Banda v Zambia Bata Shoe Company Ltd (Appeal 148 of 2013) [2016] ZMSC 272 (24 August 2016)

IN THE SUPREME COURT FOR ZAMBIA APPEAL NO. 148/2013 HOLDEN AT NDOLA (Civil Jurisdiction) SCZ/8/205/2013 BETWEEN: IREEN KAFULA BANDA APPELLANT AND ZAMBIA BATA SHOE CO. PLC RESPONDENT CORAM: Mwanamwambwa, D. C. J., Chibomba and Malila, J. J. S., On 2nd December 2015 and 24th August, 2016 For the Appellant: For the Respondent: In person Mr. K. Kanswata, of Messrs. Kanswata & Company JUDGMENT Mwanamwambwa, DCJ, delivered the Judgment of the Court Legislation Referred to: 1. The Minimum Wages and Conditions of Employment (Shop Workers) Order, Statutory Instrument No. 1 of 2011 2. Section 26 B (1) of the Employment Act, Chapter 268 of the Laws of Zambia Cases Referred to: 1. Wilson MasausoZulu v Avondale Housing Project Limited (1982) Z. R 2. Lawrence Muyunda M waive v Bank of Zambia (2010) 2 Z. R. 387 3. Barclays Bank Zambia Pic v Zambia Union of Financial Institutions and Allied Workers (2007) Z. R. 106 Work Referred to: 1- Paragraph 667 of Halsbury’s Laws of England. Vol. 16, 4th Edition at Page 460. This is an appeal from a Judgment of the Industrial Relations Court, which dismissed the appellant’s case. Brief facts are these. The appellant is a former employee of the respondent. She worked as Sales Assistant for 12 years from the 1st of March, 1999 to the 1st of May, 2011. Her employment was terminated after the respondent was restructured. When the respondent was restructured, a K-Scheme was introduced which hived off the retailing of the respondent’s products. As a result, the appellant lost employment. Her services were terminated on 1st May, 2011. The respondent computed and paid her terminal benefits on the basis that she was not a unionized employee. The appellant was not satisfied. In so far as she was concerned, she was a unionized employee and the respondent should have paid her terminal benefits in accordance with the collective agreements between the respondent and the National Union of Commercial and Industrial Workers of the Zambia Congress of Trade Unions. She took out a complaint in the Industrial Relations Court against the respondent. She was seeking the following reliefs (a) Damages for unlawful or wrongful termination of employment amounting to a two years’ salary as in Chitomfwa v Ndola Lime Company Limited (1); (b) An Order compelling the respondent to base the 3 months’ basic pay for each year served on class MAX 1 under indirect labour, on Appendix B of the 2009/2010 Collective Agreement which on 1st January, 2010 increased by 15%, which again on 1st January, 2011 increased by 17%, consequently, the appellant be paid: - J3 - (i) Differences in terminal benefits representing the 12 years 4 months of service; (ii) Differences in salaries while in employment from March, 1999 to the date of termination, i.e. 1st May, 2011 reflecting the appellant’s 12 years 4 month (148 months); (iii) Differences in leave days while in employment from date of engagement, i.e. 1st March, 1999 to date of termination, i.e. 1st May, 2011 reflecting the appellant’s 12 years of leave pays; (c) An order compelling the respondent to pay the appellant holiday allowance pursuant to clause 37.0 of the Collective Agreement of 2009/2010 reflecting K400.000 per 24 accrued leave days of the appellant’s 164 accrued leave days appearing on the appellant’s copy of the last payslip of April, 2011; (d) An order compelling the respondent to pay the appellant the differences of Hardship Allowance of K567, 852 and further; (i) An order compelling the respondent to pay on this sum, special interest based on the Bank of Zambia current lending rate; (e) An order compelling the respondent to pay the appellant overtime reflecting 3,200 hours in excess of normal weekly working hours accumulated during the appellant’s 12 years 4 months of service; (f) An order compelling the respondent to pay the appellant full wages between the date of termination, 1st May, 2011, to the date of payment of redundancy benefits, 1st July, 2011, pursuant to section 26B (3); (g) Interest; (h) Costs; (i) Any other relief the court could deem appropriate and just. The respondent disputed the appellant’s claims. It contended that the appellant was not entitled to benefit from the successive collective agreements because she was not a unionised employee. The respondent’s position was that the appellant was a shop employee and as such, she was covered by Statutory Instrument No. 1 and 2 of 2011, which stipulates - J4 - the minimum wages for shop workers. It contended that the appellant was paid her dues in full, in accordance with Statutory Instrument No. 1 and 2 of 2011. The respondent further disputed the appellant’s claim for a redundancy package. It argued that the appellant was not declared redundant, but that she was retrenched after the respondent was restructured. In its Judgement, the Industrial Relations Court found as a fact that the appellant was not a unionised employee and that she was not entitled to benefit from the collective agreements. It made this conclusion after finding that the appellant’s thirteen payslips which spanned from 2003 to 2011, did not bear any union contributions. The lower court said among the 27 payslips spanning from January, 2000 to January, 2011, the appellant had only made two union contributions during that period. It stated that this was an indication that the appellant did not regularly subscribe to union membership. It agreed with the respondent’s contention that the two union contributions were erroneously deducted from the appellant’s salary. The Industrial Relations Court found as a fact that the appellant’s contract was governed by the Minimum Wages and Conditions of the Employment and that she was paid her dues in full. It found as a fact that the appellant was declared redundant because her employment was terminated on account of the fact that the respondent was restructured. The lower court stated that the appellant was on an oral contract and she was deemed redundant in accordance with section 26 B 1 of the Employment Act. It formed the view that since the appellant was not a unionised employee, she could only claim a redundancy package under the Minimum Wages and Conditions of Employment (Shop Workers) Order, Statutory Instrument No. 1 of 2011. It however held that she was not entitled to a redundancy package because the amounts she was paid were higher than what she was entitled to. The court below dismissed the appellant’s claim for hardship allowance on the basis that she was not a unionised employee. The Industrial Relations Court further dismissed the appellant’s claim that she was entitled to be paid 164 accrued leave days as reflected on her last payslip for the month of April, 2011. It agreed with the respondent’s contention that the 164 accrued days indicated on the appellant’s payslip were as a result of an error in the system. It took the view that the appellant was duly paid her 8 accrued leave days, as reflected on - J6 - the physical leave forms. It dismissed the appellant’s contention that the signatures on the leave forms were forged. In addition, the court below dismissed the claim for lunch allowance on the basis that the appellant used to take a one hour lunch break every day that she was entitled to. Dissatisfied with the judgment of the court below, the appellant appealed to this Court. She advanced eight (8) grounds of appeal. These read as follows 1. That the trial court erred in law and fact in holding that the appellant was not a member of the union, thus not entitled to successive Collective Agreements on the basis that the appellant only made two (2) union contributions, when in fact there was evidence on record which showed that she had made not less than eighteen (18) union contributions. 2. That the lower court grossly misdirected itself when it held for the respondent that the appellant was not a member of the union, thus not entitled to conditions enshrined in Successive Collective Agreements, and when it held that all the thirteen (13) payslips displayed by the respondent, spanning from 2003 to 2011, did not bear union contributions, when in fact there was evidence on record which showed that there are seven (7) payslips displayed by the respondent bearing union contributions. 3. That the court below glaringly erred both in law and fact when it ignored abundant empirical evidence on record, other than that of union contributions confirming the appellant’s status as a member of the union. 4. That the court below erred both in law and fact when it held that the appellant was on oral contract when in fact the record contains no documentary evidence to prove the same as required by labour laws. 5. That the Industrial Relations Court erred both in law and fact by failing to order two (2) years’ salary as damages for unlawful or wrongful termination of employment in the appellant’s favour, after it found as a fact, that the appellant’s employment was terminated by reason of redundancy, when there was compelling evidence on record which showed that there was no true situation of redundancy. 6. That the lower court grossly misdirected itself when it held for the respondent on the accrued leave days, by relying on purported leave application forms, when in fact the record shows that the same are highly suspicious and do not tell a full story on paid accrued leave days. 7. That the lower court further misdirected itself in law and fact when it held for the respondent on leave days that physical documents reflected a total of 8 leave days, when in fact there are no such documents on record indicating that the appellant had only 8 leave days at termination. 8. That the trial court erred both in law and fact by failing to order overtime payment in the appellant’s favour, when it found as a fact that lunch hour was her entitlement, thus part of reckoning when counting working hours per week. Both parties filed heads of argument based on these grounds of appeal, which they relied on at the hearing this appeal. For convenience, we propose to address grounds one to three together since they are interrelated. We shall also deal grounds six and seven together because they are interrelated. The rest of the grounds shall be addressed separately. In support of the first ground of appeal, the appellant drew our attention to eighteen (18) of her payslips which showed that union contributions were deducted. She also referred us to her - J8 - evidence in the court below in which she testified that she was a unionised employee. She asked us to allow the first ground of appeal. On the second ground of appeal, the appellant submitted that the court below misdirected itself when it found that all the thirteen (13) payslips which were displayed by the respondent, did not bear union contributions. She again drew our attention to her payslips which showed that she was making union contributions. It was her submission that ground two must succeed. On behalf of the respondent, Mr. Kanswata opposed grounds one and two. He submitted that the respondent tendered evidence in the court below which showed that the union subscription deductions were erroneous. He stated that an error in counting the actual number of union subscription deductions that were wrongly made did not go to the root of the matter. It was his submission that the fact that the union subscription deductions were erroneous was supported by the fact that the Collective Agreements did not cover Shop Assistants. In support of the third ground of appeal, the appellant submitted that apart from the union contributions, there was other compelling evidence which proved that she was a unionised employee. She stated that this ground should equally succeed. - J9 - In response to ground three, Mr. Kanswata submitted that the appellant was attempting to use the commonality in some instances between non-unionised Shop Workers and unionised factory workers to claim that she was a unionised worker. He submitted that this could not be a basis for being a unionised employee. Counsel stated that the determinant factor was whether a specific category of workers is actually included in a Collective Agreement. It was his further submission that the minutes of a meeting held on 16th December, 2008 show that shop workers were not unionised and the union in that meeting was negotiating to have them unionised. We have considered the issues raised in ground one, two and three. The three grounds are concerned with the issue of whether the appellant was a unionized employee who was entitled to benefit from the collective agreements between the respondent and the Union. We have looked at the evidence relating to this issue. There are various pay slips on record which show that the appellant consistently made contributions to the union. Although the lower court found that the appellant only made two union contributions, there are over twenty pay slips on record which show that union contributions were deducted from the appellant’s salary during the period she worked for the respondent. -J10- In our considered view, there is no merit in Mr. Kanswata’s argument that the union contributions were erroneously deducted from the appellant’s pay slips. The respondent could not have allowed an error on the appellant’s pay slip to continue for many years without detecting or correcting it. The various union contributions that the appellant made are, in our view, confirmation that she was a unionized employee. A former Chairperson for the National Union of Commercial and Industrial Workers of the Zambia Congress of Trade Unions also confirmed in his evidence before the lower court that the appellant was a unionized employee. There was overwhelming evidence in the lower court to prove that the appellant was a unionized employee and in our view, it is immaterial whether or not the appellant’s position was specified in the collective agreement. In view of the fact that the lower court arrived at a wrong conclusion on this issue, we are of the considered view that this is an appropriate case in which this court can reverse findings of fact by a trial court. In Wilson Masauso Zulu v Avondale Housing Project Ltd111, we held that: "Before this court can reverse findings of fact made by a trial judge, we would have to be satisfied that the findings in question were either perverse or made in the absence of any relevant evidence or upon a misapprehension of the facts or that they were findings which, on a proper view of the evidence, no trial court acting correctly could reasonably make." -Jil­ in the present case, we are satisfied that the trial court made the finding that the appellant was not a unionized employee, based on a misapprehension of the facts. We accordingly reverse that finding of fact. We hold that the appellant was a unionized employee and she was entitled to benefit from the collective agreements. We would like to make it clear that since the appellant was covered by the collective agreements, the Minimum Wages and Conditions of Employment were not applicable to her. In the case of Lawrence Muyunda Mwalye v Bank of Zambia*21, we held that: “The Minimum Wages and Conditions of Employment, which are amended from time to time, are meant to apply to non-unionized workers whose organizations do not have clear guidelines on certain aspects of employment, such as the payment of redundancy packages.” Accordingly, the appellant’s terminal dues should be recalculated so that she can be correctly paid in accordance with the collective agreements. There is merit in grounds one to three. They are hereby allowed. We shall now deal with ground four. In support of ground four, the appellant contended that the court below erred when it held that section 26B of the Employment Act applied to the appellant since she was on oral -J12- contract. The gist of the appellant’s submission was that, that particular finding was not supported by evidence. She argued that Part 24 of the Employment Act makes it mandatory that all oral contracts should be evidenced in writing on a prescribed form maintained by the employer. She contended that in this case, there was no prescribed form to show that she was on an oral contract. She further submitted that Part V of the Employment Act requires that all contracts exceeding six months should be in writing. The appellant contended that she was not an oral contract since there was no dispute that she worked for the respondent for twelve years and four months. She submitted that this ground has merit and it should succeed. Mr. Kanswata opposed ground four. He submitted that since there is no other evidence on record to show that she had a written contract with the respondent, she was clearly covered by section 26B of the Employment Act in accordance with the holding in the case of Barclays Bank Zambia PLC v Zambia Union of Financial Institutions and Allied Workers*31. We have considered the appellant’s arguments on this ground. From the outset, we must mention that it is usually a question of fact whether an employee is on an oral or written contract. We agree with the appellant that the Employment Act requires that a contract of service made for a period of six months -JI 3- or more should be made in writing. We also agree that the Employment Act requires an employer to prepare and maintain a record of every employee who is on an oral contract. In this case, we have perused through the record and we have not seen any written contract of employment between the parties. In the absence of such a contract, we cannot fault the court below for making a finding that the appellant was on an oral contract. Ideally, the contract of employment between the parties to this case should have been in writing but this was not done. We, therefore, agree with the court below that the appellant was on an oral contract. Ground four fails. It is hereby dismissed for lack of merit. We shall now address ground five. In ground five, the appellant argued that the trial court erred when it declined to award her damages for unlawful or wrongful termination. She stated that the letter of termination showed that there was no true situation of redundancy. She, therefore, urged us to uphold ground five of this appeal. In response, Mr. Kanswata stated that ground five was either a contradiction or a misunderstanding of the law. He submitted that since the lower court made a finding that the appellant’s employment was terminated by reason of redundancy, there is no way it could have awarded damages for -J14- unlawful or wrongful termination of employment. He stated that the shops in which the appellant worked were hived off by the respondent and the shop workers’ situation was a redundancy in accordance with section 26 B(l) of the Employment Act. We have considered whether the appellant was entitled to damages for unlawful or wrongful termination of employment. It is not in dispute that the appellant lost her job on account of the fact that the respondent was restructured. She worked as a Sales Assistant and when the K-Scheme was introduced, her services were no longer required because the respondent hived off the retailing of its products. In our view, this was a classic example of a redundancy stipulated in Section 26B (1) (a) of the Employment Act, Cap 268 of the Laws of Zambia, which provides that: “(1) The contract of service of an employee shall be deemed to have been terminated by reason of redundancy if the termination is wholly or in part due to- (a) the employer ceasing or intending to cease to carry on the business by virtue of which the employee was engaged; ...” The learned authors of Halsbury’s Laws of England, Vol. 16, 4th Edition, Paragraph 667 at Page 460 also state that: “... An employee who is dismissed is taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to the fact that: (1) his employer has ceased or intends to cease to carry on the business for which the employee was employed by him; ...” -JI 5- In this case, the appellant was dismissed from employment by reason of redundancy because the respondent ceased to carry on the business of retailing for which the appellant was employed. Since the appellant was declared redundant, we are of the considered view that she was not entitled to damages for unlawful or wrongful dismissal. Redundancy is a legally recognized way of terminating a contract of employment. An employee who has been declared redundant is not entitled to damages for unlawful or wrongful dismissal. Such employee can only be entitled to a redundancy package. As we have already indicated, the appellant was a unionized employee and she is entitled to a redundancy package as provided for in the collective agreements. Ground five lacks merit and it accordingly fails. We shall now deal with grounds six and seven. In support of ground six, the appellant submitted that the lower court ignored the evidence which proved that the leave application forms could not be relied upon. She stated that the purported leave application forms were not credible. She asked us to uphold ground six of this ground of appeal. Mr. Kanswata countered ground six. He submitted that the allegation of forgery on which this ground is predicated was an afterthought because this issue did not arise at trial. He stated -J16- that the respondent’s evidence was that the appellant had applied for leave on various occasions. He said the leave forms were signed by the appellant and were approved. Counsel submitted that the appellant did not dispute the leave application forms and the signatures on them in her evidence before the lower court. On ground seven, the appellant contended that the lower court ignored the evidence which showed that when her employment was terminated, she had more than eight leave days. She submitted that the court below misdirected itself. In response to ground seven, Mr. Kanswata drew our attention to the leave application forms and submitted that the last copy of the leave application forms indicated that the appellant had a balance of 8 leave days in 2010. He contended that the appellant was fully paid her leave pay for those 8 days. He submitted that the appellant did not contest the authenticity of the leave application forms in the court below but that she only sought clarification when she cross-examined the respondent as to why 164 leave days were appearing on her pay slip. We have considered the issues raised in grounds six and seven. The two grounds are centred on whether the appellant was entitled to be paid 164 accrued leave days as indicated on her last payslip. In opposing the appellant’s claim, the -J17- respondent has contended that the 164 accrued leave days on the appellant’s last payslip were indicated due to an error in the system. We have not been persuaded by this argument because the respondent did not demonstrate how the error in the system occurred. On the other hand, we scrutinized the leave application forms that are on record and we wish to make two key observations. Firstly, we note that the signatures on the leave application forms are glaringly not the same on all the forms. Secondly, we note that the leave application form which indicated that the appellant had a balance of 8 accrued leave days that she was paid is dated 19th May, 2010. Meanwhile, the appellant’s employment was terminated on 1st May, 2011. We do not think the appellant’s accrued leave days remained the same for close to a year, from the 19th May, 2010 to 1st May, 2011. For these reasons, we are of the considered view that the leave application forms in issue are unreliable. We, therefore, hold that the appellant was entitled to be paid 164 accrued leave days, as indicated on her last payslip of April, 2011. The respondent is hereby ordered to pay the appellant 164 accrued leave days, minus the 8 accrued leave days, that she was already paid. There is merit in grounds six and seven. They are hereby allowed. We shall now deal with ground eight. -J18- In support of ground eight, the appellant submitted that the bone of contention was not whether the appellant had one hour lunch break every day, was considered by the lower court. She argued that the issue was whether the lunch hour formed part of the working hours per week. She stated that if the trial court had properly addressed its mind, it would have found in her favour because the evidence showed that lunch was part of the working hours. The appellant urged us to allow ground eight. In response, Mr. Kanswata submitted that since the trial court found that the appellant was entitled to lunch hour and that she was given a lunch break from 13:00 hours to 14:00 hours every day from Monday to Friday, it could not therefore have been part of the working hours. Mr. Kanswata submitted that all the grounds of appeal lack merit and the appeal must be dismissed with costs. We have considered whether the appellant was entitled to be paid overtime allowance. Her contention is that she was entitled to overtime allowance because lunch hour was part of reckoning when counting her working hours per week. In our view, this claim can only be sustained if there is proof that the appellant used to work beyond the normal working hours. The court below found as a fact that she used to take a one hour lunch break every day from 13:00 hours to 14:00 -J19- hours. The appellant has not disputed the fact that she used to take one hour lunch break every day and there is no evidence to show that she used to work beyond the normal working hours. We do not, therefore, see how this claim can succeed. Ground eight has no merit. It is hereby dismissed. All in all, we have allowed grounds one, two, three, six and seven. We have dismissed grounds four, five and eight. This appeal has substantially succeeded and it is hereby allowed. The net result of what we have decided is that the appellant’s dues should be recalculated so that she can be paid in accordance with the successive collective agreements. We shall in the circumstances refer this matter to the Deputy Registrar for assessment. We award costs to the appellant, to be agreed and in default thereof, to be taxed. H. CHIBOMBA SUPREME COURT JUDGE MJMA'CTl’a SUPREME COURT JUDGE