Nyambe v Price Waterhouse Coopers Limited (Appeal 155 of 2014) [2017] ZMSC 41 (24 May 2017)

IN THE SUPREME COURT OF ZAMBIA APPEAL NO. 155/2014 HOLDEN AT LUSAKA (CIVIL JURISDICTION) BETWEEN: MWANGALA NYAMBE (cid:9) AND PRICE WATERHOUSE COOPERS LIMITED (cid:9) APPELLANTS RESPONDENT CORAM: MAMBILIMA, CJ, KAJIMANGA AND KABUKA, JJS On 9th May, 2017 and 24th May, 2017 For the Appellant: For the Respondent: No Appearance. Ms Mwape Bwalya, of Mwenye and Mwitwa Advocates. JUDGMENT MAMBILIMA, CJ delivered the Judgment of the Court. CASES REFERRED TO: ATLAS COPCO ZAMBIA LIMITED V. ANDREW MAMBWE APPEAL NO. 137/2001; GERALD MUSONDA LUMPA V. MAAMBA COLLIERIES LIMITED (1988 - 1989) Z. R 21; ALBERT MWANAUMO AND OTHERS V. NFC MINING PLC, QUE NELSON JILOWA, 2006/HK/385; STERKINEKOR V. ATTORNEY-GENERAL 2010/HP/346; AGHOLOR V. CHEESEBROUGH PONDS (ZAMBIA) LIMITED (1976) ZR 1; AND CHILANGA CEMENT V. KASOTE SINGOGO, S. C. Z JUDGMENT NO. 13 OF 2009. LEGISLATION REFERRED TO: INDUSTRIAL AND LABOUR RELATIONS ACT, CHAPTER 269 OF THE LAWS OF ZAMBIA; EMPLOYMENT ACT, CHAPTER 268 OF THE LAWS OF ZAMBIA; AND (cid:9) (cid:9) J2 3. HALSBURY'S LAWS OF ENGLAND, 5TH EDITION, VOLUME 40 AT PARAGRAPH 682. OTHER WORKS REFERRED TO: 1. JOHN SPRACK, "EMPLOYMENT LAW AND PRACTICE", AT PAGE 30; This appeal is from a judgment of the Industrial Relations Court delivered on 10th September, 2013. The said judgment followed an action brought by the Appellant by way of a Notice of Complaint and supporting Affidavit, filed pursuant to section 85(4) of the INDUSTRIAL AND LABOUR RELATIONS ACT'. The Appellant claimed for the following reliefs: an order that the dismissal was wrongful, unfair, unjustifiable and unlawful; damages for wrongful, unfair, unlawful and unjustifiable dismissal; an order deeming her to have retired and accrued benefits and salaries as a result thereof; damages for mental anguish, torment and embarrassment; further and other relief the Court may deem fit; and interest and costs. The Appellant's case was that she was employed by the Respondent on 10th August, 2009 as an Internal Services Coordinator on permanent and pensionable terms. On 17th January, 2012, she fell ill and was hospitalized as a result of which she stayed away from work but with the knowledge of the Respondent. In May, 2012 she resumed her duties. • (cid:9) The Appellant stated that strangely and shockingly, on 1st June, 2012 the Respondent dismissed her on the ground of consistent unsatisfactory work performance. That the Respondent disguised the ground for the dismissal by giving her one month's notice. She averred that her dismissal was wrongful, unlawful, unjustified and unfair because the Respondent dismissed her without affording her an opportunity to be heard on the charge laid against her. That she strongly suspected that she was dismissed because she fell ill. The Appellant alleged that the actions of the Respondent had caused her great distress and mental anguish because the finding of unsatisfactory work performance made against her had lowered her in the eyes of her fellow workers. She further alleged that the finding of unsatisfactory work performance hampered her future chances of being employed by any other employer even when she had served the Respondent without any history of disciplinary charges against her. In support of her case, the Appellant gave oral evidence before the lower Court. The gist of her testimony was that she was very J4 surprised by the termination of her employment because she had neither been warned verbally nor in writing as provided for in the Respondent's Employment Manual. She added that the Respondent did not follow any of the procedures set out in clause 5.8.2 of its Disciplinary Code before terminating her employment. The Appellant told the trial Court that it was erroneous for the Respondent to use the results of the Performance Appraisal System as the basis for terminating her employment. According to her, the Performance Appraisal System was a tool for evaluation and compensation of an employee's performance. She stated that if the Respondent had identified performance problems on her part arising out of the review of her performance, the Respondent's Human Resources and other relevant authorities should have counselled her instead of dismissing her. She did not agree with some of the ratings for her performance which rated her to have underperformed. She particularly claimed that she was shocked to have been rated as having performed below par during the period when she was ill. The Appellant accordingly, prayed for the Court to grant her the reliefs outlined in her Complaint. J5 In response to the Complaint and the supporting Affidavit, the Respondent filed an Answer. The Respondent asserted that the Appellant was not wrongfully, unfairly or unlawfully dismissed. According to the Respondent, it simply exercised its contractual and legal right to terminate the Appellant's contract in line with clause 13(a) of the contract of employment which gave either party the right to terminate the contract by giving a month's notice or by payment of one month's salary in lieu of notice. The Respondent stated that it paid the Appellant one month's salary in lieu of notice and the contract was accordingly terminated on 1st June, 2012. That, in any case, based on her constant and overall unsatisfactory work performance, the termination of her contract would have been and was justified. The Respondent further stated that it elected to terminate the Appellant's contract due to her unsatisfactory work performance and not because of her illness. The Respondent pointed out that the Appellant was given several opportunities to discuss her work performance with her immediate supervisor through regular performance reviews in line with the Respondent's policies. The J6 Respondent further pointed out that the Appellant was afforded an opportunity to be heard on any shortcomings in her work performance and she never complained about her performance ratings. The Respondent went on to state that in an effort to improve her performance, the Appellant was also afforded an opportunity to share her concerns not only with her immediate supervisor but also with a coach who constantly mentored, counselled and guided her on matters pertaining to her work performance. The Respondent denied that it breached any provision of its disciplinary procedures because, according to the Respondent, the issues pertaining to the Appellant's work performance were not treated as a disciplinary offence and there was no need to charge the Appellant. The Respondent added that this was even more justified by the fact that she had been informed by her supervisor on several occasions that she was performing below expectation and she did not dispute that fact. Accordingly, the Respondent averred that the Appellant was not entitled to any of the reliefs contained in her Complaint. J7 In support of its defence, the Respondent called two witnesses, namely, Mrs. Kaluba Chembe KACHALI (RW1) and Mr. Bornwell MWENYA (RW2). RW1 was the Respondent's Finance and Administration Manager. She was the Appellant's immediate supervisor. She testified that as the Appellant's supervisor, it was her duty to ensure that the Appellant carried out her responsibilities as required. She added that it was also her duty to review any work undertaken by the Appellant and to provide her with feedback on her work on a regular basis in order to help her resolve any difficult that the Appellant might be encountering. It was RW1 's further evidence that the Appellant could not be confirmed in her position within the requisite three months on account of her poor work performance. She averred that in terms of employee performance, the Respondent had a system of performance feedbacks which was required to happen on a regular basis between the Reviewer and the Reviewee. That in addition, the Respondent maintained a formal feedback which was required to happen every six months between the Reviewee and the Reviewer. J8 That the results of the formal feedback were discussed between the Reviewer and the employee's Coach. RW1 disclosed that the Appellant's performance for the period starting August, 2009 to January, 2010 was not up to the required standard. That under the second feedback, the Appellant performed as expected while for the period 1st July, 2010 to December, 2010 she performed below par. RW1 told the Court that at the time the rating of below expectation started, the Appellant underwent thorough counselling with RW1 as well as with her Coach (RW2). She stated that on some occasions, a Mr. Mark Libakeni, the Director of the Respondent, also had some discussions with the Appellant about her work and gave her the necessary guidance. RW1 explained to the trial Court that counseling centered on reasons for non-performance. She clarified that, on the other hand, disciplinary procedures were only used when one had gone against the Respondent's Code of Conduct or policies. RW1 went on to testify that prior to the termination of the Appellant's employment, a meeting was held with part of the J9 Respondent's management group to discuss Performance Feedbacks in general. She stated that the Appellant's Feedbacks were also discussed and a decision was subsequently made to separate with her. She further stated that another meeting was held where, RW1 herself, the Respondent's new boss, Mr. Nitesh Patel, the Human Capital Manager, Ms. Misozi Mhango and the Appellant were present. That at that meeting the Appellant was informed of the Respondent's decision to separate with her and the reasons for the separation. That the Appellant was asked to serve one month's notice but she declined to do so and opted to be paid in lieu of the notice. RW 1 emphasised that the Appellant's illness had nothing to do with the termination of her employment. RW2 was the Respondent's Information Technology Manager and the Appellant's Coach. He testified that as the Appellant's Coach, his role was supportive in nature and was intended to assist the Appellant to achieve her professional goals and enhance her career development. He told the lower Court that at the beginning and middle of each financial year, he would hold discussions with the Appellant in relation to her development plan and performance goals. That in between these periods he would have discussions with the Appellant as need arose relating to why she did not perform well and they would discuss possible ways by which she could improve her performance. RW2 explained that at the end of each financial year, the Respondent usually organized a moderation meeting which was attended by the Respondent's Partners, Managers and Directors. That at the said meeting all performance Feedbacks for employees in a particular Department would be discussed. He explained that the main objective of these meetings was to have an independent view of individual employees' performance based on the various feedbacks they got from their supervisors or Reviewers during the course of the year. That in the same meetings, decisions were also made as to whether to promote individuals depending on how they were rated in relation to their performance feedbacks. RW2 told the lower Court that in one moderation meeting the Appellant's overall rating was 4, signifying performance below expectations. He stated that, after the meeting, it was his duty to inform the Appellant that her performance was below expectation. That at that stage, the Appellant was required to come up with a development plan, that is, mapping out the way forward part of which was that she undergoes a counselling process. He stated that he held counselling discussions with the Appellant. That the Appellant held further discussions with Mr. Mark Libakeni. RW2 further informed the Court that the Appellant had challenges with her subordinates and that during the discussions he had with her, they looked at a number of ways which could help resolve the said challenges. After considering the evidence before it and the submissions of Counsel for both parties, the lower Court found that the Respondent was perfectly entitled, pursuant to the contract of employment, to terminate the Appellant's employment by giving her one month's notice or payment in lieu of notice. The Court stated that the Respondent did not need to advance reasons for terminating the contract of employment and that if a reason was advanced and it turned out to be bad, this did not automatically invalidate the termination. It found that poor performance did not necessarily constitute a dismissible offence. In its view, the J12 Respondent had the prerogative to consider other administrative procedures outlined in the Policies Manual such as counselling. It stated that on failure to bring performance into line with expectations, the Respondent had the prerogative to exercise the options available to them. That in this case, the Respondent chose to invoke the termination clause which was within its purview. The Court expressed the view that there was nothing untoward about the Respondent's action. On the issue of the Court delving behind the termination in order to ascertain the real reason for the termination, the Court held-that there was insufficient evidence to warrant the lifting of the veil. It found as a fact that the termination was not predicated on malice. With regard to the allegation that the Appellant was not heard, the Court stated that it was alive to the dicta of this Court in the case of ATLAS COPCO ZAMBIA LIMITED V. ANDREW MAMBWEl. In that case, we said that- "Having decided to terminate the Complainant's services on the ground of incompetence the Respondent was by law obliged to afford the Complainant an opportunity to be heard on the charges of incompetence." J13 The lower Court, however, expressed the view that the instant case was distinguishable from the ATLAS COPC01 case. According to the Court, this was because the Appellant in this case underwent counselling and had performance appraisals where she was given feedback. In its view, the Appellant could not, therefore, be heard to say that she was not afforded an opportunity to be heard. The lower Court concluded that the Appellant had not discharged the onus placed on her to prove her case on a balance of probability. The Court, accordingly, dismissed the Appellant's claims for lack of merit. The Appellant has now appealed to this Court, against the Judgment of the lower Court, advancing the following grounds of appeal: that the learned trial Judge and members erred in fact and in law in holding that the rules of natural justice were not abrogated when it was clear that the disciplinary rules before a dismissal can be effected were not complied with; that the learned trial Judge and the members erred in fact and in law in failing to appreciate that according to the terms of employment applicable to the parties, the termination clause would not be invoked on performance related grounds without affording the Appellant a chance to be heard on the performance related leveled against her which was not done; and that the learned trial Judge and members erred in fact and in law in failing to appreciate that there was a difference between performance appraisals and disciplinary procedure, and that the disciplinary procedure had to be followed before termination of employment based on performance related grounds could be effected. In support of the above grounds of appeal, the learned Counsel for the Appellant filed written heads of argument in which only the first ground of appeal was argued. Counsel then reproduced the second and third grounds of appeal simply as they appeared in the memorandum of appeal In support of the first ground of appeal, Counsel submitted that clause 13(a) of the contract of employment contained a provision for termination by way of notice. That additionally, the contract of service was regulated by the Human Capital Policies. That clause 5.8 of the Human Capital Policies, dealt extensively with the disciplinary procedures relating to the contract of service between the parties. Counsel contended that the legal position is that while an employer can terminate the services of an employee, the termination must be done in accordance with the contract of service and must not be contrary to the rules of natural justice. In response, Counsel for the Respondent filed written heads of argument. Counsel argued the first and second grounds of appeal i's together. Counsel contended that where there is a written contract of employment between an employee and an employer, either party has a right to terminate the contract in accordance with the provisions of the contract. For this argument, Counsel referred us to Section 36 of the EMPLOYMENT ACT", which provides as follows: 36. (1) A written contract of service shall be terminated- by the expiry of the term for which it is expressed to be made; or by the death of the employee before such expiry; or in any other manner in which a contract of service may be lawfully terminated or deemed to be terminated whether under the provisions of this Act or otherwise. Counsel argued that it is trite law that where notice to terminate a contract is required, the law allows payment of a salary in lieu of notice. In support of this argument, Counsel relied on the case of GERALD MUSONDA LUMPA V. MAAMBA COLLIERIES LIMITED', where we held that- "In an ordinary master and servant relationship, the master can terminate the contract with his servant at any time and for any reason or for none whatsoever. If the master gives a reason for termination, he is not obliged to substantiate it. It is the giving of notice or pay in lieu that terminates the employment. A reason is only necessary to justify summary dismissal without notice or pay in lieu". Counsel went on to submit that clause 3.9.1 of the Respondent's Human Capital, Policies and Standards provided that- "The firm reserves the right to terminate a staff member's contract of employment in the event that the staff member's services are no longer required. Adequate notice will be given to the staff member in line with the provisions in the contract of employment" In Counsel's view, the above clause allowed the Respondent to terminate the contract of employment with any member of staff when their services were no longer required. He, therefore, submitted that the Respondent was entitled to terminate the Appellant's contract of employment in the manner it did. Counsel went on to submit that although the Respondent gave the Appellant one month's notice, the Appellant opted to get paid one month's salary in lieu of notice and have her contract terminated immediately. On that basis, Counsel advanced the alternative view that the Appellant's rejection of the one month's notice and her counter-proposal to be separated immediately meant that the termination was done by mutual consent of the parties. Accordingly, Counsel contended that the Appellant was precluded from claiming damages for wrongful dismissal or unfair dismissal as the parties had reached an agreement for the employment to be terminated. To reinforce this view, Counsel referred us to the following extract from a book by John Sprack entitled "EMPLOYMENT LAW AND PRACTICE''Ill, at page 30, where the author states the following: "Agreement; the parties can agree that the contract be terminated. In such a case, there is no breach of contract, and no claim for wrongful or unfair dismissal should arise." Counsel also cited HALSBURY'S LAWS OF ENGLAND, Sm EDITION VOLUME 401lii for the principle that since "the ordinary law of contract is applicable to contracts of employment, the parties who enter the contract may also stipulate how it is to end." Counsel also cited the case of ALBERT MWANAUMO AND OTHERS V. NFC MINING PLC, QUE NELSON JILOWA3, where the Court held as follows: "A master can terminate a contract of employment at any time, even with immediate effect and for any reason. And that if he terminates outside the provisions of the contract, there is a breach of contract, and is liable in damages for breach of the contract." Counsel went on to submit that the Respondent did not dismiss the Appellant from employment but that she was separated from employment by way of contractual termination of the contract of • employment. According to Counsel, the Respondent effected the termination in accordance with clause 13(a) of the contract of employment which provided that- "The firm may terminate employment by one month's written notice or by payment in lieu of one month's notice. You may terminate employment by giving one month's notice to the firm or by paying to the firm one month's salary in lieu of notice." Counsel submitted that clause 13(b) of the contract of employment outlined situations in which an employee may be dismissed from employment. According to Counsel, consistent unsatisfactory work performance was not one of the situations listed in clause 13(b). Counsel contended that there being no dismissal, there was no requirement for the rules of natural justice to be followed. That in any case, the Appellant was given opportunities on various occasions to discuss her unsatisfactory performance. Counsel referred us to the case of STERKINEKOR V. ATTORNEY-GENERAL 2010/HP/3464, where Matibini, J, as he then was, quoted the following from the decision of Cullinan, J in AGHOLOR V. CHEESEBROUGH PONDS (ZAMBIA) LIMITEDs: "Cullinan J, went on to state that to "dismiss" an employee is altogether a different matter. Cullinan J, noted that to speak of a dismissal with insufficient notice is to confuse the issue. A master may terminate with or without notice. In the latter case he is liable for breach of contract. Where however, the master "dismisses" a servant, he terminates the Jig contract summarily without notice, on the ground of misconduct, negligence or incompetence. If such grounds are justified the servant forfeits the right to any notice whatsoever and to a number of other benefits." Counsel submitted that the lower Court properly directed itself when it decided that the Respondent was within its rights to terminate the Appellant's contract by notice. In support of this position, Counsel cited the case of CHILANGA CEMENT V. EASOTE SINGOG06, where this Court held that- "Payment in lieu of notice is a proper and lawful way of terminating employment, since every contract of service is terminable by reasonable notice." On the third ground of appeal, Counsel contended that the lower Court was on firm ground when it held that there was a difference between performance appraisals and disciplinary procedures, and that the disciplinary procedures did not have to be followed before termination of employment based on performance related grounds could be effected. Counsel essentially repeated his arguments relating to the first and second grounds of appeal. Counsel added that there was no basis for the Respondent to go through a disciplinary procedure, as the Appellant had not been charged for any offence. That the reason for termination of • J20 employment did not require disciplinary action as the work performance was resolved through the performance feedback process. That disciplinary action could only be taken against an employee who had gone against the Respondent's code of conduct or policies. In Counsel's opinion, lack of performance by an individual was not one of the matters that would warrant disciplinary action under the Respondent's Manual. We have carefully considered the evidence on the record of appeal, the submissions of Counsel and the judgment appealed against. This appeal has essentially raised the issue of "whether the Appellant's contract of employment was properly terminated". The argument by Counsel for the Appellant is that although the law allows an employer to terminate the services of an employee, the termination must be done in accordance with the contract of employment and must not be done in contravention of the rules of natural justice. Counsel's view seems to be that before terminating the contract of employment in the instant case, the Respondent should have given the Appellant a hearing. I (cid:9) 122 As per the firm's procedure you will be requested to hand over all firm properties in your possession such as access key, laptop, identity card, medical card and any other firm property. Note that the final payment is subject to full clearance from all relevant lines of service and a comprehensive set of handover notes and files to your Line of Service supervisor. We thank you for all your efforts and wish you all the best in your future endeavours. Yours sincerely, (signed) Nitesh Patel Country Operations Partner" From the above letter, it is clear that the Respondent terminated the Appellant's contract of employment pursuant to clause 13(a) of that contract. The Appellant's contract of employment was embodied in a letter written to her by a Mr. Mark LIBAKENI, the Director of the Respondent firm. The letter was headed "Offer of Employment". Clause 13(a) of the contract provided as follows: "By notice: The firm may terminate employment by one month's written notice or by payment of one month's salary in lieu of one month's notice. You may terminate employment by giving one month's notice to the firm or by paying to the firm one month's salary in lieu of notice." The issue for our determination, therefore, is "whether, in terminating the Appellant's contract of employment, the Respondent did not comply with the contract of employment and the rules of natural justice." It is evident from clause 13(a) of the contract of employment that the Respondent could terminate the contract by giving the Appellant a month's notice or payment of one month's salary in lieu of notice. In our view, there was no requirement under clause 13(a) for the Respondent to go further and conduct a hearing before effecting the termination. The giving of the notice or payment in lieu of notice was all that was required under clause 13(a) of the contract to terminate that contract. It is settled law that a contract of employment can be lawfully terminated by the giving of the contractual period of notice or the payment of a salary or salaries in lieu of that notice. We pronounced ourselves in this regard when we decided the ICASOTE SINGOGO5 case. In that case, we said that- "Payment in lieu of notice is a proper and lawful way of terminating employment, since every contract of service is terminable by reasonable notice." In the instant case, however, the Respondent went a step further and provided a reason for the termination. The Respondent stated that the termination of the contract was "... due to consistent unsatisfactory work performance ...". It is mainly on this basis that the Appellant insisted that, having provided the reason for terminating her contract, the Respondent should have given her an opportunity to be heard The question that inevitably follows, therefore, is- did the fact that the Respondent provided a reason for terminating the Appellant's contract imply that the Respondent should have taken the Appellant through a disciplinary hearing to establish the veracity of that reason? This Court settled the law on the above question when we decided the case of GERALD MUSONDA MUMBA2. In that case, we said the following: "Although the collective agreement had the force of law under the Industrial Relations Act, the code did not apply in this case and the giving of notice to terminate under clause 4.4 was a perfectly proper way of terminating the plaintiff's employment. In our view, it made no difference that the employment was terminated because of the alleged use of abusive language. The employer, in this case the respondent, was perfectly entitled to give notice for no reason whatsoever. In this respects we disagree with the learned trial commissioner that, if a reason is given for termination of employment, that reason must be substantiated- that is not the law. It is the giving of notice or pay in lieu that terminates the employment. A reason is only necessary to justify summary dismissal without notice or pay in lieu." (Emphasis by underlining is ours) On the authority of our decision in the GERALD MUSONDA MUMBA2 case, we hold that the Respondent was not legally obliged to substantiate the reason for terminating the Appellant's contract of employment. The payment of one month's salary in lieu of notice J25 that the Respondent made to the Appellant was sufficient to lawfully terminate the contract of employment. We, therefore, find no merit in this appeal. We dismiss the appeal on all the three grounds of appeal. In view of the nature of this case, we make no order as to costs. I. C. Mambilima CHIEF JUSTICE a anga SUPREME COURT JUDGE J. K. Kabuka SUPREME COURT JUDGE