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Zambia

January 15, 2021

By Karen Fulton and Bulela Mungeka

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Zambia

KEY DEVELOPMENTS FOR 2021


 

Employment Code (Exemptions) Regulations, Statutory Instrument No. 48 of 2020

The Employment Code Act No. 3 of 2019 (the "ECA") consolidated employment law in Zambia by repealing and replacing the Employment Act, the Employment (Special Provisions) Act, the Employment of Young Persons and Children Act and the Minimum Wages and Conditions of Employment Act. The ECA also enhanced the benefits due to employees during employment as well as at termination.

Notwithstanding the above, on 8 May 2020, the Minister of Labour and Social Security signed into law the Employment Code (Exemptions) Regulations, Statutory Instrument No. 48 of 2020 ("SI 48 of 2020") pursuant to section 2 of the ECA. SI 48 of 2020 was the Government's intervention to the adverse effect of the COVID-19 pandemic on businesses in Zambia and it exempts the employer from certain obligations in the ECA.

The pandemic has crippled business across several sectors of Zambia's economy by significantly reducing revenues. SI 48 of 2020 is intended to provide relief to Zambian business by exempting businesses from certain obligations in the ECA to keep businesses afloat. In particular, SI 48 of 2020 exempts the application of sections 36, 37, 48, 54(1)(b) and (c), 55(2), 73 and 75 of the ECA, which are discussed in more detail below:

  • Accruing annual leave and formula

    Section 36 of the ECA provides that employees in continuous employment for a period of twelve consecutive months are entitled to annual leave on full pay at a rate of at least two days per month. This is in addition to any public holiday or weekly rest period, whether fixed by any law, agreement or custom. Further, the section goes on to state that where an employer does not grant an employee leave or grants the employee less than the total leave due, the employer shall pay the employee wages in respect of the leave still due at the end of the period of twelve consecutive months. Section 37 of the ECA provides for the formula for calculating annual leave benefits. SI 48 of 2020 exempts all employees from the application of section 36 on payment of wages for annual leave not taken at the end of 12 consecutive months and it also exempts the application of section 37 of the ECA.

  • Forced leave

    Section 48 of ECA provides that an employer shall, where the employer sends an employee on forced leave, pay the employee basic pay during the period of the forced leave. SI 48 of 2020 exempts the application of this section to employers who are assessed to be in financial distress by an authorised officer under the ECA.

  • Severance pay and gratuity to expatriate and management employees

    Section 54 (1) (b) and (c) of the ECA provides that an employer shall pay an employee on a fixed duration contract a severance pay or gratuity, at the rate of not less than 25% of the employee's basic pay earned during the contract period as at the effective date of termination, where the employee's contract of employment is terminated or has expired. SI 48 of 2020 exempts employers from paying expatriate employees and employees in management such a severance pay or gratuity upon termination of their fixed terms contracts.

  • Redundancy procedural requirements

    Section 55 (2) of the ECA provides for certain notices to be given by the employer to the affected employee and the labour commissioner prior to effecting a redundancy. It also provides that the affected employees must be given an opportunity to consult on the measures to be taken to minimise the adverse effects of the termination on the employee. SI 48 of 2020 exempts employers who are assessed by an authorised officer to be in financial distress from having to comply with the aforesaid procedural requirements when carrying out a redundancy exercise.

  • Payment of gratuity for long-term contracts and overtime

    Section 73 of the ECA provides for payment of gratuity at the end of a long-term contract. It provides that the rate of gratuity to be paid should not be less than 25% of the employee's basic pay earned during the contract period. Section 75 of the ECA creates an obligation for an employer to pay an employee who works in excess of 48 hours in a week, one and a half times the employee's hourly rate of pay as overtime pay. SI 48 of 2020 exempts the application of section 73 to expatriate employees, employees in management who have a written contract providing for gratuity, employees in the domestic sector and employees in the agricultural sector. Further, SI 48 of 2020 exempts the application of section 75 on payment of overtime to expatriate employees and management employees.

  • On-going and anticipated case law developments

    The advent of the Coronavirus pandemic has seen the closure and downsizing of several businesses in Zambia. The Ministry of Labour and Social Security has encouraged employers to consider options that do not lead to loss of employment, such as placing employees on forced leave until the situation normalises. The foregoing has resulted in a lot of litigation in the Labour Division of the High Court, mainly by employees who are affected by redundancy or forced leave. Notable defendants in the said litigation include banks, major supermarkets and large retail stores in Zambia. We are currently not aware of any landmark decision by the superior courts in Zambia on the effects of the pandemic on employment, but such a decision is expected if the volume of the cases in the High Court are anything to go by.

With thanks to Karen Fulton and Bulela Mungeka of Bowmans for their invaluable collaboration on this update.

 

KEY DEVELOPMENTS FOR 2020


 

Enactment of the Employment Code Act

The Employment Code Act (Act No.3 of 2019) came into force on 9 May 2019, and seeks to consolidate employment legislation in Zambia by repealing and replacing the Employment Act, the Employment (Special Provisions) Act, the Employment of Young Persons and Children Act, and the Minimum Wages and Conditions of Employment Act.

Although the Employment Code Act came into force in May 2019, a grace period of one year applies to contracts of employment that were executed before the new Act came into force in order to enable employers to comply with its provisions.

The key changes include:

  • the inclusion of additional leave entitlements and benefits;
  • the addition of standard redundancy procedures for written contracts;
  • the mandatory payment of gratuity for employees on fixed-term contracts;
  • the introduction of the entitlement to a severance pay under certain circumstances; and
  • the introduction of overtime pay for all employees who work beyond 48 hours per week, including employees in higher or management positions.

 

New regulations regarding National Health Insurance

  • The Government of Zambia has recently issued the National Health Insurance (General) Regulations to implement the National Health Insurance Act which came into force in October 2018. The National Health Insurance Act was enacted to establish a national health insurance scheme and health insurance fund in order to provide quality insured healthcare services to all Zambians by the year 2021. The Regulations provide for the development of specific benefit packages for registered members, set out the criteria for accreditation of healthcare services providers, as well as details in respect of applications for health insurance payment mechanisms.
With thanks to Karen Fulton, Nonkululeko Mkhwanazi and Bulela Mungeka of Bowmans for their invaluable collaboration on this update.

 

KEY DEVELOPMENTS FOR 2019


 

Introduction of the National Health Insurance Act No. 2 of 2018

On 9 April 2018, the National Health Insurance Act was passed. The Act seeks to provide financing for the national health system and universal access to quality insured health care services for all Zambians through risk pooling. The Act also establishes the National Health Insurance Scheme and National Health Insurance Fund which will receive employer and employee contributions. The Act is not yet in effect as a commencement order is yet to be issued.


 

Amendment of Minimum Wages and Conditions Act of Employment (General) Order S.I. 71 of 2018 and (Shop workers) Order S.I. 70 of 2018

On 7 September 2018, the Minister of Labour and Social Security issued a Statutory Instrument amending the Minimum Wages and Conditions of Employment (General) Order and (Shop Workers) Order.

Key amendments include:

  • under the General Order: “protected employee” status for assistant sales persons, packers, pump attendants, sales persons and service station attendants, an increase in the minimum wages for protected employees, the introduction of paternity leave, nursing leave for a hospitalized spouse or child and revised funeral assistance, transport and lunch allowance; and
  • under the Shop Workers Order: an increase in minimum monthly wage, revised shift differential rates, introduction of paternity leave, nursing leave for hospitalized spouse or child, revised funeral assistance, transport and lunch allowance.
With thanks to Abigail Shansonga, Bridgette Shamankomba and Charles Mkokweza of Corpus Legal Practitioners for their invaluable collaboration on this update.

Contributors

Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department

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