26th, March, 2024
INTRODUCTION
In employment law, an employer and employee
share a symbiotic relationship, that is, they benefit from each other. While an
employee benefits an employer by working for him or her, an employee benefits
from the employer through favourable conditions of employment, which among them
are the basic salary and aftermath benefits when a contract of employment ends,
an employee is legally entitled to terminal benefits. It is from this
background that this article discusses the disparate between pension benefits
and terminal benefits. It briefly outlines what pension benefits are. It
highlights, also in brief, terminal benefits. Thereafter, it discusses the
Lubunda Ngala case in depth and lastly a conclusion is given.
PENSION BENEFITS
A pension is simply a fund into which
amounts are paid regularly during an individual's period payment are made to
support the person's retirement from work.[1]
Therefore, pension benefits are benefits which an employee is entitled to when
he or she retires from work. Retirement as envisaged in a Supreme Court of African Life Financial Services Zambia
Limited (t/a Saturnia Regna Pension Trust Fund) v Kelvin Funga,[2]
refers to leaving employment once an employee reaches a specified age or tour
of services. As can be seen, pensions are only entitled to an employee when he
or she retires from work.
TERMINAL BENEFITS
Terminal benefits are additional benefits
a person gets when leaving employment and they are provided in individual
contracts of employment or collective agreements. Terminal benefits, or
otherwise termination benefits are given to an employee when a contract of
employment ends and may include benefits among others accrued benefits,
redundancy package and gratuity.[3] In
National Milling Co. Ltd v Grace Simataa
and Others,[4]
the court held that when a person is leaving employment, the arrangements
for terminal benefits such as pension, redundancy and gratuity and the like are
the most important and payments must be prompt.
Therefore, the mode of exist from
employment is what determines the terminal benefits which an employee will be
entitled to. This was also re-echoed by Musonda JS while delivering the
judgment of the majority in Care
International Zambia v Misheck Tembo,[5] when
he asserted that the mode of exist of an employee determines the kind of relief
they will be entitled to. It is crucial to therefore note that the terminal
benefits an employee will be entitled to, is dependent on the way their
contract of employment ends.
SUBSTRACTUM OF LUBUNDA NGALA AND ANOR V THE
ANTI-CORRUPTION COMMISSION
This case was a referral to the
Constitutional Court by the High Court for interpretation of Articles 189(2)
and 266 of the Constitution. This referral was made pursuant to the provisions
of Article 128 (2) of the Constitution, which mandates other courts to refer
any questions relating to the Constitution to the Constitutional Court subject
to Article 28 which gives the High Court exclusive Jurisdiction to hear matters
relating to the Bill of Rights.
In this case, the two applicants were
former employees of the Anti-Corruption Commission (hereinafter designated as '
the commission'), contracted on permanent and pensionable terms and conditions
of employment. Within two years of taking up employment, they resigned with the
commission. Thereafter, they demanded payment of their terminal benefits-
accrued leave days, uniform settling in allowances and payment of their
salaries, in areas from every month since their last day in the respondent’s
employment.
Owing to the want of paying the applicants
their terminal benefits, the applicants asserted that the commission was
obliged to keep them on payroll until they did so. They therefore sought a
declaration that the commission's failure to maintain them on its payroll
pending final settlement of their terminal benefits was an infringement of
their constitutional rights enshrined in the constitution.
The Constitutional Court was called upon
to answer the questions, among others as to;
1. Whether or not in light of Article 266,
terminal benefits accrued while an employee's contract of employment falls
within the ambit of the definition of a pension benefit?
2. Whether or not in light of Article
189(2) a person who has not been paid his or her terminal benefits should be
retained in payroll until his or her terminal benefits are paid?
The Constitutional Court in a resounding
judgment delivered by Chibomba PS, as she then was, held that not all terminal
benefits that arise from the termination or end of the contract of employment
are the same as pension benefits. In short, strictly speaking, pension benefits
for purposes of the constitution are those that arise when an employee retires.
Thus, what is anticipated with a pension is that it becomes effective on
retirement, in some cases due to age or other circumstances and not certainly resignation as was with the
applicants in this case (emphasis given).
The Court concluded that the type of
terminal benefits claimed by the applicants, namely, leave pay, uniform
settling and uniform allowances did not fall within the ambit of a pension hence
could not invoke the provisions of Article 189 to be maintained on payroll.
The substratum from the case is that,
while a pension benefit can 'loosely' be considered to be a terminal benefits
it is not every terminal benefits that has qualities of a pension. A pension
benefit is only available for employees whose contract of employment end by
means of retirement.
CONCLUSION
The article has with great pains attempted to address and clarified the misconception behind terminal and pension benefits. This article does not however, settle the raged debate on terminal benefits and the Constitutional requirements to maintain employees on the payroll until pension benefits are paid. This is because the Constitutional Court did not address itself as to whether a person who decides to leave employment several years before early retirement or retirement is entitled to remain on payroll until they receive their benefits. Until such clarity is brought to light, the debate rages on.
BIBLOGRAPHY
LEGISLATION
Constitution of
Zambia (Amendment) Act No.2 of 2016, Chapter 1 of the Laws of Zambia.
CASES
4] National Milling Co. Ltd v Grace Simataa and
Others(2000) ZR 91 (SC)
[2] African Life Financial Services Zambia Limited (t/a Saturnia Regna
Pension Trust Fund) v Kelvin Funga (2005) SCZ No. 112
[5] Care International Zambia v Misheck Tembo(2018)
ZMSC 378
BOOKS
[3] Chungu C, and Beele E, LABOUR LAW IN ZAMBIA An Introduction (2nd ed, Juta and Company 2020) 92
[1] Chungu C, and Beele E, LABOUR LAW IN ZAMBIA An Introduction (2nd ed, Juta and Company 2020) 92
This Article is Brought to You By:
LEGAL AID INITIATIVE
Bringing The law To Your Comfort
