Zambia

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KEY DEVELOPMENTS FOR 2024

Employment Code (Amendment) Bill 2023

The Zambian Cabinet has approved the introduction of the Employment Code (Amendment) Bill 2023 (“the Bill”) to amend the Employment Code Act No. 3 of 2019. The Bill will likely revise provisions relating to termination benefits, clarify the legal framework for employer-employee rights and obligations at the workplace, and improve redundancy procedures for non-represented employees.

National Pension Scheme Authority (Amendment) Act No. 1 of 2023

The National Pension Scheme Authority (Amendment) Act No. 1 of 2023 (the “Amendment”) was enacted to provide for access to a pre-retirement lump sum benefit. The Amendment enables employees who have contributed to the National Pension Scheme Authority for at least five years and have either made at least 60 monthly contributions or attained the age of 45 years, to make a one-off withdrawal of 20% of the indexed monthly contributions and the accrued interest. This legislative reform is a significant development in the Zambian social security system, granting contributors more control over their pension funds. The legislative reform is also significant for employment law as it has emphasised the obligation of employers to deduct and remit their employees’ contributions to the National Pension Scheme Authority.

The Data Protection Act 2021 (“DPA”)

The DPA created potential obligations on employers in respect of collecting and processing their employees’ personal and sensitive data before and during employment. A number of these obligations depend on the regulations and guidelines to be issued by the Commissioner, who was recently appointed in June 2023. We anticipate that the said appointment will result in the obligations under the DPA coming into effect and accordingly, employers should familiarise themselves with what is required of them.

KEY DEVELOPMENTS FOR 2023

Social welfare

Zambia operates a mandatory statutory pension scheme through the National Pensions Scheme Authority. Under the scheme, employees and employers make monthly contributions to a pensions fund from which employees would draw benefits in the event of retirement or loss of employment or ability to earn income for a number of reasons, including mental and physical disability.

The National Pensions Scheme Act, pursuant to which the National Pensions Scheme Authority is established is currently being reviewed and amended through a bill that has been presented to parliament. The objectives of the bill are to revise the penalty rate for delayed payment of contributions; provide for a waiver of penalties arising from delayed payments of contributions and provide for an option to claim for age benefits by a member under the existing fund before attainment of the retirement age.

The current 20% of the outstanding contributions as a penalty for late transmission of the contributions has been problematic for most businesses. The fact that the interest is compounded further exacerbates the problem. The penalty is imposed on the employer who has the obligation to collect and transmit the pension contributions.

Under the current law, the National Pension Scheme Authority does not have the power to grant waivers of penalties. Therefore, the proposed amendment would provide the much-needed relief to businesses. Further, the proposed early access to the pension benefits by employees would allow employees to start investing their benefits while they still have energy. However, the criticism of this proposal is that it reduces the pension entitlement as a much-needed social security cover during the time that an employee is not able to earn any income.

Employment of expatriates in Zambia

The Employment Code Act No. 3 of 2019 (the “Code”) came into force on 11 April 2019. The Code repealed and replaced a number of statutes, which are the Employment (Special Provisions) Act, the Employment of Young Persons Act and the Minimum Wages and Conditions Employment Act. The Code introduces several new employment policies, including the creation of a critical skills list, succession plan requirements for expatriate employees and the creation of a Skills Advisory Committee. Despite the Code having come into force in 2019, these provisions have not yet been implemented.

When fully implemented, expatriates seeking to work in Zambia will only be allowed to apply for work authorization for positions appearing on an official critical skills list. The critical skills list is to be developed by a Skills Advisory Committee in a consultative process with the employers’ and employees’ organizations and relevant government agencies. This process in projected to be conducted in 2023.

The new critical skills list will restrict employers on the types of jobs that they make available to expatriates. Employers will need to provide their input in the creation, review, and update of the critical skills list. Where employers are allowed to employ expatriates, they will be required to put in place a training and succession programme for local employees to take over from the expatriate employees. The Code provides for both civil and criminal liability for noncompliance with these new requirements by the employers.

Personal data protection

The need for data protection and the respect of individual person’s privacy have been a growing trend in Zambia. Various measures have been put in place to ensure the realizing of these ideals. This has been capped by the enactment of the Data Protection Act No. 3 of 2021. The introduction of the Data Protection Act is an advancement in the plight to protect the privacy and personal data of persons generally and of employees in particular. Previously, individuals had to rely on vague and general Constitutional provisions relating to protection of data.

The Data Protection Act is quite a significant development on how employers should deal with employees’ personal data. The Act requires every business, organization or entity to put in place policies and measures to ensure that information collected from data subjects, who include employees, is handled and kept safely and securely. One of the categories of information that might be collected in an employment setting is personal information, which includes an employee’s name, address, contact details, gender, birth date and geographical information. Another category of information that might be collected by an employer is sensitive information such as racial or ethnic origin, political opinions, religious or other beliefs, trade union membership, genetic or biometric information, physical or mental health, or physical or mental condition. To have ongoing accountability and compliance, the Act has established the Office of the Data Protection Commissioner which is responsible for the regulation of data protection and privacy in Zambia. The Data Protection Commissioner has, among other duties, the mandate to prepare a code of conduct for data controllers, processors, and auditors. This Code of conduct, once promulgated, shall be binding on the said parties.

In trying to ensure that everyone’s data is kept safely and only used for its intended purpose, the Act also provides for increased accountability. It provides for very stiff civil and criminal penalties for breaches.

It is expected that in 2023, the Act will be fully implemented. Under the Act, employers have a strict duty to obtain a copy of the code of conduct once published in the Government gazette or website of general circulation in Zambia. It is also expected that the Data Protection Commissioner will be appointed in 2023. However, employers are expected to adjust their policies and practices and adhere to the provisions of the Act as the law is currently in force.

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.

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.

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.