A contract of employment forms the legal relationship between employer and employee and defines their rights and duties. The terms governing this relationship can be express (explicitly agreed upon), statutory (required by law), implied (included by legal precedent or custom) or incorporated (derived from collective agreements).
By Natasha M'chulu
TERMS OF A CONTRACT OF EMPLOYMENT
A contract of employment represents the legal relationship between an employer and their employee. It is one of the most important documents from which the rights and duties of the parties to an employment contract are derived. Employees in Zambia are usually issued with contracts of employment, which will normally outline the terms agreed upon by the parties to the contract. These terms are what regulate the employment relationship between the parties. Therefore, the aim of this article is to discuss the various terms that may form part of the contract of employment.
DEFINITION OF A TERM IN A CONTRACT OF EMPLOYMENT
Terms of a contract are agreements in a contract that form part of the contract of employment after a series of negotiations between the employer and the employee. For instance, an employee’s remuneration and work area form part of the terms of a contract of employment. A contract made orally or in writing may include any of the following.
1. EXPRESS TERMS
Terms are said to be expressly made if they are explicitly agreed upon, negotiated and outlined by the parties either orally or in writing. (Winnie Sithole Mwenda and Chanda Chungu, A Comprehensive Guide to Employment Law in Zambia, 2021). According to the case of Rosemary Ngorima and 10 others v. Zambia Consolidated Copper Mines [2000] SCZ Appeal N0.1, it was held that it is trite law that in any employer-employee relationship, the parties are bound by the terms and conditions they set for themselves. Therefore, where parties freely and voluntarily enter into a contractual agreement it is binding on them unless otherwise agreed. Apart from bilateral express terms, a contract of employment may consist of any of the following: terms imposed by statute, terms implied by common law, custom or trade usage and terms incorporated by a collective agreement.
2. STATUTORY TERMS/TERMS IMPOSED BY STATUTE
The parties to an employment contract the employer and their employee can agree to terms that they see fit to regulate their employment contract. However, in the case of Saviours Mundia v. Consolidated Farming Unit [2023] ZMHC 45, it was held that there are instances in which a statute may provide for mandatory terms applicable to employees. These terms will limit the parties’ freedom to contract, to the extent provided for by the law.In Zambia, employment relations are governed by the Employment Code Act No.3 of 2019. Therefore, the terms imposed by this act or any other law or statutes are usually referred to as default terms which are applicable to all contracts of employment (Winnie Sithole Mwenda and Chanda Chungu, A Comprehensive Guide to Employment Law in Zambia, 2021). These terms serve as the baseline level of protection for employees and cannot be overridden unless better terms or conditions are agreed upon. Additionally, Section 127 of the Employment Code Act makes it clear that where a contract of employment, collective agreement or other written law provides conditions more favorable to the employee, the contract, agreement or other written law shall prevail to the extent of the favorable conditions. This position of law has further been affirmed in the case of Kenny Sililo v. Mend- a -Bath and Spencon Zambia Limited [2017] ZMSC 54.
3. IMPLIED TERMS
According to Winnie Sithole Mwenda and Chanda Chungu, terms of a contract of employment need not always be made expressly or imposed by statute. This is because the law can imply a term into a contract although it has not been expressly included by the parties. By definition, implied terms are terms not expressly agreed upon by the parties but nonetheless, may form part of the contract of employment. They can be relied upon to fill the gaps of any express terms or collective agreement (Winnie Sithole Mwenda and Chanda Chungu, A Comprehensive Guide to Employment Law in Zambia, 2021). According to the case of Standard Chartered Bank Zambia Plc v. Celine Meena Nair [2019] ZMCA 221, it was held that implied terms of a contract are those not expressly stated in the contract. They are terms which are so obvious that they need not to be stated. Terms can be implied into a contract in various ways including:
(I) Terms Implied by custom – In order for customs to form part of the contract of employment they must be well established practices which are reasonable, certain and of sufficient notoriety (Winnie Sithole Mwenda and Chanda Chungu, A Comprehensive Guide to Employment Law in Zambia, 2021). This means the custom must be universally observed and everyone involved must know about the custom or at least be aware of it. Apart from this, the parties must know what effect the custom has on them. In the case of Sagar v. Ridelagh and Son Limited [1931] 1 Ch 310, the court dealt with a practice in a factory where the employer deducted pay for work that did not meet the agreed performance standards or was not done with reasonable care or skill. The court held that the right to deduct wages in these circumstances would be implied because the rule was common practice which was firmly established in other companies that had a similar business.
(II) Terms Implied from Trade usage - trade usage refers to the customs or practice of an industry. In order for a practice to amount to a trade usage, it must be notorious. This means it must be so well known in the market in which it is alleged to exist that those who conduct business in that market contract with that usage as an implied term. This is in accordance with the holding in the case of Kansanshi Mining PLC v. Francis Ndilila [2011] S.C.Z No.24 of 2011. Thus, terms can be implied into a contract of employment by trade usage, if they are considered to be part of the normal practices in a particular business or industry.
(III) Terms implied by law- terms implied by the law are not expressly agreed upon by the parties, but form part of the contract of employment because they are implied by common law or statutes. At common law, the employer and the employee are bestowed with various duties that are automatically considered part of the contract of employment. Examples are the Duty of good faith, trust and respect as evidenced in the case of Standard Chartered Bank v. Celine Meena Nair [2019] ZMCA 221. Additionally, terms can be implied from the law because the law sets out the minimum terms and conditions for every contract of employment. Thus it has been held in the case of Kenny Sililo v. Mend- a -Bath and Spencon Zambia Limited [2017] ZMSC 54 that the law sets out the basic minimum for contracts of employment and that such terms are deemed by the court to be present or implied into the contract of employment.
(IV) Terms implied by facts- these are terms implied into a contract of employment to make the contract make sense or have business efficacy. Thus it has been established in the case of Reigate v. Union Manufacturing Limited [1918] 1 K.B 592 that where a term is necessary for a contract to make sense it may be implied from the facts. This means a term will only be implied by facts if it was so obvious and clear that the contract will not operate effectively without it. This is what is called the business efficacy test. It should be noted that a contract cannot include every single thing. As such, the officious bystander test is used to ascertain if a term is implied by interrogating whether the parties would have agreed to it in any case (Winnie Sithole Mwenda and Chanda Chungu, A Comprehensive Guide to Employment Law in Zambia, 2021).
4. INCORPORATED TERMS
For many employees in Zambia, the most important terms in their contracts do not derive from individual bargaining and consensus with their employers, but from a collective agreement entered into by their employers within a trade union (Winnie Sithole Mwenda and Chanda Chungu, A Comprehensive Guide to Employment Law in Zambia, 2021). Incorporated terms according to the case of Frank Chinambu and Another v. Zambia Airports Corporation Limited [2024] ZMHC 270 are terms which have not been specifically agreed to by an employer and employee individually but are explicitly incorporated into individual contracts of employment and can be derived from collective agreements. A collective agreement is a document which adds terms and conditions to a contract of employment and is made between an employer and a Trade union (Winnie Sithole Mwenda and Chanda Chungu, A Comprehensive Guide to Employment Law in Zambia, 2021).In Zambia, terms established by a collective agreement are automatically incorporated in an employee’s contract of employment. This is so because section 71(3) of the Industrial and Labour relations Act, Chapter 269 of the Laws of Zambia makes it categorically clear that, every collective agreement which has been approved by the minister is binding on the parties to it. This position of law has been affirmed in a plethora of cases such as Cosmas Phiri and 85 others v. Lusaka Engineering Company Limited (in liquidation) [2007] ZMSC 1 where the Supreme Court reiterated that a valid collective agreement is automatically binding and forms part of the terms and conditions of the contract of employment. Additionally, it has been held in the case of Daniel Peyala v. Zambia Consolidated Copper Mines [2014] ZMSC 98 that terms incorporated by a collective agreement are only binding on those who belong to the particular trade union. It has been affirmed in the case of Saviours Mundia v. Consolidated Farming Unit [2023] ZMHC 45.
In conclusion, a contract of employment outlines various terms of service agreed upon by the employer and their employees. This article has discussed the key terms that may form part of the contract of employment. It has delved deeply in explaining the types of terms that may form part of the contract and those that may be considered legally binding on both the employer and the employee.
BIBLIOGRAPHY
LEGISLATION
Employment Code Act No.3 of 2019
Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia
CASE LAW
Cosmas Phiri and 85 others v. Lusaka Engineering Company Limited (in liquidation) [2007] ZMSC 1
Daniel Peyala v. Zambia Consolidated Copper Mines [2014] ZMSC 98
Frank Chinambu and Another v. Zambia Airports Corporation Limited [2024] ZMHC 270
Kansanshi Mining PLC v. Francis Ndilila [2011] S.C.Z No.24 of 2011.
Kenny Sililo v. Mend- a -Bath and Spencon Zambia Limited [2017] ZMSC 54
Reigate v. Union Manufacturing Limited [1918] 1 K.B 592
Rosemary Ngorima and 10 others v. Zambia Consolidated Copper Mines [2000] SCZ Appeal N0.1
Sagar v. Ridelagh and Son Limited [1931] 1 Ch 310
Saviours Mundia v. Consolidated Farming Unit [2023] ZMHC 45
Standard Chartered Bank v. Celine Meena Nair [2019] ZMCA 221.
BOOKS
Mwenda Winnie and Chanda Chungu, A Comprehensive Guide to Employment Law in Zambia. Lusaka: University of Zambia Press, 2021.
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About the Author:
Natasha Mchulu is a 4th year law student at the University of Zambia, (former Assistant Publicity Secretary) of the Legal Aid Initiative