On 11 April 2019, the government of Zambia passed the Employment Code Act, 2019 (the “Act”) which focuses on regulating employment by creating new entitlements and expanding existing benefits. With this legislation, the Zambian government also attempts to tighten immigration rules and protect the local labor market by clarifying regulations around local and expatriate employment contracts. Additionally, a new critical skills list will be developed and managed by a Skills Advisory Committee.
Implementing regulations for some provisions of the new law have not yet been released.
Key details
The new Act repeals and replaces the Employment Act, 1965 and the Minimum Wages and Conditions of Employment Act, 1982.
The Act introduces the following new employment provisions which did not exist previously. The details of each new provision are provided below:
- Employment contract: employment contracts are now required for all employees and must meet the outlined minimum contract terms with regards to hours, wages and benefits. In the event of a merger or acquisition, if an employer wishes to transfer an employee’s contract the employee must give written consent. If the employee does not consent to the transfer, the employment contract shall be terminated, and the employee shall be entitled to severance.
- Severance entitlements introduced:
- Workers employed under permanent and short-term employment contracts (under 12 months): a new severance pay must be provided as a mp sum. The regulatory formula has yet to be determined.
- Workers employed under a long-term employment contract, whose contracts expired or have been terminated, are now entitled to an end-of-service, lump-sum gratuity not less than 25% of the employee’s base pay over the term of the employment contract. The limitations of which the calculation spans are still unclear.
- Casual and temporary employees are not entitled to severance pay.
- A probation period of three months has been introduced. The initial probation period can be extended once for another three-month period.
- Foreign nationals seeking to work in Zambia will now only be allowed to apply for work authorization for positions appearing on an official Critical Skills List. The Critical Skills List is currently under development by a Skills Advisory Committee.
The Act stipulates the following leave provisions:
- Expansion of existing maternity leave: maternity leave increased from 12 to 14 weeks (four additional weeks in the case of multiple births, premature birth or if recommended by a medical doctor). Female employees who suffered a miscarriage in the third trimester will be entitled to six weeks of full paid maternity leave. Unpaid maternity leave may now also be taken after one year of service. Employers are required to provide full pay for maternity leave taken after two years of service.
- Annual leave: the annual leave minimum service requirement increased from six months to 12 months. If the employer fails to grant the employee their annual leave, the employer shall pay the employee wages in respect of the leave still due at the end of the 12 consecutive month period.
- New sick leave entitlements for short term employees: employees with a short-term employment contract are now entitled to 52 days of sick leave. Employees shall be given full pay for the first 26 working days of the sick leave and half pay for the remaining 26 working days.
- New paternity leave: male employees with at least one year of service are entitled to five-consecutive working days of unpaid paternity leave, which must be taken within seven days of the birth of the child.
- New family responsibility leave: seven days of paid family responsibility leave per year is available for employees with at least six months of service to care for a sick child, spouse or dependent. Additionally, three days of paid leave per year are available for reasons related to ensuring the health or education of the employee’s child, spouse or dependent.
- New compassionate leave: employees are entitled to 12 days per calendar year of fully paid leave for the death of a spouse, child, parent or dependent.
The following mandated benefits for protected employees (workers to whom a statutory order was previously made under the Minimum Wage Act) have now been extended to all employees:
- Employees who work more than the normal 48-hour workweek are entitled to overtime pay equal to 150% of their base hourly wage, per hour of overtime work.
- All employees must be offered housing assistance. Employers may choose to offer direct provision of housing, home loans, loan guarantees or a housing allowance.
- All employees are now entitled to employer sponsored medical care, medicine and transportation to a health facility when needed.
Next steps
Employers should review the new benefits and entitlements stipulated in the Act in detail and, where possible, begin to implement complying programs for their employees. The expectation is that labor costs will increase.
The new Critical Skills List may restrict employers on the types of jobs foreign workers will be permitted to fill in the future. Employers will need to work with their immigration providers to review the Critical Skills List and should defer to training and employing local workers as they are able.
Noncompliance with these new rules could lead an employer to be charged with significant fines, up to three years imprisonment, or both. Employers should be on the lookout for the accompanying implementing regulations as they are released.