Judgement Labour Application No

THE JUDICIARY OF TANZANIA

IN THE HIGH COURT OF UNITED REPUBLIC OF TANZANIA AT MOSHI LABOUR CASE NO. 8226 OF 2024 (C/F Labour Dispute No. CMA/KLM/MOS/ARB/04/2023 in the Commission for Mediation and Arbitration at Kilimanjaro) EDMUND KADILI MWAULAMBO ……................................... APPLICANT

VERSUS SGA SECURITY LIMITED..…….…..……………………………RESPONDENT

JUDGEMENT 24th September & 12th November, 2024 MONGELLA, J. The applicant has moved this Court under Section 91(1)(a); 91(2)(b)(i) and; 94 (1)(b)(i) of the Employment and Labour Relations Act, 2004 [Cap 366 R.E 2019] (ELRA) and Rule 24 (1), (2) (a), (b), (c), (d); (3) (a), (b), (c),(d) and; 28 (1), (c), (d), (e) of Labour Court Rules, 2007, GN No. 106 of 2007. He is seeking for this Court to: one, call for and examine the proceedings of the Commission for Mediation and Arbitration (CMA) in Labour Dispute No. CMA/KLM/MOS/ARB/04/2023 in order to satisfy itself as to its legality, propriety and correctness; two, revise the CMA record on two grounds being: first, that it was improperly procured; second, it is unlawful and irrational. Page 1 of 18 The applicant’s application was backed by his own sworn affidavit. The respondent expressed his opposition of the revision through a counter affidavit sworn by one, Absolom Jairo, a principal officer of the respondent. In a nutshell, the applicant was employed by the respondent as a security guard on permanent basis on 01.04.2019. Allegedly, owing statutory changes on basic wage for private sectors initiated by the Government vide Minimum Wage Order of 2022, on 05.12.2022, the respondent informed its employees, including the applicant, on the changes. The respondent promised to initiate discussions with their clients for whom the employees

work for and inform them on decisions made thereafter. On 08.12.2022, the respondent offered that any of the employees who wished to participate in retrenchment proceedings should register their names before 30.12.2022. Those that participated were to be paid benefits offered in the said letter. It is in such manner that the respondent commenced retrenchment proceedings. In the process, the applicant was eventually retrenched on 06.01.2023. Aggrieved by his retrenchment, the applicant filed a claim at the CMA alleging to have been unlawfully terminated. He sought to be paid: notice in lieu of salary, salary for December 2022, 6 worked days, severance pay, transport fare during leave and 24 months’ salary as compensation. Bearing the duty to prove otherwise, the respondent paraded 3 witnesses and tendered 16 exhibits which were all admitted and Page 2 of 18 marked S-1 to s-16. The applicant represented himself and tendered 3 exhibits which were all admitted and marked E-1 to E-3. The CMA found the applicant’s termination fair. It further found that the applicant had failed to prove the reliefs he claimed save for notice in lieu of salary and severance pay, which were also listed by the respondent. Aggrieved, the applicant has preferred this application on three grounds advanced in his affidavit, being: (a) The Honourable Arbitrator erred in law and facts in favour of the

respondent, since the reason of termination not proved. (sic) (b) The Honourable Arbitrator erred in law and facts in favour of the respondent, since the procedures for termination not proved to be followed. (sic) (c) The Honourable Arbitrator erred in laws and facts in favour of the respondent, since the Applicant was entitled to all terminal benefits and not limited to benefits mentioned by respondent in his termination letter. (sic) The application was resolved by written submissions whereby the applicant was represented by Mr. Exaud Michael Mgaya, his personal representative. The respondent was represented by Mr. Nicodemus Mbugha, learned Advocate. Mr. Mgaya commenced his submission by praying to adopt the applicant’s affidavit. Coming to the gist of the application, he alleged that the applicant’s retrenchment was unfair as neither the Page 3 of 18 reason or procedures for retrenchment were observed as per Section 38 of the ELRA and Rule 23 of the Employment and Labour Relations (Code of Good Practice) Rules GN. No. 42 of 2007. He found the retrenchment process not fair on the following grounds: one, there was no proof of service of notice of intention to retrench and reasons thereof; two, there was no proof in written records of the meetings that the applicant was consulted in process of retrenchment; three, there was no proof of joint meeting for problem solving; four,

the reason for retrenchment was never clearly stated (as evident in Exhibit S-12); five, there was no proof that the applicant was issued with a letter for alternative job; six, the criteria for retrenchment were not disclosed by the respondent contrary to law; seven, the applicant was not given his terminal benefits (as seen in exhibit S-14) and; eight, the applicant was not heard on his sickness caused by a dog bite as he stated in exhibit E-2. Discussing the 1st ground on reason of termination being unproved, Mr. Mgaya averred that the oral evidence adduced by respondent’s witnesses shows that the reason for retrenchment was communicated orally. He referred to DW1’s evidence to support his assertion. He challenged the oral communication on the bases that it was contrary to Clause 13:2 of the contract of employment (Exhibit E-3). He further alleged that the termination letter issued to the applicant did not also indicate the reason for termination. Addressing the 2nd ground, Mr. Mgaya averred that the procedures for the applicant’s termination were not observed as the applicant Page 4 of 18 was not informed of the meeting. Further, that the applicant opposed the procedural irregularities vide his letter (Exhibit E-2), which indicated that the procedures for termination were not followed. Explaining the alleged irregularities, he contended that the applicant was not consulted

as per Section 38 of the ELRA and Rule 23 of GN No. 42 of 2007. That, there was also no proof that he was involved in the retrenchment process. On the 3rd ground, Mr. Mgaya talked about unpaid terminal benefits. He averred that the applicant was not paid any benefits in his termination as mentioned in his termination letter. That, he was also not paid benefits he claimed in his CMAF1. He mentioned the alleged benefits to include: notice in lieu of salary = 150,000/-; overtimes = 540,720/-; salary of December 2022 =150,000/-; 6 days of work = 30,000/-; severance pay=121,000/=; transport fare during leave =20,000/- and 24 months compensation for unfair termination = 3,600,000/-. Mr. Mgaya further asserted that the applicant was entitled to all benefits in his termination letter as mentioned and approved by the respondent and the management authority. In the circumstances, he found it wrong for the arbitrator to deny the applicant the terminal benefits by virtue of proof. He thus asked the Court to assess the benefits in favour of the applicant as per Section 44(1) of the ELRA. To cement his argument, he referred the case of Alliance Insurance Corporation Ltd vs. George Mkangala (Consolidated Revision Application No. 264 & 266 of 2023) [2024] TZHCLD 105 (16 Page 5 of 18 May 2024) and Tanzania Cigarette Company Ltd vs. Hassan Marua, Revision No. 154/2014 (CAT). Mr. Mgaya finalized

his submission praying for this Court to find the applicant’s termination substantively and procedurally unfair as procedures for retrenchment were not observed. The application was opposed. Mr. Mbugha commenced his reply by praying to adopt the respondent’s counter affidavit as part of his submission. He further gave a brief account of the matter, which I will not summarize or reproduce herein. Responding to the 1st ground, Mr. Mbugha supported the CMA decision whereby he contended that the Arbitrator came up with a genuine decision. He averred that the decision was guided by the framed issue as to whether the respondent had fair, genuine and valid reason for termination. He contended that the Arbitrator took into account exhibit S-12 which was tendered by DW3 without objection. That, the said exhibit provides the reasons for termination and the Hon. Arbitrator connected the same with Regulation 23(2)(a) of the ELRA, which provides for circumstances that might legitimately form basis of termination. The learned Counsel further averred that the reason for termination was clear as testified by all three respondent’s witnesses and supported by the tendered exhibits. He mentioned the said reason as being increase of minimum wage in the Country. He claimed that this fact was communicated to all employees and their trade Page 6 of 18 union namely, Tanzania Union of Private Security

Employees (TUPSE), at a meeting held at the headquarters and they agreed on implementation of the same. He added that that this fact was also made clear by the trade union secretary in his testimony and vide Exhibit S-4. Citing Section 37(2) (a), (b), (ii) and (c) of the ELRA and Rule 8(1)(a)(b) and 9(4) of GN No. 42 of 2007, he insisted that the termination was due to operational requirements of the employer, thus fair. In his stance, the termination letter served as proof of fairness of the reason for the termination. With respect to the 2nd ground, Mr. Mbugha referred to Section 38 of the ELRA as the law regulating termination on operational requirements. He averred that the respondent’s witnesses testified on the procedures followed prior to the applicant’s termination. He referred to Exhibit S-8 and S-9, which he argued that the same shows that there were prior meetings held on 08.12.2022 and 16.12.2022 as well as a meeting to discuss payment to retrenched employees held on 31.12.2022. He challenged the applicant for not participating in the process as other employees did and had no valid reason thereto. He alleged that the testimony by the respondent’s witnesses shows that the respondent issued notice of intention to retrench employees and the said information was also orally communicated vide parade as testified by DW2. The learned Counsel further alleged that the

respondent adequately consulted her employees whereby she also involved TUPSE, a trade union representing majority of her employees. He claimed that the trade union was registered and had exclusive Page 7 of 18 bargaining power. That, the union had a meeting with the employers as evidenced by minutes admitted by the CMA. He argued further that according to Rule 23 (8) of GN No. 42 of 2004, the agreement between an employer and a trade union is recognized as exclusive bargaining agent and is binding on all employees within the bargaining unit. Mr. Mbugha further cited the case of Metal Product Limited vs. Mohamed Mwerangi and 7 Others, Revision No.148 of 2008 (unreported) averring that Section 38 of the ELRA is not meant to be applied in a checklist fashion, but rather provides a guideline to ensure that the consultation is adequate and covers all vital matters. On the 3rd ground, Mr. Mbugha faulted the applicant’s failure to specifically state which entitlement he was denied. He averred that the applicant is not entitled to payment of 24 months’ salary, extra working hours and transport fare as his termination was fair as found by the CMA. He said that the applicant is also ineligible for receiving severance pay as he refused alternative employment as stated under Section 42(3)(b) of the ELRA. He added that the applicant was paid all his final dues as confirmed under Exhibit

S-14. Mr. Mbugha concluded his submission praying for the application to be dismissed and for the CMA award to be upheld. Rejoining, Mr. Mgaya insisted that there was no proof on record that the respondent issued a written notice to the applicant to express Page 8 of 18 her intention to retrench him. He reiterated his stance that that was contrary to the employment contract Clause 13:2. In addition, he alleged that there was no proof on the CMA record that the applicant was consulted prior to retrenchment or redundancy or reasons thereof issued. He stressed further that the applicant was also not consulted on the retrenchment process and the process was in itself biased, which is why the applicant’s fellow employees accepted alternative jobs, except the applicant. Mr. Mgaya continued averring that the applicant’s entitlements were already admitted by the respondent in the applicant’s termination letter and some benefits were approved by respondent, but not paid to the applicant. However, he said, the Arbitrator only awarded the applicant notice in lieu of salary and severance pay. With regard to the claimed 24 months’ salary as compensation, Mr. Mgaya contended that the same was lawful and rational as the termination was unfair. He stressed that the reasons for retrenchment were supposed to be disclosed via written notice which was to be issued to the applicant and that the

applicant was also to be consulted. In the premises, he maintained his prayer for the applicant’s claims to be approved. I have accorded the rival submissions by both parties, due consideration and also gone through the CMA record. Under Section 37(2) of the ELRA, the law settled that termination of employment must be for a valid and fair reason as well as fair Page 9 of 18 procedures. This position is the focal point is assessing fairness of termination of employment. Where there are allegations that the termination is unfair, the employer holds the burden to prove that it was fair. This requirement is set under Section 39 of the ELRA. In the matter at hand, the applicant is challenging the CMA Award on grounds that the CMA erred in in finding his termination being substantively and procedurally fair and in denying him reliefs claimed. The complaints originate from retrenchment proceedings initiated by the respondent following the enactment of the Minimum Wage Order, GN No. 687 of 2022. The Order provided rates of wages for workers in the private sector thereby affecting the respondents. Retrenchment entails termination by operation of law and is regulated under Section 38 of the ELRA which states: “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 of any

intention to retrench as soon as it is contemplated; (b) disclose all relevant information on the intended retrenchment for the purpose of proper consultation; (c) consult prior to retrenchment or redundancy on – (i) the reasons for the intended retrenchment; (ii) any measures to avoid or minimize the intended retrenchment; (iii) the method of selection of the employees to be retrenched’ (iv) the timing of the retrenchments; and Page 10 of 18 (v) severance pay in respect of the retrenchments, (d) give the notice, make the disclosure and consult, in terms of this subsection, with- (i) any trade union recognized in terms of section 67; (ii) any registered trade union which members in the workplace not represented by a recognised trade union; (iii) any employees not represented by a recognized or registered trade union.” The requirements under the above cited provisions were interpreted by the Court of Appeal in the case of Haider Mwinyimvua & Others vs. Deposit Insurance Board & Another (Civil Appeal No. 250 of 2018) [2022] TZCA 97 (7 March 2022) TANZLII, whereby the Court stated: “In our view, it is clear that subsection (1) (a), (b) and (c) above creates three preconditions for retrenchment: one, that it imposes on the employer the onus to give notice of any intention to retrench as soon as it is contemplated. Secondly, it requires the employer to disclose all relevant

information on the intended retrenchment for the purpose of proper consultation. Thirdly, it enjoins the employer to consult prior to retrenchment or redundancy on five matters (see subsection (1) (c) (i) to (v) above) two of which are relevant for our present purposes. These are the requirements that the consultation process should address any possible measures that can avert or minimize the intended retrenchment and the method of selection of the employees to be retrenched (see subsection (1) (c) (ii) and (iii) above).” Page 11 of 18 On reason for retrenchment, the respondent presented evidence to the effect that there were changes on the minimum wage of 2022. DW3, the Human Resource Officer of SGA, testified to the effect that upon the Minimum Wage Order being issued in November 2022, the respondent tabled the same to her clients so that they could make alterations on the wage they paid their employees. On 05.12.2022 the respondent issued an internal notice (waraka wa ndani) (exhibit S-4) informing her employees on the changes in minimum wages for private sector employees. The document communicated that the change affected the costs of the services offered to their clients. The notice indicated that if the communications between the respondent and her clients does not bear positive fruits then she would be inclined to retrench some employees. On 08.12.2022, a meeting was

held involving the management of the Northern Zone and the employees. In the meeting the manager of the Northen Zone communicated that some of the respondent’s customers have demonstrated failure to meet the minimum wage introduced and some wanted to end their contracts for that reason. However, some of the clients agreed to contract with Ironsides Limited, allegedly a small-scale security company somehow affiliated with the respondent as evidenced by the working document and personnel outsourcing agreement (Exhibit S-1). The respondent as well informed her employees that for clients that would want to work with Ironsides, they would consult the employees working for such clients to seek alternative employment Page 12 of 18 with Ironsides. This was because the minimum wage at Ironsides was equivalent to the minimum wage they received at the respondent’s company. The record shows that on the same day of 08.12.2022, the respondent issued an internal notice (Exhibit S-4) requiring employees who wanted to voluntarily participate in the retrenchment exercise to write to the respondent. The letters were to be received from that date to 30.12.2022. The internal notice further stated that such employees would be paid their entitlements including; salaries for days worked, overtime pay, leave pay, one month salary in lieu of notice, severance pay and certificate of service. On

16.12.2022, a meeting was conducted and the agenda was retrenchment of employees working for clients who had expressed failure to pay the minimum wage. This list included the applicant and other 7 employees. However, the applicant did not attend. The minutes of the meeting (Exhibit S-9) show that the applicant and one Elifasi Zakaria Mbise refused to participate in consultations and refused the recommendation to continue working for the clients. On 30.12.2022, another meeting was held involving the same parties in the previous meeting and again the applicant and the said Elifasi Zakaria Mbise did not attend. This meeting was a final one addressing issues of retrenchment. It was noted on the minutes (Exhibit S-10) that the applicant and the said Elifasi Zakaria Mbise did not agree with consultations and refused to join Ironsides Company. Eventually, on 31.12.2022, there were discussions on Page 13 of 18 entitlements to be paid to the retrenched employees. The applicant and Elifasi were again absent. The minutes of the meeting (Exhibit S-11) indicated that the two had been informed on the purpose of the meeting as it went on and they agreed to being paid their entitlement, but refused alternative employment. In the foregoing observations, I am of the view that the respondent demonstrated a fair reason for termination by operation of law. No doubt, the Minimum Wage Order of 2022

had introduced a higher threshold of salaries, a fact admitted by the applicant himself in his testimony. According to explanations offered by DW2 and DW3, it is apparent that the respondent’s services are procured by clients and it is the respondent that supplies their employees to offer such services to clients. Their earning therefore stems from payments for services offered to their clients. With the raise in wage, obviously they would have to raise the price of services offered to the clients to meet the minimum wage set under the new law. It appears that most clients including the one for whom the applicant worked for refused to pay the raised wage. Like most clients, he opted for lower scale security services offered by Ironside, their affiliate. Thus, evidently, with his clients’ failure to meet the threshold, the respondent could not pay all employees the raised wage. The respondent was clearly faced with an economic constraint recognized under Rule 23(2) of GN No. 42 of 2007 as a reason for termination under operation of law/the retrenchment process. The retrenchment exercise was reasonably initiated. Page 14 of 18 Now follows my determination as to whether the retrenchment procedures were observed. As observed earlier, the employees were informed of the changes in law on 05.12.2022 as seen in Exhibit S-4, the internal notice. The retrenchment exercise was

then communicated orally in a meeting as evidence in Exhibit S-8 and the exercise was then announced vide the internal notice, Exhibit S- 5. The applicant is faulting the process for absence of written notice as provided under Clause 13:2 of his employment contract (Exhibit S-2). While indeed it is true that Clause 13:2 does require notice to be given in writing, the notice covered in the clause is that of termination of employment. The circumstances at hand involved the initiation of retrenchment process whose process was not covered in the employment contract. According to DW1, a former employee of the respondent, most of the information involving work issues was orally communicated at parades and at their place of work. DW2 testified to being assigned to orally communicate the retrenchment process to the employees. The employees were also assembled to communicate to them the refusal by clients to meet the raised fee in services. This shows that the applicant was adequately informed of the retrenchment process from 08.12.2022. Further proof is from his own testimony in which when cross examined, he admitted to have been informed by one Mr. Victor, a manager from Arusha, vide a meeting, that the respondent would offer alternative employment to Ironsides and the rest of the employees would remain in the company. This also Page 15 of 18 serves as proof that necessary information

on retrenchment was given to employees. As I indicated earlier, DW3 testified on engaging a trade union to wit, TUPSE, which represented most of its employees. This is evident at the bottom of Exhibit S-4 whereby there is annexed a signature by TUPSE official. However, the employees opted not to be represented. The applicant was however not a member of any trade union and was thus to represent himself. Three consultation meetings were held as seen under Exhibit S-9, Exhibit S-10 and S-11, but it is shown that the applicant did not attend any of them. It was in the said meetings that it was indicated that the employees involved in the process were those who offered services to clients that refused to pay the increased fee. In addition, alternative employment by Ironside was also communicated to the employees. This proves that the selection process was well communicated to the employees, consultations adequately held and employees were well engaged in the process. The applicant however, voluntarily refused to participate in the process. Eventually, an agreement was reached between the respondent and 6 employees engaged in the process. There were discussions on payment to be issued as found in exhibit S-11. The payments were to be made after 31.12.2022. The terms of payment were exactly as those discussed in a large-scale retrenchment meeting held on 29.12.2022 which involved

TUPSE, CHODAWU and workers’ representatives among others. Evidently, there is sufficient proof that Page 16 of 18 all procedures for retrenchment were rightfully observed, the applicant however refused to engage in the process. Following his refusal, as the decision had been made, like others, he was retrenched without having an alternative employment. Although there appears to be two different termination letters whereby the applicant appears to have the one issued on 31.12.2022 (Exhibit E-1), while the respondent presented the one issued on 06.01.2023, there is no doubt that the applicant received termination letter on 06.01.2023 (Exhibit S-12). This is further proven by the 7 days worked as calculated in Exhibit S-14. Concerning reliefs, as it is proved that the retrenchment process was both, substantively and procedurally fair, the applicant is herein not entitled to any reliefs provided under Section 40 of the ELRA since the same are offered in cases of unfair termination. On the other hand, as the Hon. Arbitrator ruled, I also find that there is no evidence that the applicant was paid reliefs agreed in the final retrenchment meeting. Exhibit S-14 indicating his final dues with signature of some of the respondent’s officers cannot operate as evidence of payment being made to the applicant. This is because, the applicant did not append his signature thereon. On those bases,

I find it was improper for the Hon. Arbitrator to award the applicant two of the benefits under exhibit S-14 while acknowledging that there was no proof tendered on payments not being made. Since the document was manufactured by the respondent, whether the applicant failed to prove some of the said Page 17 of 18 claims, he still ought to be paid all the claims awarded by the respondent as listed under Exhibit S-14. Since the respondent never challenged the said payments vide revision, I hereby order that the respondent effects all the payments listed under Exhibit S-14, effectively and immediately. Save for the reliefs ordered herein, the rest of the applicant’s claims are hereby dismissed. Being a labour matter, I make no orders as to costs. Dated and delivered at Moshi on this 12th day of November, 2024. X L. M. MONGELLA

JUDGE Signed by: L. M. MONGELLA Page 18 of 18