In February 2019, the Zambian Government tabled the Employment Code Bill before Parliament. The Bill is the culmination of the 2014 Labour Issues Paper that was drafted by the ILO and Zambian Professor Evance Kalula that sought to provide recommendations on employment law reform. On 11th April 2019, the Bill was approved by Parliament and became a piece of legislation.
The 2019 Employment Code Act has introduced several new innovations and has drastically transformed the labour law landscape in Zambia. A significant portion of the new Employment Code is the introduction of various mechanismsto protect employees such as the introduction of a compulsory payment of gratuity at the end of fixed-term contracts, housing and medical attention for all employees and various benefits when employment comes to an end. Whereas these innovations seeks to protect employees, it neglects a fundamental principle that even the International Labour Organisation (ILO) advocates for, which is the need to consider the need of sustainable enterprises when seeking to protect workers interests. In other words, when seeking to protect workers, those drafting laws need to ensure that they do so in a manner that it maintains businesses and enterprises as a going concern rather than making it too burdensome to carry on business. Thus, whereas protecting the interests of workers in this way is critical, it is submitted that the new Employment Code would lead to employers going out of business or job losses because it creates statutory obligations that are potentially too burdensome.
This piece opines that the Employment Code Act has gone too far. And could be detrimental to business in Zambia which could have unintended consequences for employees in the country. For example, the introduction of the medical discharge benefit of three (3) months’ pay for each year worked has been introduced even though the National Pension Scheme Act provides for an invalidity pension and the Workers’ Compensation Act provides for compensation – thereby giving three types of benefits to an employee when they get injured at work. Such a situation is untenable and makes doing business very expensive.
Another issue is the Employment Code introduces a mandatory payment of two (2) months pay for each year worked when an employee dies even though the National Pension Scheme Act provides for survivor’s benefits when an employee dies. Further, the new Act makes it mandatory for employers to provide medical attention, medicines and where necessary, transport to a health facility during the illness of an employee, even though the National Health Insurance Act which creates am mandatory National Insurance Scheme provides for access to health care for all employees from accredited health care centres.
Further, the costs of doing business for employers will increase due the compulsory payments mandated by the Act such as compulsory gratuity – rather than letting gratuity be regulated by individual contracts of employment. Previously gratuity was only provided for in contracts of employment depending on negotiation by employees and was not payable where employees are dismissed for misconduct. The introduction of this mandatory payment, whilst guarding against employers abusing fixed term contracts without giving employees permanent employment makes it very expensive to employ people in the country.
The Employment Code Act makes it compulsory for employers to provide employees with medical attention and medicines and even transport to health facilities during illness. This not only increases the cost to the employer but also does not consider that there is a National Health Insurance Act which regulates health and medical attention for employees which employers contribute to.
The provision that provides that an employer must provide housing, a housing loan or housing allowance could make the cost of employing expensive and affect the ability to employers to sustain their workforce and lead to either job loss or reduced wages or both.
Lastly, with the introduction of multiple number of leave days(6 months sick leave, 10 days family responsibility leave, 12 days compassionate leave) in addition to normal 26 days leave and public holidays the level for efficiency in Zambian businesses may be at risk. This is employers will bear a huge cost of not having workers at work that could affect business success due to lower efficiency and higher costs due to paying workers on more leave days.
Overall, whereas the Employment Code Act makes significant strides in protecting the basic rights of employees and giving them various guarantees, the major drawbacks are the impact it will have on business. The Employment Code fails to take into consideration other benefits provided for in other Zambian legislation and how the introduction of compulsory housing and gratuity could harm the interests of the employees in the long-run who could have reduced basic income because their employers cannot sustain the higher wages or even be affected by job losses because of the increased cost of doing business.
