aar healthycare tanzania limited vs evard peter rwelamira 2021 tzhcld 244 25 june 2021

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA LABOUR DIVISION AT PAR ES SALAAM REVISION NO. 08 OF 2020 BETWEEN AAR HEALTHYCARE TANZANIA LIMITED............................................. APPLICANT AND EVARD PETER RWELAMIRA........................................................... RESPONDENTS JUDGMENT Date of Last Order: 19/04/2021 Date of Judgment: 25/06/2021 A. E. MWIPOPO, J. AAR Healthcare Tanzania Limited, the Applicant herein, filed the present application against the decision for the Commission for Mediation and Arbitration (CMA) in Labour Dispute No. CMA/DSM/KIN/966/18/305. The Applicant is praying for the order of the Court to revise and set aside the entire award of the CMA by Hon. N. Kiangi, Arbitrator, dated 29th November, 2019 on the ground that the award was legally and factually wrong, it is irrational and illogical. In order to understand the dispute, its brief historical background will suffice. The Applicant employed Evard Peter Rwelamira, the Respondent herein, in the position of IT Administrator for a two years fixed term contract i on 15th August, 2014. The Contract was renewed on 15th September, 2016 for another two years and he was re categorized as IT Manager on 31st October, 2016. On 21st August, 2018 the Applicant conducted contract renewal review and on 23rd August, 2018 the Applicant informed the Respondent that his contract will not be renewed upon expiry. The Respondent was aggrieved and he filed dispute before the Commission. The Commission decided the dispute in Respondent favour and the Applicant filed the present revision application. During the hearing, both parties were represented. The Applicant was represented by Ms. Blandina Kihampa, Advocate, whereas, Mr. Arbogast Anthony, Advocate, appeared for the Respondent. Briefly, the Applicant's Counsel divided her submission in three grounds. That there is no valid reason for termination, there was no proper procedure followed for termination and the award of 24 months' salary granted by the CMA was wrong. On the issue of fairness reason for termination, the Counsel submitted that the Arbitrator erred to hold that the Applicant had no valid reason to terminate the Respondent. The Respondent's fixed term contract was to come in end on 14th September, 2018. The testimony of the Application's witness - DW1 is to the effect that the contract come to an end due to expiry of its tenure. Rule 4(2) of the G.N. No. 42 of 2007 provides for the period for 2 expiry of the fixed term contracts. The CMA held that there was legitimate expectation that the Contract will be renewed because the contract had previously been renewed. The issue of legitimate expectation did not come to play in this case because the Applicant informed the Respondent in the contract renewal review - Exhibit D5 that his contract would not be renewed and it will come to an end after the expiry of fixed period. The Respondent signed the review form acknowledging what transpired in the contract review process. For this reason it cannot be said that the Respondent had expectation of renewal of his contract. The previous renewal of the Respondent contract only guaranteed that the Respondent would work for the duration of the contract. It did not guarantee or give impression that once the expiry period approach than his contract will be renewed again. The Applicant issued a notice of non-renewal to the Respondent -Exhibit D4. This made it clear that the Respondent's contract would come to an end after the expiry of the term of contract. Thus, it was illogical for the CMA to hold that the Respondent had genuine expectation of renewal of his employment contract. Regarding the procedure for termination, the Commission held that it was not followed. The Applicant's Counsel submitted that the procedures was followed as required by the law. The Respondent was alerted that his content 3 was coming to an end through notice and contract renewal review. Thereafter the contract expired. By virtue of rule 4(2) of GN. 42 of 2007 the contract automatically came to an end upon expiry of the term of content. There was no further procedure to adopt. The Arbitrator suggested that the Applicant ought to negotiated terms with the Respondent and that the Application ought to have to instigate retrenchment procedures. Both suggestion are neither appropriate nor legally correct for the circumstances of this case. The reason is that the Respondent had a fixed term contract which automatically came to an end after expiry of its tenure. Also it is in record that the Applicant had discretion to renew or not to renew the contract. On the awarded compensation, she submitted that the awarded figure is neither backed by evidence on record nor circumstances of the case. There is no basis to grant 2 years' salary compensation to the Respondent who had no expectation for renewal of his employment. The Arbitrator did not considered the qualification of the Respondent and Economic situation of the Applicant nor the evidence on record and also did not give reason for the award given or make other consideration provided by rule 32 of G.N. 67 of 2007. The Applicant had a valid reason and followed proper procedure for 4 termination hence the Arbitrator had no reason to award the Respondent with the respective compensation. In reply, the Respondent Counsel submitted that the CMA award is correct and reflect the true outcome of what transpired before the CMA with regard to Respondent claims against the Applicant. The Respondent had a fixed term contract. The first contract started on 15th September, 2015 up to 14th September, 2016. The second term commenced on 15th September, 2016 and was scheduled to end on 14th September, 2018. 21 days before the expiry of the contract, the Respondent was subjected in to contract renew review process as shown by Exhibit D5. The review process included looking at some factors such as general work performance, attitude, knowledge, team work, character, communication, trustworthy and general comments among other factors. The Respondent scores in all factors was good and excellent. The Respondent knew about his score and the general comment was that he is dependable and timely reliable. The Respondent was given the copy of Exhibit D5 and signed it. At the time the Respondent signed Exhibit D5 the contract Review form was not ticked to show that the contract was coming to an end. But later on the tick was added to the form which was sent to the Respondent. The contract renewal review process raised the Respondent's expectation to have his contract renewed provided the facts 5 that the good performance of the Respondent in all factors was good and excellence. The Counsel proceeded to submit that the Respondent was served with notice of end of contract - exhibit D4 which states that the contract was not renewed due to the reason captured in Exhibit D5. But Exhibit D5 contains no reason for the non-renewal of the contract. The Arbitrator correctly dispute the reasoning in the Exhibit D4. Once there is expectation of renewal of the contract then the termination was unfairly terminated. The Counsel went on to submit that DW1 testified that the reason for not reviewing Respondent contract is that he was expensive. However, the Arbitrator was of the view that if the employee is expensive the remedy is to negotiate his salary (salary review) and not to end his contract by not renewing it. The increase of Respondent's salary was not Applicant's own initiation. Thus, the Arbitrator rightly held that there was expectation for the renewal of Respondent's contract. Regarding the Applicant submission on the failure to follow procedure for termination, the Counsel averred that rule (3) & (4) of G.N. 42 of 2007 provides that when the contract was not renewed where there is expectation for renewal it would be considered to be unfair termination. The Arbitrator rightly considered the termination to be unfair substantively and procedurally. 6 In terms of procedures for termination, the Applicant is considered to terminate the contract without following any procedure including the possible retrenchment procedure. Regarding the amount for compensation, the Respondent Counsel averred that amount awarded to the Respondent which is 24 months' salary was for the reason that the expected contract to be renewed was 24 months. In rejoinder, the Applicant Counsel retaliated her submission in chief and emphasized that performance of the employer is not the only consideration for renewal of the contract. The Applicant had discretion to renew the contract. The review was done so that when the Respondent left he got his certificate of service his future employment prospects. The issue of performance salary increments does not go together with the issue of coming to an end of the contract. The Applicant was in financial constraints as it was submitted by the DW1. Thus the Arbitrator was supposed to consider the Applicants financial situation before awarding the Respondent with 24 months' salary. The Court should consider the other factors which were not considered by the commission in deciding the arbitral award. From the submissions, there are 3 issues in disputes to be determined by this Court. The issues are as follows hereunder: 7 i. Whether there was a reasonable expectation for the renewal of the fixed term contract of employment. ii. Whether the Applicant unfairly terminated Respondents' employment. iii. What remedies are entitled to parties? In determination of the first issue, the relevant law providing about reasonable expectation for the renewal of fixed term contract is section 36(a) (iii) of the Employment and Labour Relations Act, Cap. 366 R.E. 2019. The section provides that, I quote:- "36. (a) Termination of employment includes - (iii) a failure to renew a fixed term contract on the same or similar terms, if there was reasonable expectation of renewal". The above cited section is read together with rule 4 (1) and (2) of the Employment and Labour Relations (Code of good Practice) Rules, G.N. No. 42 of 2007. These rules provides that termination of the contract of employment shall be in accordance with the employer and employee's agreement. The Rules provides further that for the fixed term contract, the contract shall terminate automatically when the agreed period expires, unless the contract provided otherwise. Rule 4 (3) of G.N. No. 42 of 2007 provides for reasonable expectation of renewal. The rules reads as follows, I quote:- 8 "4 (3) Subject to sub-rule (2), a fixed term contract may be renewed by default if an employee continues to work after the expiry of the fixed term contract and circumstances warrants it." Thus, the rules provides that the reasonable expectation of renewal is raised where the respective employment contract provides so or where an employee continues to work after the expiry of the fixed term contract and the circumstances warrants it. This Court in the case of Dar Es Salaam Baptist Sec School v. Enock Ogala, Revision No. 53 of 2009 High Court Labour Division at Dar Es Salaam, (Unreported), held that; ...Where the contract is a fixed term contract, the contract shall terminate automatically when the agreed period expires, unless the contract provided otherwise or there were no expectation of renewal, the contract would have expired automatically with no need to write a termination letter." Back to the evidence available in record, the Respondent's last Contract of employment - exhibit DI was renewed on 15th September, 2016 for two years. While under contract he was re categorized to the post of IT Manager on 31st October, 2016 and the conditions and the terms of contract remained the same as per Exhibit D2 - a Letter from Applicant dated 31st October, 2016. The evidence on record shows that on 21st August, 2018 the Applicant conducted contract renewal review and on 23rd August, 2018 the Applicant informed the Respondent that his contract will not be renewed upon expiry. The Commission held that there was expectations for renewal of 9 Respondent's contract for the reason that two previous Respondent's contracts of employment were renewed upon expiry. But I don't agree with the Commission on this reason. Renewal of two former contracts does not automatically renew the fixed term contract which has expired. The Commission also held that the expectation of renewal of contract was for the reason that the contract review form - Exhibit D5 shows that Respondent's performance was good and has been dependable, timely and reliable and the reason for non-renewal of contract is not known since the termination letter shows that the reason of termination is found in the Exhibit D5 but there is no such reason in Exhibit D5. The Applicant in his submission was of the view that the purpose of the Exhibit D5 was to guarantee that the employee will work to the remaining duration of the contract and that the Exhibit D5 shows that the outcome of the review is that the contract will not be renewed. I don't agree with Applicant's submission. The Exhibit D5 speak of itself that it is a contract renewal review form. This means that it was a review of the Respondent actual duties performance before the decision is made to renew his contract. The Exhibit D5 shows that the Respondent performance was good and the general comments shows that he was dependable, timely 10 and reliable. Thus, I agree with the Commission reasoning that there was reasonable expectation that Respondent's contract will be renewed. The Applicant averred that the reasonable expectation was not supposed to be there as on 23rd August, 2018 the Respondent was informed through a letter - Exhibit D4 that his contract will not be renewed upon expiry, however, I'm of the opinion that the letter does not take away the reasonable expectation of the renewal of contract which was created by exhibit D5. After the Applicant conducted the review, the Respondent expected his contract will be renewed. The Exhibit D4 shows that the management confirmed that Respondent contract will not be renewed due to the reason provided in the contract renewal review form which was signed by both parties. This proposes that even the management was aware that there was need to provide reason for non- renewal of the Respondent's contract, the reason which was not provided until during arbitration where the Applicant witnesses DW1 stated during cross examination that the Respondent's contract was not renewed so as to reduce cost as he was the most expensive employee and the Applicant was in financial difficulties. Thus, I agree with the Commission that there was reasonable expectation for renewal of Respondent's contract. 11 The next issue is whether the Applicant unfairly terminated Respondents employment. Section 36 (a) (iii) of the Employment and Labour Relations Act provides that termination of employment includes a failure to renew a fixed term contract on the same or similar terms, if there was reasonable expectation of renewal. The section is read together with rule 4(4) of the G.N. No. 42 of 2007 which provides that failure to renew a fixed- term contract in circumstance where the employee reasonably expects a renewal of the contract may be considered to be an unfair termination. As I have found in the first issue that there was expectation of renewal of the Respondent's contract, then failure to renew the fixed-term contract amount to unfair termination. In the present matter the Applicant submitted that the contract came to an end after expiry of the fixed term but since there was reasonable expectation for renewal, the Applicant was supposed to terminate it on fair reason and on fair procedures. But, there is no such evidence from the Applicant. Thus, I find that the Respondent was unfairly terminated. The last issue is what are remedies to the parties? The Commission awarded the Respondent to be paid 24 months' salary compensation for unfair termination. I agree with the Arbitrator that since the Respondent's last contract was for 24 months his foreseeable benefits is the salaries for the same period. Since other terminal benefits has already been paid, salary 12 compensation for the remaining period of the expected contract is the foreseeable loss as it was held in the case of Good Samaritan vs. Joseph Robert Sawari Munthu, Revision No. 165 of 2011 High Court Labour Division Dar Es Salaam, (unreported). The Applicant argued that the Applicant is struggling financially and the Arbitrator was supposed to consider that. But, there is no evidence on record regarding the Applicant's financial position. The only evidence regarding Applicant financial stability is the statement of DW1 during cross examination that the Applicant was in financial constraints which is a reason for not renewing Respondent contract. However, that statement was not supported by any other evidence. For that reason, I find no reason to revise the Commission award. Therefore, I find that the revision application has no merits and I hereby dismiss it. The Commission arbitral award is upheld. Each party to bear its own cost of the suit. * n A. E. MWIPO JUDGE < 25/06/2021 13