Let’s review our labour laws

Let’s review our labour laws
By Editor
Tuesday March 25, 2008 [03:00]

The growth of our national economy instead of bringing comfort to the workers, and to the masses of our people in general, is imposing additional burdens on them. We submit that the true test of progress is not the accumulation of wealth in the hands of a few, but the elevation of a people as a whole.

It is rather hard that an old workman should have to find his way to the gates of the tomb, bleeding and footsore, through the brambles and thongs of poverty.
Something should be done, and urgently so, about the conditions under which our people work, about the laws that govern work in this country. We say this because the abuse of employment in this country has become diverse, widespread and severe. There are employees regularly injured and killed in preventable tragedies that result from the neglect of employers.

Extreme poverty in Zambia has bred a dangerous work environment where many workers are willing to suffer abuse by their employers for fear of losing what little they earn. It is in this desperate climate that labour laws become highly important for the protection of basic human rights and promotion of human dignity. Employees in Zambia are currently suffering abuse through both legal and illegal labour practices. And we agree with International Labour Organisation country director Gerry Finnegan’s observation that Zambian labour laws should seriously be updated and modernised if people are to feel the value and importance of employment.
When one looks at our labour laws, it is evident that a casual employee is legally guaranteed very little in terms of remuneration for services offered. Here we are not saying that there should be no casual workers. We do recognise that there are certain jobs that emerge – repairs, construction, transport – extend for periods greater than a single day but still demand short-term employment. The legal casual employee fills a very important gap in society – often doing piecework – but it is the abuse of this type of employee that has become negatively referred to as the “casualisation” of labour.
This practice exploits a loophole in our labour laws, for the employment Act fails to explicitly make it illegal to hire casual workers to fill permanent positions. Whether one is or not a legal casual employee is also open to interpretation. The sad thing is that no money is being put away towards retirement for this casual worker, for the employer is not withholding anything for NAPSA. Casual workers are legally free to unionise, but they are extremely vulnerable to intimidation without legal protection of their jobs. Through casualisation, employers ultimately pass the burden of providing workers with social security onto families, the government, the church, charitable agencies, and so on and so forth.

As Finnegan has correctly observed, our employment Act has not undergone major modifications since the time when all employees in Zambia either worked for the government or for parastatal companies. In other words, the primary law guiding employment in Zambia was written at a time before the emergence of the private sector as we know it today, and therefore fails to offer clear legal guidance to employment in all its modern forms. The employment Act separates employees – excluding casual employees – into just two categories: workers employed on an “oral contract” and workers employed on a “written contract”. Those employed on an oral contract, that is less than six months, can generally be referred to as temporary workers and those under a written contract, that is greater than six months, can be said to be permanent workers. These primarily two legal categories of employees were appropriate before the 1990s, when the prevailing policy of the government – the sole employer – was to hire an employee first on a six-month probationary period under an oral contract and then on a permanent basis under a written contract until an employee retired either upon reaching 25 years of service or the age of 55.

Each individual business within the private sector today has its own policy on hiring labour, but a common guiding principle is to minimise costs of labour, among other production costs, in order to maximise profits. Depending upon the unique needs and strategy of a private employer, employees might be hired on a part-time, that is less than 48 hours per week, or a full-time basis, on a one-year, five-year or open-ended contract, with conditions stipulating a salary or an hourly wage, in a position that allows unionisation or not, on a formal or informal basis, and so on and so forth. Establishments within the private sector are extremely diverse in size, shape, employment policies and this is the positive result of the free-market economy. Unfortunately, our labour laws in their current form do not accommodate for the wide-range of employee categories that exist today and do not offer prudent legal protection to each individual type of employee. For example, the temporary employee is nearly an obsolete category of worker in Zambia, especially since the introduction of the new definition of casual worker as someone employed up to six months. Why should an employer pay a wage that meets the legal minimum wage to a temporary employee when a casual employee is legally guaranteed much less? Who exactly is a legal temporary employee? Does a temporary employee have to be a full-time, salaried employee? If so, is an employer legally required to contribute to NAPSA on behalf of every consultant? What if the consultancy work takes longer than six months? Confusion about the legal obligations of employers has been the primary cause of labour disputes in this country and has also allowed employers to exploit legal loopholes to minimise investment in workers. The seriousness of this confusion becomes even clearer in terms of the permanent employee, especially when exploring the issue of terminal benefits.

The minimum wages and conditions of employment Act has been the most controversial law concerning employment in Zambia, especially due to its provisions for retirement and redundancy pay. Historically it came into effect only to protect the most vulnerable workers, especially the non-unionised, and as such it contains minimum wage provisions for specific types of vulnerable employees – shopkeeper, driver, typist. But this Act has been interpreted to set the standard practices of remuneration for all employees in Zambia. Managing directors earning over K50 million per month and contributing to private pension schemes have used this Act to claim extremely large terminal benefits upon retirement. Unions negotiating collective agreements have demanded that all contracts contain a provision for full terminal benefits in terms of both redundancy and retirement. It is now the common understanding in this country that at the end of a period of employment, an employee is legally guaranteed some sort of terminal benefit. But this is not the case.

According to current provisions under our labour laws, an employer is only obligated to pay a terminal benefit if an employee is made redundant or qualifies for retirement. These two provisions set better guidelines for a government or parastatal employee hired on a permanent contract as opposed to a private sector employee hired on a contract of fixed duration. In the first case, to qualify for redundancy requires being terminated from employment before the end of a contract. In the prevailing situation where private employers often hire employees on contract of one to five years, an employee is not considered redundant if he or she is simply not rehired with an employer at the end of the contract. In other words, the current practice of offering gratuity or a terminal benefit to coincide with the end of a contract, is not legally required of employers. For highly skilled workers filling specialty positions in a competitive business environment, it is almost a foregone conclusion that contracts will provide for tempting gratuities. But for average workers filling non-specialty positions it is likely that an employer will offer a contract written in such a way to offer no gratuity and no terminal benefits, for example, a nine-year contract.

In the second case, to qualify for retirement requires working for one employer for more than 10 years and reaching an age of 55. Again, with the higher turnover of employees and with the emergence of short-term contracts of one to five years, it is unlikely that many employees will ever qualify for the full retirement benefit of three months pay per year of service. Furthermore, the laws currently encourage an employer to hire on short-term contracts or at least make employees redundant before 10 years in order to minimise costs. Another concern with the retirement benefit is that even those employees who have contributed to a viable private or public pension scheme are still legally guaranteed terminal benefits of three months pay per year of service on the day of retirement. If NAPSA proves itself as a viable pension scheme in the long term, will it remain necessary for the law to oblige employers to pay retirement benefits to all employees?
The current debates about adjusting the law on minimum wages and conditions of service have stalled since 2002 over the issue of terminal benefits. Employer groups claim that the cost of hiring labour is too expensive in Zambia, and at the root cause they cite their legal obligation to pay retirement benefits and the expectation of all workers to receive gratuity at the end of employment. It is for this reason, they claim, that the wages of all employees are kept low and that contracts are set for periods less than 10 years. On the other hand, the unions constantly face resistance in negotiating for wage increments that even meet the costs of basic food items and that keep up with the rapidly rising cost of living. The union leaders claim that employers pay exorbitant wages to top management and take home large profits, while at the same time bluffing that wage increases for the average worker are financially impossible.
There is a fourth legal category of employee in Zambia and that is any permanent employee who has been specifically excluded from the legal protections of the minimum wages and conditions of employment Act. One such group is the domestic worker, which allows the legal abuse of maids, gardeners, cooks, housekeepers in terms of poor wages, long hours and the absence of other minimum benefits. It is unclear why domestic workers are singled out from the provision of a minimum wage.

In terms of government employees, many of them find themselves in the same position as employees who go for collective bargaining, for most government employees also belong to trade unions. In the case of both government employees and employees who go for collective bargaining, unions have typically negotiated for all the same provisions guaranteed by the minimum wages and conditions of employment Act on minimum wage related to wages, benefits and terminal benefits. Excluding unionised employees from this Act is founded on the assumption that employees who are free to collectively bargain are non-vulnerable. In other words, what if union leadership fails to act in the interest of the employee or if a large employer is able to bully a weak union into accepting poor conditions of service? Should these employees be excluded from the minimum provisions of labour established through this Act? What is a good definition of a vulnerable worker?

The informal sector employee and the self-employed are even more vulnerable than any formal sector employee, especially in terms of job security and the inability to pay into a retirement scheme such as NAPSA. Defining vulnerability in terms of social security, the reality is that very few Zambian employees can work with confidence that the basic needs of the family will be met in retirement, after next year, or even until the current month-end.

It is clear that there is urgent need to review our labour laws and the heart of our revised labour laws needs to be a clear, comprehensive and grounded minimum wages and conditions of employment Act that promotes the common good within individual places of employment. And the minimum wage should be tied to a poverty datum line.