Joe's Earthworks & Mining Limited v Dennyson Mulenga (APPEAL NO. 107 of 2022) [2024] ZMCA 48 (28 February 2024)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT NDOLA (Civil Jurisdiction) BETWEEN: JOE'S EARTHWORKS & MINING LIMITED APPELLANT AND DENNYSON MULENGA RESPONDENT CORAM: KONDOLO, MAJULA & PATEL, JJA On 22nd & 2sth February 2024 For the Appellant: Mr. Z. Sampa Messrs. Simeza Sangwa & Associates For the Respondent: Mr. G. Haakainsi Messrs. L. M Chambers JUDGMENT Patel, JA, delivered the Judgment of the Court Page IJ 1 Cases Referred to: 1. Emporium Fresh Foods limited T/A Food lovers Market and Gourmet Market limited v Kapya Chisanga -CAZ App No. 44/2021 2. Atlantic Bakery v ZESCO Selected Judgment No.61 of 2018 (Appeal No. 47 of 2016}. 3. Tebuho Yeta v African Banking Corporation ABZ (Zambia) limited -SCZ App. No. 117/2013 4. Christopher lubasi Mundia v Sentor Motors limited {1982} Z. R. 66 5. Jere DVR/SGT Shamayuwa and Another {1978} ZR, 204 6. Anderson K. Mazoka & others v levy Mwanawasa {2205) ZR, 138 7. Eston Banda and Another v The Attorney General Appeal No 42 of 2016 8. Saviours Mundia v Consolidated Farming limited Comp/lRClK/442/2019 9. Zambia Consolidated Copper Mines v Jackson Munyika Siame and 33 others-SCZ App No. 106/2003 10. ZRA v The Post Newspapers limited -SCZ App. No.18/2016 legislation Referred to: 1. The Employment Code Act, No.3 of 2019. 2. Employment Code (Exemption) Regulations, S. I. No. 48 of 2020 3. The Employment Act, Chapter 268 of the laws of Zambia. 4. The Employment Code Act (Commencement) Order S. I. No. 29 of 2019. Page IJ 2 1.0 INTRODUCTION 1.1 This is an appeal against the judgment of Hon. D. Mulenga J, of the High Court (Industrial Relations Division) delivered on 28th January 2022 . The learned Judge found that the Respondent's services were unlawfully terminated, and he was awarded damages for unlawful termination of the contract. The lower Court also awarded gratuity to the Respondent, for the period 9th May 2019 to 31st December 2019, the two awards being the main subject of this appeal. 2.0 BACKGROUND 2.1 The Respondent (Complainant in the Court below), commenced these proceedings against the Appellant (Respondent as it was below), by way of Notice of Complaint and Affidavit in Support on 6th April 2020, seeking the following reliefs : a. Damages for breach of contract entered into from 01-01-2018 b. Payment of the balance/difference on gratuity from the years 2018 and c. Any other relief which the court deems fit and just under the circumstances d. Interest e. Costs 2.2 In his affidavit in support of the Complaint, the Respondent averred that he was employed by the Respondent on 2nd June 2014 as the Human Resource Manager for the Respondent company. Page IJ 3 2.3 He averred that his contract was for a duration of one year and was renewed several times between June 2014 and 31 st December 2019. 2.4 It was his evidence that he received a letter from the Company dated 20th January 2020, informing him that his contract had expired due to effluxion of time and would not be renewed. He referred to this letter which was exhibited and marked 'DM1' to his supporting affidavit. 2.5 He referred to the exhibit marked 'DM2' which was a tabulation of his entitlement according to the Company. He also referred to exhibit marked 'DM3' being a copy of his pay slip for the month of January 2020. 2.6 It was his averment that he received two payments in the sum of USD 3,519.27 each, paid on 31st January 2020 and again by a direct credit to his Bank on 5th February 2020, which represents his separation package, though underpaid. 2.7 It is his claim that he was entitled to gratuity for the years served and he was seeking damages for breach of contract and payment of the difference that was due to him . His initial complaint and affidavit in support is noted at pages 29 to 36 of the Record of Appeal. 2.8 The Respondent in the Court below, (the Appellant herein), filed its Answer and counterclaim and supporting Affidavit on 26th May 2020 as noted at pages 37 to SO of the Record of Appeal. 2.9 The gist of the Appellant's defence in the lower court was premised on the basis that the Respondent was employed on a fixed term contract and that no new contract was executed until his services were terminated by letter of Page IJ 4 20th January 2020. A copy of the contract of employment was exhibited and marked 'LRl' at pages 43 to 47 of the Record of Appeal. The Appellant also maintained that the second payment to the Respondent in the sum of KSl,028.85 was made in error, the exact same sum having been paid to him in January 2020, and this formed the basis of its counterclaim. 2.10 The Complainant (the Respondent) herein, caused to be filed its Reply to Answer and Counterclaim and its opposing affidavit on 2ih April 2021, as noted at pages 51 to 67 of the Record of Appeal. It was his contention that his contract did not have an expiry date of 31st December 2019 and that he was entitled to gratuity for the period 2018 up to 2020. He denied the counterclaim and claimed underpayment in the form of severance package for the year 2018 and 2019. 3.0 DECISION OF THE COURT BELOW 3.1 For the purposes of the narrative of the findings of the lower Court, we shall focus only on issues that directly affect this appeal and are currently in dispute before this Court. 3.2 The Trial Judge considered the claims made by the Respondent, the facts and evidence adduced at trial as well as submissions of the parties. The Lower Court noted that 2 central issues emerged: i. Whether there was a breach of contract in the manner the Appellant terminated the contract of employment with the Respondent. ii. Whether the Respondent is entitled to payment to payment of gratuity for the contract period 2018 and 2019. Page IJ 5 3.3 In dealing with the first issue, the trial court placed reliance on section 52 of the Employment Code Act1 and found that the contract of employment terminated by effluxion of time. However, the learned judge was of the view that the reason for termination was not valid and unacceptable. 3.4 The learned judge came to the conclusion that the Appellant unlawfully terminated the Respondent's contract and thereby arrived at a determination that the same was synonymous with breach of the contract and determined that the Respondent had proved his claim against the Appellant. 3.5 The lower court, in ascertaining damages for unlawful termination of the employment contract, took into consideration the circumstances in which the contract was terminated, and held the view that it was abrupt, hence inconvenienced the Respondent. The learned judge also took into consideration the duration for which the contract could have run had the Appellant not terminated the same. Ultimately, the learned judge awarded six (6) months' salary as appropriate damages for unlawful termination of employment to the Respondent. 3.6 Turning to the second issue of gratuity, the learned judge noted that the Respondent's basis for this claim was that it was agreed verbally between the parties. The lower court noted that on the other hand, the Appellant denied that there was such a verbal agreement and averred that it paid gratuity to the Respondent on a pro-rata basis only for the period worked in 2020, based on its understanding of the new employment law. Page IJ 6 3.7 The Learned Judge found that there was no evidence of any clause making provision for payment of gratuity. The learned judge concluded that there was no verbal agreement in respect to payment of gratuity between the parties. He was of the opinion that the claim for payment of gratuity by the Respondent should be on the basis of employment law. 3.8 The Learned Judge noted the legal point raised by the Appellant which is that section 73 of the Employment Code 1 made it mandatory for the employer to pay gratuity upon termination of contract of employment, and that under the savings and transitional provisions, 4th schedule of the same Act, provides for a grace period for compliance{ reference made to section 5 (i) and (3) of the Employment Code Act1 . 3.9 The Lower Court noted that the Respondent submitted that the Employment Code Act {commencement) Order, otherwise statutory Instrument No. 29 of 2019, having provided the Act would come in force on 9th May, 2019 the one year grace period was up to 9th May, 2020. However, the fact that the Respondent decided to pay the Complainant gratuity on pro-rata basis on termination of employment, it cannot be allowed to discount a certain period based on the cited provision of the law. The learned judge held the view that the Respondent had proved his claim for payment of gratuity on the balance of probabilities and ordered that the Respondent was entitled to payment of gratuity from 9th May, 2019 to 31st December, 2019. Page IJ 7 4.0 THE APPEAL 4.1 Dissatisfied with the outcome in the court below, the Appellant filed a Notice and Memorandum of Appeal on 15th February 2022, fronting two (2) grounds of appeal, namely: 1. That the Lower Court erred in law and fact when it awarded the Respondent 6 months damages for wrongful termination. 2. The Lower Court erred in law and in fact when it awarded gratuity to the Respondent for the period 9th May 2019 to 31 st December 2019. 5.0 APPELLANT'S ARGUMENTS IN SUPPORT OF THE APPEAL 5.1 We have duly considered and appreciated the Appellant's Heads of Argument and Argument in Reply filed on 20th May 2022 and 19 September 2022 respectively, which will not be recast here save for emphasis as necessary. 6.0 THE RESPONDENT'S HEADS OF ARGUMENTS 6.1 The Respondent filed its Heads of Response on 8th August 2022. These too, have been duly considered, and will not be recast save for emphasis where appropriate. Page IJ 8 7.0 THE HEARING 7.1 At the hearing Counsel placed premium on its heads of argument and heads of argument in reply as well as the Record of Appeal. 7.2 Counsel Haakainsi relied on the Respondent's heads of argument and referred us to our decision rendered in the case of Emporium Fresh Foods Limited T/A Food Lovers Market and Gourmet Market Limited v Kapya Chisanga 1 to advance the argument that we had, in that case, upheld an award of 24 months, for dismissal which was effected in violation of the principles of natural justice and in an abrupt manner. 7.3 Counsel Sampa attempted to distinguish the facts in the Kapya Chisanga 1 case from the facts in casu and submitted that it was not relevant to the case before the court. Counsel submitted that the facts in that case involved summary dismissal where the Complainant though charged, was not heard. In casu, there was no summary dismissal. 7.4 We are familiar with the facts of the Kapya Chisanga 1 case and are of the opinion that, it is not applicable herein. 8.0 DECISION OF THIS COURT 8.1 We have given this appeal our due consideration and will proceed to address the grounds as canvassed by the Parties. 8.2 The issue of contention, in this appeal, is whether the lower Court was on firm ground when it awarded the Respondent 6 months damages for Page IJ9 wrongful termination and gratuity for the period 9th May 2019 to 31 st December 2019. 8.3 The Appellant has argued with respect to ground 1, that the lower court erred as this relief was neither pleaded nor claimed as a relief. This is due to the fact that the relief of wrongful termination was not pleaded, and the award violates the principle for award of damages for wrongful termination . It was further canvassed that the lower Court correctly reasoned that the contract was terminated for effluxion of time but found that section 52 of the Employment Code Act1 had not been followed as no proper reason was given for the termination. 8.4 On the first part of the argument, the Appellant placed reliance on the case of Atlantic Bakery v ZESC02, in support of their submission that a court cannot grant a relief not prayed for or pleaded. In so doing, the lower court extended the Respondent's claims and erred in so doing and submitted that the Judgment was amenable to being set aside on that finding. 8.5 The Respondent on the other hand, has canvassed the position that its claim for breach of contract was synonymous with wrongful termination, as both relate to the procedure invoked to terminate the contract of employment. In casu, the Respondent contends that not having terminated the contract of employment for a valid reason, constituted breach of contract for which damages were payable. 8.6 In directing our mind to this ground of appeal, it is trite that a case is cast by a litigant and the Court must adjudicate on the issues placed before it and within the perimeter of the dispute. A Court cannot extend the scope of the Page IJ 10 reliefs sought by a Party even under the guise of doing substantial justice between the Parties. The principle that substantial justice, as understood in the context of the Industrial and Labour Relations division of the High Court is to be viewed from the lens of both parties to a dispute was firmly established by the case of Tebuho Veta v African Banking Corporation ABZ (Zambia) Limited3. 8.7 We have noted the reliefs sought by the Respondent, being "damages for breach of contract entered into from 1st January 2018" and "payment of the balance & difference on gratuity from the years 2018 and 2019". The reliefs are clear. We note as correctly observed by Counsel for the Appellant, the basis for the claim of damages for breach of contract, is clearly set out in the (Respondent's) Affidavit in Support of the Complaint. We refer to paragraph 9 of the said Affidavit appearing at page 32 of the Record of Appeal, which states: "9. That verily I believe that by not paying me gratuity based on the years I have served, the Respondent has abrogated the contract of employment [and] am entitled to damages for breach of contract of the difference of the underpayment. 11 8.8 It is as clear as day that the Respondent's claim for damages, was anchored on the allegation that he was not paid gratuity. There was no claim for wrongful termination or at all. Counsel for the Appellant has drawn our attention to the holding of the Supreme Court in the cited case of Atlantic Bakery v ZESCO2 wherein the Court stated as follows: " .... the learned judge made an order which violates a fundamental rule of civil procedure, namely that evidence can only be considered where a Page IJ 11 plea which the evidence supports has been put forward in the pleadings. A court is not to decide on an issue which has not been pleaded. Put differently, a court should confine its decisions to the questions raised in the pleadings. It can thus not grant relief which is not claimed. Litigation is for the parties; not the court. The court has no business extending or expanding the boundaries of litigation beyond the scope defined by i. e. parties in their pleadings. In other words, a court has no jurisdiction to set up a different or new case for the parties. 11 8.9 Numerous authorities in our jurisdiction speak to the cardinal issue of pleadings and these need no elaboration. Decisions of the Supreme Court in the cases of Christopher Lubasi Mundia v Sentor Motors Limited 4 and Jere DVR/SGT Shamayuwa and Another5, on the principal function of pleadings are well noted. In the case of Anderson Mazoka & others v Levy Mwanawasa6 , the Apex Court stated as follows: "The function of pleadings is to give fair notice of the case which has to be met and define the issues on which the court will have to adjudicate in order to determine the matters in dispute between the parties. Once the pleadings have been closed, the parties are bound by their pleadings and the court has to take them as such. 11 8.10 It has been noted that the Respondent's claim for damages for breach of contract was firmly anchored in the allegation that he was not paid gratuity. There was no claim for damages for wrongful termination and none that termination itself was wrongful. We have also noted from the Record of Appeal, that when the Respondent attempted to lead evidence on the apparent reason for termination in the lower court, this line of evidence was Page IJ 12 objected to by the Appellant and upheld by the Court. This was noted at pages 97 and 13 of the Record of Appeal. 8.11 We have seen from page 23 of the Record of Appeal, the reasoning of the lower court when it purported to re-cast the Respondent's claim and we have equally noted that there being no claim for unlawful termination, nor claim for damages for unlawful termination, the lower court thereby proceeded sui moto to identify an issue not pleaded and make a determination on it. Having examined the pleadings including the reliefs claimed, and having seen the proceedings of the court below, we are of the considered opinion that the lower court misdirected itself by stepping into the ring meant only for the parties to the dispute and by proceeding to grant reliefs not prayed for after introducing an issue not pleaded. 8.12 From the record before us, we are of the considered opinion, that this is a classk case where the finding of wrongful termination by the lower court, is perverse and against the weight of the evidence and the pleadings and is amenable to being set aside. We accordingly do so. We rely on the decision in the case of Christopher Lubasi Mundia v Senter Motors Limited 4 (1982) Z. R. 66 where the Court stated as follows: 0 Where the pleadings are at variance with the evidence adduced in court, the case fails since the plaintiff's case is completely re-cast without actual amendment of the statement of claim, and not only will the court record be incorrect as a reference thereafter, but the other party will be unable to meet the case having had no correct notice." Page IJ 13 8.13 Ground 1 of the appeal accordingly succeeds, and we set aside the finding of wrongful termination together with the award of damages. 8.14 With reference to the second ground of appeal, we have noted, as did the lower court that, there is no provision for gratuity in the said contract which is signed by both parties. The Respondent refers to his pay slip exhibited as 'DM3' which is noted at page 65 of the Record of Appeal to support his contention that he was entitled to gratuity for the years worked, and not only for the month of January 2020. The record shows that the Respondent himself confirmed that he had not been paid gratuity, as it was not a part of his contract for the years that he had worked. It is also not disputed that the contract of employment was entered into before the enactment of the Employment Code Act1. 8.15 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. This position was settled by the Supreme Court in the case of Eston Banda And Another v The Attorney General 7 • The lower court at page 24 of the Record of Appeal, noted as follows: "I have no doubt that the Complainanes submission placing his claim on the above cited law is a departure from his pleaded position that there was a verbal agreement in respect of payment of gratuity. I have carefully gone through the evidence before me, and I have not found anything pointing at such an agreement in terms of the rate of pay of the alleged gratuity and at what point the same was to be paid. I have also perused the written contract entered by the parties prior to the said Page IJ 14 verbal agreement. I have not found any clause making provision for payment of gratuity. n 8.16 We have noted at page 25 {J20) of the Record of Appeal, that the lower court in its consideration of the claim for gratuity reasoned as follows: 0 The Respondent has raised an important legal issue in its submissions, the same is that whereas section 73 of the employment code act makes it mandatory for the employer to pay gratuity upon termination of the contract of employment, it also under savings and transitional provisions, 4th Schedule of the same act, provides for a grace period for compliance (Ref to 4th schedule section 5 (i) {3} of the Employment Code, Act No. 3 of 2019). The Respondent submitted that the Employment Code Act {Commencement) Order otherwise statutory instrument No. 29 of 2019, having provided the act would come in force on 9th May 2019, the one-year grace period was up to 9th May 2020. I appreciate the ingenuity of learned counsel for the respondent's submission. However, the fact that the respondent decided to pay the complainant gratuity on pro-rota basis on termination of employment, it cannot be allowed to discount a certain period based on the cited provision of the law. The complainant is entitled to payment of gratuity from 9th May to 31 st December 2019." Page IJ 15 8.17 The issue for interrogation, in our considered opinion, centers on the effect of an existing contract of employment and which was executed prior to the coming in of the Employment Code Act1 viz the statutory procedural and substantive requirements ushered in by the Code. It is trite that the Employment Code Act was assented to on 11th April 2019 and that the Commencement Order in relation to the Act was brought into force on 9th May 2019. Regulation 5 (2) and (3) of the Fourth Schedule embodied all written contracts and also gave employers a period of one year to ensure that all contracts are materially consistent with the provisions of the Act. This was referred to as the grace period or cooling off period. 8.18 We have had occasion to consider a Judgment of the High Court and though which is not binding on us, is persuasive, in its reasoning and analysis. The learned Judge in the case of Saviours Mundia v Consolidated Farming Limited8 while referring to the Fourth Schedule of the commencement order noted as follows: '7he implication of the above provisions is that all contracts of employment in Zambia are deemed to have been entered into in terms of the provisions of the Employment Code. This is subject to employers being given one (1) year from the date of commencement of the Code to comply with the provisions of the Act. In my view, the one-year transition or grace period, applied solely to the substantive provisions of the Act, such as those relating to equal pay for work of equal value, the mandatory housing allowance, medical attention and leave entitlements. The transition period was so given so as not to ambush Page IJ 16 employers with costly introductions that if implemented immediately, would have jeopardized their enterprises. JI However, the provisions of the Employment Code Act as it relates to the procedural aspects of the law, such as the need to give valid reasons (which was carried over from the repealed Employment Act), the need to give employers an opportunity to be heard prior to any dismissal based on conduct or capacity and the provisions on probation became applicable immediately on commencement of the Code. JI 8.19 We are equally guided by the reasoning of the Supreme Court in the case of Zambia Consolidated Copper Mines v Jackson Munyika Siame and 33 others9 where the Apex Court guided that the procedures and practice of a statue take effect immediately. It is also the settled position that the one year transition or grace period, applied solely to the substantive provisions of the Act. 8.20 It is thus not correct for Counsel Sampa to assert, as he repeatedly did, that in general, the Employment Code is not applicable, due simply to the cooling off period. For avoidance of doubt and to guide litigants, we reiterate the guidance of the Supreme Court, that the procedure and practice of a statute take effect immediately. It is thus clear that the procedural and practical elements of the Employment Code Act became applicable immediately, while the cooling-off, or grace period, referred to the substantive aspects of an employment contract. Gratuity is an example of a substantive provision . Page IJ 17 8.21 Having noted that the new Employment Code Act1 came into existence whilst the Respondent's contract was on going, and having discussed above, the effects of the new legislation viz procedural issues and substantive issues, we can safely determine that the requirement for the payment of gratuity, is not retrospective and cannot be applied retrospectively. This was a substantive issue and caught within the grace period of one year and would only have become effective and payable after 9th May 2020. 8.22 We have noted that despite the finding on gratuity made by the lower court as quoted above, at paragraph 8.15 of our Judgment, and despite acknowledging that there was no agreement for the payment of gratuity, the lower court found that because the Appellant had opted to pay gratuity on a pro-rata basis on termination of employment, it cannot be allowed to discount a certain period based on the cited provision of the law and consequently ordered payment of gratuity for the period 9th May 2019 to 31 st December 2019. 8.23 We are of the considered opinion that this award by the lower court has no legal basis and is amenable to being set aside, which we now do. The Supreme Court in the case of ZRA v The Post Newspapers Limited 10 stated as follows: "In effect, the learned trial judge granted a stay purely for the convenience of the Post. His decision was based on purely sympathetic and moral considerations; and he went outside the principles governing a stay as set out above. In Attorney General v Maureen Nawakwi, we said that Courts should not be swayed by sympathy into making moral Page IJ 18 judgments. We wish to add that such judgments deviate from the Rule of Law, the principle which ensures consistency, uniformity fairness in the delivery of justice. 11 8.24 In casu, whilst we have noted that the Appellant did pay gratuity for the few days worked in January 2020, on the misapprehension that it was a requirement of the new law, that in itself did not make the subsequent determination by the lower court correct. The lower court misdirected itself and we have no hesitation in setting aside the order for the payment of gratuity for the period 9th May 2019 to 31 st December 2019. The second ground of appeal succeeds. 9.0 CONCLUSION 9.1 Both grounds of appeal having been successful, what remains due and payable by the Respondent, to the Appellant, is the counterclaim in the sum of KSl,028.58. 9.2 Each Party to bear its own costs. M. M. KONDOLO S. C. COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE A. N. PATEL S. C. COURT OF APPEAL Page IJ 19