conduct or performance, before the employee is accorded an opportunity to be heard. 5.18 Seeing that the reason for the termination related to the Complainant's performance, it was incumbent upon the Respondent to grant him an opportunity to be heard. There is no evidence on the record that suggests that the Complainant was given an opportunity to be heard. The onus to prove that the termination was fair is on the employer. I am guided by Section 52 (5) of the Employment Code which provides as follows; (5) An employer shall bear the burden of proof that the termination of a contract of employment was fair and for a valid reason." 5.19 Notice prior to termination 5.20 The law regarding notice is found in Section 53 of the Employment Code which provides as follows; "(1) An employee whose contract of employment is intended to be terminated is entitled to a period of notice, or compensation in lieu of notice, unless the employee is guilty of misconduct of a nature that it would be unreasonable to require the employment relationship. (2) An employer shall, where the contract of employment does not provide for a period of notice, give- the employer to continue CamScanner . r~ .. ,, . '•· i: ~:le '. J12 (a) twenty-four hours for a contract of employment not exceeding one month; (b) fourteen days for a contract of employment of more than one month but not exceeding three months; and (c) thirty days for a contract of employment of more than three months, except that notice to terminate a contract of employment of more than six months shall be in writing. (3) ... (4) An employer who does not give notice to an employee shall pay the employee the wages that the employee would have received if the employee had worked during the notice period." 5.21 The Respondent stated that it terminated the Complainant's employment with immediate effect. This means that the Complainant was not given notice of termination prior to its occurring. Further, there is no evidence showing that the Respondent compensated the Complainant in lieu of notice. The contract does not provide for a notice period therefore the statutory notice of thirty days applies; seeing that the last contract was for period of one year. Accordingly, I find that the Respondent did not comply with this provision and order that it pays the Complaint the wages that he \\7ould have received if he had worked during the notice period. 5.22 Gratuity 5.23 It is worth noting that the Complainant's last contract of employment was made prior to the enactment of the Employment Code. This Act came into force in 2019. Prior to CamScanner . :;:" ,{?:-:;·· . . . •' •, ' 1 . . · . . · .. ,, J13 this, payment of gratuity was based on agreement by the parties. In other words, it had to be one of the terms of the contract, if an employee would claim it on termination. I am fortified by the case where the Court of Appeal stated as follows; "It is the undisputed position that before the enactment of the Employment Code Act, gratuity was only payable if it was an agreed term of the contract of employment. The Court relied on the case of Eston Banda and Another v The Attorney General." 5.24 According to Clause 11 of the contract marked as Exhibit 'HP 10', the parties agreed to the following; "Gratuity At the end of each contract an employee shall be entitled to receive two months basic pay for each completed year of service and 30 days leave pay for year not commuted." 5.25 Seeing that gratuity is a term of the contract, and the contract l• was terminated by the Respondent before its expiration, I find that Complainant is entitled to be paid gratuity on a pro-rated basis. 5.26 In · dealing with the issue of whether the Respondent is entitled to withhold the Complainants benefits as a form of compensation to itself, the Respondent argues that clause 12. g· grants it authority to withhold the Complainant's benefits for poor performance. I am guided by the case of ZESCO CamScanner J14 •.·, . l-·, Limited v Kang'ombe2 where the Supreme Court held as follows; "An employer cannot, trough a contract, escape statutory obligations imposed by employment law." 5.27 Further, I am fortified by the case of Zambian Breweries Pie v Muka Nyirenda3 where the Supreme Court held that; "Even where an employee consents to contractual terms that waive statutory rights, such agreements are unenforceable if they undermine statutory provisions." 5.28 It is my understanding, from the above decisions, that clauses in employment contracts that contravene statutory protections are invalid to the extent of their inconsistency with the law. In other words, private agreements cannot waive statutory rights especially in labour law. Therefore, the Court will uphold statutory protections in cases of conflict between contracts and the law. 5.29 Accordingly, I find that the Complainant is entitled to be paid his benefits, gratuity inclusive for the period that he worked and in accordance with the agreement or the law, whichever benefits the Complainant more. 5.30 Leave pay 5.31 The Complainant states that he is entitled to be paid for his accrued leave days. The Respondent alleged that it paid the Complainant for his accrued leave days as shown by Exhibits CamScanner J15 'HP13-14', the payment form and petty cash vouchers. This was not disputed by the Complainant. I have looked at the evidence on record and find that the Complainant was paid for his accrued leave days. Therefore, this claim fails. 5.32 Breach of Contract 5.33 There are a plethora of authorities speaking to the general rule on breach of contract. A breach of contracts occurs when a fundamental term of the contract is not performed, thereby entitling the innocent party to treat the contract as repudiated and claim for damages. In the current case, the Respondent terminated the contract before its expiration. This would have been a breach but for the term that grants it authority to do so, as demonstrated above. 5 .34 It is my considered view that the Complainant has not demonstrated that his contract of employment was breached, thereby giving rise to a claim for damages. The breach that may be imputed, is that of failure by the Respondent to pay him his benefits upon termination of the contract. However, even in this situation, the Complainant has not demonstrated that he suffered loss as a result. CamScanner •. ' l. I ... ,fr J16 5.35 Costs 5.36 Ordinarily this Court does not award costs in favour of one party. The Court only deviates from this norm, in accordance with Rule 44 of the Industrial Relations Court Rules where one party has been guilty of unreasonable delay, or of taking improper, vexatious or unnecessary steps in any proceedings, or of other unreasonable conduct. I see no such reasons in the current case. For these reasons, I order that each party shall bear its own costs. 5.37 Summary of findings 1. The Complainant is entitled to gratuity because it is a term of the contract and a statutory right that an employer cannot waive. It is to be paid on a pro rata basis; 11. The Complainant was paid his leave pay, therefore his claim for leave pay is unsuccessful; 111. The Complainant is entitled to notice pay equivalent to thirty days. 1v. The Complainant did not prove his claim for breach of contract. v. Each party shall bear its costs. ., ·l i j ·! ' CamScanner . . ,. . . . f. . . Jl7 ·· 5.38 Leave to appeal is granted. Dated this 30th day of September, 2024 Hon. Mr. Justice E. HIGH COURT ' r";. I ' .•.' ' CamScanner