Zambian Airways v Musengule (203 of 2004) [2008] ZMSC 11 (10 January 2008)

- J1 - IN THE SUPREME COURT OF ZAMBIA Appeal No. 203/2004 HOLDEN AT LUSAKA (CIVIL JURISDICTION) SCZ Judgment No. 14 of 2008 Page 343 ZAMBIAN AIRWAYS APPELLANT AND JOHN MUSENGULE RESPONDENT Coram: Sakala, CJ, Mumba, Silomba, JJS 21st March 2006 and 11th January 2008 For the Appellant: Mr S. C. Mwananshiku of M and M Advocates, Lusaka For the Respondent: Mr E. M Sikazwe, Deputy Director of Legal Aid Mumba, JS, delivered the Judgment of the court. JUDGMENT CASES REFERRED TO: 1. JAMESON MUNDOMWE HAPEEZA VS ZAMBIA OXYGEN LIMITED (1988-89) Z. R 202. For convenience, the appellant will be referred to as the respondent and the respondent as the complainant, designations they held in the court below. Page 344 - J2 - The complainant sued for damages, compensation and terminal benefits against the respondent for declaring the complainant redundant. The Industrial Relations Court granted judgment to the complainant with costs, hence this appeal by the respondent. Briefly, the facts were that the complainant was employed on 1st October 2000, as an aircraft dispatcher. After a probation period of three months, the complainant was confirmed. During his employment the complainant became branch secretary at his work place, for the Airways and Allied Workers Union of Zambia, hereinafter referred to, as AAWUZA. The respondent transferred the workforce from Kitwe to Lusaka upon being informed that the Kitwe airport was to be closed because it was damaged. As a result of the transfer of the workforce from Kitwe to Lusaka, the respondent had excess labour in Lusaka and decided to restructure. On 9th August 2002, a joint meeting between employees’ Union and the respondent’s management was held and the restructuring was Page 345 - J3 - discussed. The complainant, as a Union official, attended the meeting. The Union agreed to the restructuring exercise. On 21st October 2002, the respondent gave a list of employees to be declared redundant to the Union. The list included the complainant as well as other Union officials among several employees. On 22nd October 2002, the complainant received a letter informing him of his redundancy with effect from 21st October 2002. He was paid terminal benefits comprising one month in lieu of notice, three months pay for each year served and accrued leave days. The complainant, however, continued working on the advice of his supervisor and on 21st November 2002, he was formerly informed that he was a casual employee. The complainant explained that he accepted to work as a casual employee because he hoped for reinstatement. However, casual employment was terminated on 22nd February 2003. Page 346 - J4 - The complainant found out from the Chief Labour Officer that he, the Chief Labour Officer, was not aware of the redundancies by the respondent. The complainant felt that the redundancies were done in breach of the provisions of the Employment Act on account of failure by the respondent to inform the Chief Labour Officer. The complainant took the matter to the Industrial Relations Court. He claimed that his redundancy was unlawful because the respondent failed to comply with Section 26B (2) of Cap 268 and the Collective Agreement in force at the time, and secondly, that the respondent did not comply with the Employment Act, on account of failure to inform the Chief Labour Officer about the redundancies. The court below found that the respondent failed to give thirty days notice to the Union about the intended redundancies and thus failed to accord the Union an opportunity to make representations, if they so wished, on Page 347 - J5 - behalf of the employees declared redundant. The court below found that the respondent was in breach of Section 26B (2) (a) and (b) of the Employment Act, CAP 268 of the laws and Clause 28 of the Collective Agreement. The court below found that respondent accepted conceded failure to comply with the provisions of the law. The redundancy was ultra vires, and, therefore, null and void. The court below further found that the complainant mitigated his loss by accepting casual employment. The complainant was awarded six months salary as compensation for loss of employment. The respondent adduced evidence through RW1, Honey Chile Chirwa, the Finance and Administration Manager. RW1, testified that about October, 2001, the Department of Civil Aviation informed the respondent that South Downs Airport in Kitwe was to be closed down because the runaway needed repairs. The respondent decided to redeploy its Kitwe staff to Lusaka. That resulted in excess staff in the dispatch Page 348 - J6 - department where the complainant was employed. On 9th August 2002, the respondent and the Union held a meeting where the redundancies were discussed. On 21st October 2002, the respondent gave a list of its employees for redundancy to the Union. Individual letters of redundancy were also written to the affected employees. RW1, testified that no one made any representation regarding redundancy. She informed the court below that the complainant was paid all his benefits. The respondent filed one ground of appeal, that:- “ 1. The court below erred in law when it held that the appellant’s breach of Section 26B 2 (a) and (b) of the Employment Act rendered the redundancy exercise carried out by the said appellant null and void.” The respondent filed written heads of argument in support of the appeal. The respondent submitted that the court below did make a finding that on 9th August 2002, the respondent met Page 349 - J7 - the Union and informed the Union of the impending restructuring and the Union agreed to the exercise, therefore, the redundancies were justified. It was submitted that it was the manner in which the redundancy was carried out that led to the court action. It was submitted that the court below found that the restructuring was justified and the redundancy was justified. The breach lay in not giving the Union thirty days notice to allow for representations to be made on behalf of the affected employees. It was submitted that it was not the intention of the legislature to make an otherwise legitimate and justifiable redundancy exercise null and void on account of failure on procedure. It was submitted that such failure on procedure was the reason why Section 77 which provides for penalties was included in the Employment Act. It was submitted that Section 77 provided the penalty for failure of procedure, and the penalty was both custodial and a fine or one or the other; that the penalty provided was punitive to the tortfeasor, that is the employer. It was submitted that the Page 350 - J8 - remedy of the fine or custodial sentence was not designed to compensate the employee. In support of this submission, the appellant cited the case of Jameson Mundomwe Hapeeza Vs Zambia Oxygen Limited (1). It was submitted that in that case this court held that failure to notify a proper officer after dismissing an employee as was required by the Employment Act, did not render the dismissal null and void, but only gave rise to the penalty against the employer. It was submitted that the appeal before the court was similar in that the respondent failed to comply with the provisions of the Employment Act, the correct punishment therefore was the penalty prescribed in the said Act. Mr Sikazwe, on behalf of the respondent submitted that there was no evidence that the redundancy was unjustifiable, that the court below took into account that the remedy of reinstatement was not available because of the restructuring exercise hence the award of six months salary. Counsel Page 351 - J9 - submitted that the case cited by the respondent did not apply, as the circumstances were not similar. We are grateful to both counsel for their submissions. We have duly considered the evidence on record, the submissions and the judgment appealed against. This is an appeal which is dealing with a point of law, the effect of Section 26 B (2) (a) and (b) of the Employment Act as well as clause 28 of the Collective Agreement which was a valid agreement at the material time. The Employment Act as well as the Collective Agreement then in force were material instruments intended to protect employees as well as employers’ interests. The law allowed employers latitude to organize or run their business profitably while protecting employees’ rights to a source of livelihood. Industries have to run in a regulated manner that respects and provides for the necessary labour. The Employment Act provides the equation. Page 352 - J10 - On the facts of this case, the list of the employees to be declared redundant was provided to the Union more or less at the same time when individual letters of redundancy were served on the affected employees, including the complainant. It was a clear breach of the provisions of the law because the Union was not afforded time to make representations, if they so wished, on behalf of the affected employees. What this court has to resolve is the consequence of such breach. The court below found that the breach rendered the redundancy null and void and awarded compensation to the complainant. The complainant brought his action, because, according to him, the redundancy was unlawful, he did not complain that he was not paid what was due to him for the redundancy under the Collective Agreement. He was paid one month salary in lieu of notice, accrued leave days and three months salary for each year served. Page 353 - J11 - We agree with the submissions of Counsel for the respondent that Section 77 provides for a penalty for any breach. Section 77 reads as follows: “Any person guilty of an offence under this Act for which no other penalty is provided shall be liable to a fine not exceeding two thousand penalty units or to imprisonment for a period not exceeding six months, or to both and, in the case of a continuing offence, to an additional fine not exceeding two hundred penalty units in respect of each day during which such offence continues.” In the case cited by the respondent, James Mundomwe Hapeeza Vs Zambia Oxygen Limited (1), the facts were slightly different. The principle was similar in that in that case the appellant was dismissed but the employer failed to notify the Labour Officer of the dismissal. This court said that where the dismissal was justifiable, failure to comply with the law would be met by the penalty and not a declaration that the dismissal as null and void. Similarly, in this case, the steps Page 354 - J12 - taken by the respondent in the restructuring exercise did not fall short of the provisions of the law, but for the failure to give thirty days notice before separation of the affected employees by way of redundancy. The penalty provided for under Section 77 should have been applied. The complainant was paid what was due upon redundancy. It was a misdirection for the court below to hold that the redundancy was null and void under the circumstances. This appeal therefore succeeds. The award of compensation is set aside. Because of the circumstances in this case, there shall be no order on costs. ……………………… E. L. SAKALA CHIEF JUSTICE ……………………… F. N. M. MUMBA SUPREME COURT JUDGE ……………………… S. S. SILOMBA SUPREME COURT JUDGE