CONSOLIDATED REVISION NO 264 OF 2023 AND REV NO 266 OF 2023 ALLIANCE INSURANCE CORPORATION LTD VRS GEORGE MKANGALA

IN THE HIGH COURT OF UNITED REPUBLIC OF TANZANIA LABOUR DIVISION AT PAR ES SALAAM CONSOLIDATED REVISION APPLICATION NO. 264 OF 2023 AND REVISION NO. 266 OF 2023 REF. NO 20231023000535365 AND 20231024000535602 (Arising from Labour Dispute No. CMA/DSM/ILA/768/20/387from the Commission for Mediation and Arbitration o fD a r es Salaam Zone - Ifaia) ALLIANCE INSURANCE CORPORATION LTD.............................. APPLICANT VERSUS GEORGE MKANGALA....................... .............................. .........RESPONDENT JUDGEMENT Date of last order: 4/3/2024 Date of judgement: 16/5/2024 OPIYO. J. This judgement emanated from consolidated Revision applications arising from the decision of Hon. MASSAY, A., the Arbitrator, which was delivered on 12th Day of September 2023 in Labour Dispute No. CMA/DSM/ILA/768/20387 in the Commission for Mediation and Arbitration (CMA) at Dar Es Salaam. The dispute was referred to the Commission by the employee against the employer following employer’s decision to terminate his employment. A short story of the dispute is obtained from applicants' affidavit and counter affidavit, submissions and the CMA records as hereunder. The applicant was employed by the employer as a Deputy Manager, Legal department from 2016 to 2020. He was retrenched on 24 September 2020 for the alleged operational reasons. Following termination, the employee referred the dispute to the Commission for Mediation and Arbitration which delivered the award in his favor by being awarded 12 months compensation to the tune of TZS 15,600,000/= after finding that the termination was both substantively and procedurally unfair. Both parties were not satisfied with the CMA's award. Consequently, each filed revision applications before this court on different grounds. The employer filed Revision No. 264 of 2023 while the employee, filed Revision No. 266 of 2023. The two Revision applications were consolidated by this court for convenience purposes following parties1prayer. In Revision No. 264 of 2023 the applicant advanced three legal issues as stated at paragraph C of the affidavit as follows: - i) That, the arbitrator failed to properly analyse evidence as a result ended at wrong conclusion on reason and procedures for termination of the respondent. ii) That, the arbitrator erred in law in holding that the termination of the respondent was unfair while the evidence proved to the contrary. iii) That, the arbitrator erred for not considering evidence that proved respondent agreed to be retrenched and received retrenchment package. iv) That, the arbitrator erred in law and facts by failure to record and analyse properly the evidence which were before him and jumped into the wrong conclusion contrary to the evidence adduced by parties. While in Revision No. 266 of 2023, the applicant raised four legal issues as stated in paragraph 13 of the affidavit as follows; - i) That, the arbitrator erred in law and in fact for granting the applicant twelve months salaries as compensation for unfair termination the number of months which are very minimum and average taking into account the nature and circumstances of the unfair termination. ii) That, the arbitrator erred in law and in fact for failure to take into account that since the termination was unfair, both substantively and procedurally, the departure from the minimum compensation was inevitable. iii) That, the arbitrator erred in law and fact for failure to take into consideration at the time of determining and assessing the appropriateness of the quantum of compensation that the applicants contract of employment was permanent. iv) That, the arbitrator erred both in law and fact for failure to take into account that the way the respondent handled the whole retrenchment process it is clear that she had intention to terminate the applicant and used the retrenchment procedure to cover up her ill intention. The application was argued by the way of written submissions. The respondent/employer was represented by Mr. Praygod Jimmy Uiso, Advocate, while applicant/employee was represented by Mr. Mwang'enza Mapembe, Advocate. In Revision No. 264 of 2023, Mr. Uiso argued ground (i),(ii) and (iii) jointly. In support of the grounds, he stated that DW2 testified that the reason for retrenchment was due to restructuring of the company and some of the departments was affected including the legal department. He submitted that, the employer also tendered exhibit D2 which was a notice of intention to retrench dated 22 September 20 the notice of the meeting clearly stated the reason for retrenchment and agendas to be discussed during the meeting. However, surprisingly the arbitrator found that there was no valid reason in terminating respondent employment contrary to Section 38 of the ELA, Cap 366 R.E 2019. According to Mr. Uiso the evidence adduced by DW2 was not properly analysed leading to the conclusion that there was no good reason for retrenchment. It was further argued that, Section 38 of the ELA, Cap 366 R.E 2019 requires employers to give notice of intention to retrench as soon as it is contemplated and equally disclose all relevant information on the intended retrenchment. However, the arbitrator's findings were totally different from what transpired during hearing. Regarding terminal benefits, Mr. Uiso argued that Exhibit A-2 (minutes of retrenchment) at page 1 paragraph 8 the final benefits that were to be paid were clearly stated. He added that, consultation was properly initiated to all employees including the respondent. And all procedures of retrenchment went well. That, the Court has already set up some standards regarding retrenchment procedures by not being applied in checklist fashion as was held in different cases, including the case of Mainline Carries Ltd v. Delifrida Filbert Libaba & 70thers, Labour Revision No. 264 of 2019, High Court of Tanzania, Labour Division, at Dar es salaam, (unreported). He therefore, prayed for the award to be accordingly reversed and finding be made that the termination was fair both substantively and procedurally. In reply starting with procedure, Mr. Mapembe submitted that there was no proper consultation as the respondent was informed of the meeting regarding retrenchment to take place on 24th September 2020 and on the same date the respondent was terminated. He stated that, the applicant failed to state when the need to retrench arose, contrary to section 38 of the ELA, Cap 366 R.E 2019 and Article 14 of the ILO Convention No.158/1982. He argued that according to the provisions above the notice of intention to retrench is to be issued as soon as contemplated. Insisting on procedural aspect, Mr. Mapembe argued that it was not proper for the applicant to call all employees while the targeted employees were those who were under legal department only. He further stated that, no relevant information was disclosed during the meeting as to why restructuring was inevitable. On that basis, he is of the view that, consultation was not properly initiated and was done to baptize her ill intention as was addressed in numerous cases including the case of Walk Water Technologies v. Recho Charles, Revision No. 318 of 2016., High Court of Tanzania, Labour Division, at Dar es salaam. On validity of reason, Mr. Mapembe submitted that, there was no valid reason for termination as there was confusion regarding the reason. In Exhibit A2 (minutes of consultative meeting) the reason was restructuring, while in Exhibit A3(retrenchment agreement) the reason was financial constraints. In Revision No. 266 of 2023, 1st and 2nd ground argued jointly, Mr. Mapembe challenged the compensation of twelve 12 months. He is of the view that since the termination was both substantively and procedurally unfair, minimum compensation was not a proper remedy. As the arbitrator ought to award 60 months compensation. Justifying his assertion regarding discretionary powers in awarding more compensation, he referred to several cases including the case of Flavio Ndesanjo v. Serengeti Breweries Ltd, Civil Appeal No. 357 of 2020. On third issue regarding the quantum of compensation, Mr. Mapembe argued that, since the applicant was employed under permanent basis and his termination was unfairly done, then the arbitrator ought to have award more than minimum compensation of twelve (12) months as was addressed in the case of FLAVIO NDESANJO's Case(supra). On that basis he is of the view that the applicant ought to be awarded 60 months compensation. In challenging Revision No. 266 of 2023 Mr. Uiso argued that if the arbitrator was fair enough in evaluating the evidence tendered by the respondent, then, the applicant herein was not deserving any compensation from the respondent, as the termination was both substantive and procedural fair. From parties7 submissions, this Court is called upon to determine two issues; first, as to whether the applicant has provided sufficient ground for this Court to revise and set aside the CMA award and second to what reliefs parties are entitled? In employment termination fairness is assessed in two aspects which are reasons and procedures. The 1st ground of revision which will be addressed first, concern the fairness of retrenchment. The epicentre of parties' argument in this ground concentrates on whether retrenchment exercise was substantively and procedurally fair. In Revision No. 264 of 2023, on reason for termination, the applicant's Counsel contended that there was a valid reason for termination or retrenchment. He further added that there was proper consultation in retrenchment exercise, but the arbitrator failed to analyse the evidence adduced before him, hence, reached a wrong conclusion. On other hand the respondents Counsel maintained that the retrenchment exercise was initiated with no valid reason, as the reason for termination stated in the notice of retrenchment differ with what was stated in retrenchment agreement, he also challenged the consultation process by alleging that, the vital information relating to retrenchment exercise was not disclosed. Section 37 of the Employment and Labour Relations Act, 2004 provides that, it is illegal for the employer to terminate the employment of an employee unfairly, also section 39 of the same Act imposes on the employer a duty to prove that the reason for any termination was fair to the employee. Section 37 (1) and (2) states as follows: - "37 (1) It shall be unlawful for an employee to terminate the employment o f an employee unfairly. (2) A termination o f employment by an employer is unfair i f the employer fails to prove:- (a) That the reason for termination is v (b) al/d; (c) That the reason is a fair reason: - (i) Related to the employee's conduct, capacity or compatibility; or (ii) Based on the operational requirements o f the employer, and (d) That the employment was terminated in accordance with a fair procedure." The above provision makes termination to be unfair unless the employer (applicant) proves the validity and fairness in both reason and procedure. In resolving the disputed question, I find worth to consider the CMA records, especially Exhibit A-2(notice of retrenchment). It stated that the reason for termination is restructuring and Exhibit A-3 (retrenchment agreement) at page 2 paragraph 3 state the reason for termination was financial strains. For the sake of clarity, what constitute operational requirement is defined by Section 4 of CAP 366 RE 2019 as: - "Operational requirements'v means requirements based on the economic, technological, structural, or similar needs o f the employer" From the above definition, operational requirement may be initiated based on one of the above factors. Both restructuring and financial constrains may result to retrenchment, but whatever the reason among them, must be clearly notified to the employees before consultation in terms of section 38 (a) and (b) of ELRA, Cap 366 RE 2019. The above provisions stress on the need for disclosing all relevant information on the intended retrenchment for the purpose of proper consultation. On noticing variation of reason from retrenchment agreement and notice of retrenchment, I agree with the Mkangala's advocate that the reason was not certain as to whether the retrenchment exercise was necessitated due to structural changes or financial strains, as nothing was tendered to substantiate any of the two reasons. The same discrepancy is seen in the testimonies of DW1 and DW2. While DW1 stated that they were called in the meeting and informed of the bad condition of the company, implying financial strain, DW2 who was the (HR) testified that the main reason for retrenchment was restructuring affecting some departments in the company, legal department inclusive. What that shows is unclarity or uncertainty of reasons for retrenchment. It follows therefore that termination for unclear reason is as good as no reason, as non is proved due to unclarity. Such termination is indeed unfair. In the case of Bakari Athumani Mtandika V. Superdoll trailer Ltd. Labour Revision No. 171 of 2013 (Unreported); it was detailed that the basic duty of decision maker in unfair termination dispute where operational reasons are raised as a cause for terminating an employee, among those duties are to inquire whether operational grounds were genuine reason justifying termination or a pretext. In the instant matter based on what we have seen above, I am contented with the CMA finding that, there was no genuine reason justifying termination. Having found that the termination was exercised by way of retrenchment and that the reason was unfair, the next question on the first ground of revision is whether the procedure for retrenchment was adhered to by the employer. Submitting in support of the process, Mr. Uiso submitted that consultation was properly initiated to all employees including the respondent and all subsequent procedures well followed, provided that procedures are not to be applied in checklist fashion. Opposing side submitted that, there was no proper consultation as the respondent was informed by notice on 22nd day of September 2020 that meeting regarding retrenchment will be on 24th September 2020 and on the same date the respondent was issued by termination letter. He added that, relevant information was not disclosed as to why restructuring was inevitable. On that basis he is of the view that consultation was not properly initiated and was done to baptize employer's ill intentions. In answering the disputed question, the relevant provision is Section 38 of Employment and Labour Relation Act, Cap 366 R.E 2019 which reads as follows:- 38.~(1) In any termination for operational requirements (retrenchment), the employer shall comply with the following principles, that is to say he shall a) give notice o f any intention to retrench as soon as it is contemplated; b) disclose a ll relevant information on the intended retrenchment for the purpose o f proper consultation; c) consult prior to retrenchment or redundancy on:- (i) the reasons fo r the intended retrenchment; (ii) any measures to avoid or minimize the intended retrenchment; (iii) the method o f selection o f the employees to be retrenched; (iv) the timing o f the retrenchments; and (v) severance pay in respect o f the retrenchments. d) give the notice, make the disclosure and consult, in terms o f this subsection, with:- (i) any trade union recognized in terms o f section 67; (ii) any registered trade union which members in the workplace not represented by a recognized trade union; (iii) any employees not represented by a recognized or registered trade union." , From the above provision, the employer is mandatoriiy required to comply with the following procedural steps during retrenchment process. Issuing notice of intention to retrench, disclosure of all relevant information on the intended retrenchment for purpose of proper consultation, extensive consultation prior to retrenchment and issuance of notice for retrenchment to representatives like trade unions, if any. Examining our application in terms of the above provision, as the reason for retrenchment was found not to be certain, it is unlikely that the relevant information was disclosed. Also, it is undisputed that, the notice was given two days prior to the date of the alleged consultative meeting and on the same date, immediately after the meeting the applicant was issued with termination letter. This makes such meeting not consultative as intended by the above provision, rather a meeting to dish out employer's already settled decision. In as much as agree with the principle developed in the case of Mainline's case (supra) which held that various stages are not meant to be applied in a check list form, but, the respondent who failed to initiate proper consultation as the reason for retrenchment was not certain is far from adhering to the required procedure. From the above legal reasoning, I have no hesitation to hold that in terminating applicant's employment, retrenchment process was procedurally unfair. For the foregoing reason, Mr. Uiso's allegation regarding non-analysis of evidence lacks legal stance, hence Revision No. 264 of 2023 fails. In Revision No. 266 of 2023, the applicant herein mainly challenges the reliefs awarded. Like CMA, I have reached the same finding that the employer had no fair reason for and procedures were violated in applicant's termination. However, in this application the applicant claimed to be compensated a total of 64 months' salary for unfair termination. He insinuated that, as the termination was unfair in both aspects, substantively and procedurally, then he ought to be awarded more than minimum compensation. In unfair termination the principle is well developed in the case of Tanzania Cigarette Company Ltd vs Hassan Mama, Revision No. 154/2014, CAT, that:- "It stems out clearly that, first; an order for payment o f compensation is discretionary and, secondly; is awardabie to an employee only when the arbitrator or the Labour Court finds that his or her termination was unfair. The two conditions apply conjunctively or must cumulatively exist To say it in other words, an order o f payment o f compensation is discretionary and is consequential to unfair termination. " Therefore, awarding compensation must be done judiciously, being discretional. Under, Rule 32 of G.N No. 67 of 2007 an award of appropriate compensation is based on the circumstances of each case by considering several factors such as; the extent to which the employee will be able secure alternatives work, the extent to which the termination was unfair, the consequences, prescribed minima or maxima compensation, the amount of employee's remuneration, the amount of compensation granted in previous similar cases and the parties conduct during proceedings and any other relevant factors. Having such legal stand, its relevance to our application stems from the following factors; that the respondent was employed under permanent basis and his employment was terminated unfairly, no proper consultation and very short notice of only 2 days before termination with no certain reason al all. Also, in terms of securing alternative job, I do not think it is easy for him to secure the same job of the same status given his advanced age of over 40 years as per the proceedings. With all these factors in operation, I am prepared to go beyond the minima as was set out in the case of Flavio Ndesartjo's Case(supra). In the circumstances, I revise and set aside the CMA award and instead award the applicant 24 months7 salary compensation, (i.e Tshs. 130000x 24= 31,200,000/=). Revision application No. 266 of 2023 partly allowed to the extent explained. Each party to take care of its own cost. M. P. OPIYO, JUDGE 16/5/2024 The judgement is delivered this 16th day of May 2024 in presence of applicant in person and in absence of the respondent. M. P. OPIYO, JUDGE 16/5/2024