Zambia Consolidated Copper Mines Ltd v Kalonga (Appeal 24 of 1999) [1999] ZMSC 99 (3 December 1999)

IN THE SUPREME COURT FOR ZAMBIA APPEAL NO. 24/99 HOLDEN AT NDOLA BETWEEN: ZAMBIA CONSOLIDATED COPPER MINES LTD APPELLANT AND DINWELL KALONGA RESPONDENT Coram: Bweupe D. C. J., Chaila, Lewanika, JJS. On 2nd June, 1999 and . 1999. For the Appellant For the Respondent : : A. Imonda, Legal Counsel, ZCCM. M. Masengu of Michael Masengu & Company. JUDGEMENT Lewanika JS. delivered the Judgment of the Court. This is an Appeal against the Judgment of a Judge of the High Court as decided that the respondent's terminal benefits be calculated at a new salary which came into effect on 1st June, 1994. and that he be paid for 11 months and 15 days that he served and further be paid salary arrears for May and June, 1994. We will refer to the appellant as the defendant and the respondent as the plaintiff, which they were in the court below. The plaintiff had instituted proceedings against the defendant claiming damages for wrongful termination of Contract of employment on” 30th April, 1994 with interest and costs. p J2/.......... J 2 - It was common cause that the plaintiff was employed by the defendant on 19 th May, 1961 and worked in various capacities rising to the rank of Mine Captain. According to the records of employment produced in the court below the plaintiff was born in 1939. According to the Plaintiff's Conditions of Service the normal retirement age was 55 years. On 29th December, 1993 the defendant wrote a letter to the plaintiff in the following terms " Dear Mr. Kalonga, NOTICE OF EARLY RETIREMENT Following the Company decision to rationalise the Senior Staff structure and manning levels, thereof due to contraction, cessation of some operations, and technical changes, we regret to advise you that you have been placed on normal retirement. Your last working day will therefore, be 30th April, 1994.".......... The case for the plaintiff was that in accordance with his conditions of Service he was entitled to 6 months notice of retirement which would have expired on 30th June, 1994 and that had this been done he would have benefited from the enhanced salary Scales which came into effect on 1st June, 1994. Further he stated that he was born on 28th September, 1939 and that he was prematurely retired as he had not reached 55 years as on 30th April, 1994. The Plaintiff further complained that he was entitled to retirement benefits of 3 months salary for each completed year of service in that he was only paid for 32 years whilst he had served for 32 years, 11 months and 15 days. The case for the defendant is that, although the letter of retirement written to the plaintiff is headed "early retirement" the body of the letter makes it clear that the plaintiff was put on J3/.... J 3 - normal retirement. According to the records that they held, the plaintiff gave his date of birth as 1939 and that according to their convention the plaintiff was deemed to have been born on 1st January, 1939. That at the time that the notice was sent to the plaintiff, he was aware that he was due to retire on 1st January, 1994 and that the notice was merely to remind the plaintiff of this fact. The defendant however, concedes that the notice of retirement is supposed to be 6 months and not the 4 months given to the plaintiff. The case for the defendant is that the plaintiff is only entitled to 3 months salary for each completed year of Service and that as at 30th April, 1994 the plaintiff had completed 32 years. That at the time of retirement the plaintiff's basic pay was K138,579-00 per month and that his terminal benefits should have been K13,399,584-00 but that he was infact paid K14,230,975-07 making an overpayment of K890,695-00. Counsel for the defendant has filed 5 grounds of appeal but he only argued ground 2, 4 and 5 and abandoned ground 1 and 3. GROUND 2 That the court below erred in relying on a draft document dated 15th August, 1994 (not addressed to the plaintiff or any one at all) because the respondent's annual salary at the time of termination was K1,674,948-00 (K139,579-00 basic salary x 12 months) and not K2,880,000-00 indicated on the document. Therefore, even if the respondent was in employment up to 29th June, 1994 his annual salary after increment would not have risen to K3,066,000-00. J4/................ J 4 - in arguing this ground, Counsel submitted that the plaintiff's salary in April, 1994 was K139,579-00 per month.making 'an annual salary of K1,674,948-00 and that there was a difference in the annual salaries of the plaintiff and the unknown addressee of K1,205,052-00. The salary of the unknown addressee went up by K15,500-00 per month which was an increase of approximately 6.5%. That it followed that the salary of the respondent should have gone up by the same percentage i.e. by K12.471-39 to K148,651-35 per month. Multiplying the respondents new monthly salary of K148,651-35 by three for each completed year of sevice (33 years), the respondent would have been entitled to K14,716,483-00 retirement package instead of K14,230,975-07 paid to him. The difference in the retirement package between what he got and what he would have got after the increment was K485,508-00 and not K24,528-000-00 as found by the Learned Trial Judge in his judgment. GROUND 4 That the Court below erred in ordering payment of May and June salaries using wrong basic salaries. In arguing this ground, Counsel submitted that the evidence was that the respondent's monthly salary in April, 1994 was K139,579-00 and that the salaries went up effective from 1st June, 1994. That the Learned Trial Judge used a letter addressed toan unknown person whose monthly salary was higher than the respondent's as the basis for awarding the respondent a new salary. Counsel said that infact the court below had increased the respondent's salary twice from K139,579-00 to K240,000-00 for May and from K139,579-00 to K255,000-00 for June. That as he had pointed out J 5/ J 5 - earlier, the increase in salary was with effect from 1st June, 1994 and therefore, the May salary would have remained the same whereas the June salary would have been K148,651-35. Therefore, the two months salary arrears for the respondent would have been K288,230,356 instead of K495,540-00 awarded by the Learned Trial Judge. GROUND 5 That the judgment sum as assessed by the court below amounts to awarding the respondent a tax free income and is therefore, contrary to the Income Tax Act. In arguing this ground, counsel referred us to the provisions of Section 21(4) of the Income Tax Act. In reply, Counsel for the respondent submitted that on the evidence on record the appellant had conceded that the respondent on early or normal retirement should have been given six months notice. That the appellant did not dispute in the lower court the fact that there was an increment of salaries for the Senior Staff during what could have been proper notice of'retirement for the respondent. He said that the justification for an ex-employee to be paid the difference between his former salary and the increased salary during the period of notice is to be found in the case of M. M. LUKAMA AND OTHERS VS. LINT COMPANY OF ZAMBIA, Appeal No. 109/97. He further said that the Learned Trial Judge was right in computing the terminal benefits of 3 months for each year worked on a pro-rata basis which the respondent was not paid for 11 months and 15 days. J6/...................... J 6 - We have considered the submissions advanced by counsel for the plaintiff and the defendant and the evidence on record. It is common cause that according to the plaintiff's conditions of Service he was due to retire on attaining the age of 55 years. According to the evidence on record the plaintiff gave his date of birth as 1939 without indicating the date or month. There is also no doubt that the letter written to the plaintiff by the defendant dated 29th December, 1993 although headed 11 Early Retirement " was a letter of normal retirement the plaintiff having attained the age of 55. Under the conditions of service the plaintiff was entitled to 6 months notice whereas the letter retiring him gave him only 4 months notice expiring on 30th April, 1994. The notice was improper and had the plaintiff been given the proper 6 months notice expiring on 30th June, 1994 he would have been entitled to 33 years of completed service and also benefited from the enhanced salaries that came into effect on 1st June, 1994. However, on calculating the plaintiff's terminal benefits the Learned Trial Judge misapprehended the document on page 25 of the record as he found, that the plaintiff's new salary was K3,066,000-00 per annum, which was not correct. That was infact the salary of the unknown addressee whose salary had been adjusted from K2,880,000-00 to K3,066,000-00 per annum an increase of 6.5%. The plaintiff's salary at termination was K139,579-00 per month, an increase of 6.5% would have brought his salary to K148,651-35 per month. The plaintiff's terminal benefits on the new salary for 33 years of completed service instead of 32 at 3 months salary for each completed year of service comes to K14,716,483-00. The plaintiff was paid K14,230,975-07 and he is therefore due K485,508-00.