emmanuel urassa and others vs shared networks tanzania ltd 2020 tzhcld 3862 15 may 2020

IN THE HIGH COURT OF TANZANIA LABOUR DIVISION AT PAR ES SALAAM LABOUR REVISION NO. 467 OF 2019 BETWEEN EMMANUEL URASSA AND 10 OTHERS................. APPLICANTS VERSUS SHARED NETWORKS TANZANIA LIMITED........ RESPONDENT JUDGEMENT Date of Last Order: 01/04/2020 Date of Judgement: 15/05/2020 Aboud, 3. The Applicants, Emmanuel Urassa and Others filed the present application seeking revision of the award of the Commission for Mediation and Arbitration (herein CMA) which was delivered on 27/04/2018 in Labour Dispute No. CMA/DSM/KIN/R.487/17/722 by Hon. Kiangi. N., Arbitrator. The application was made under the provisions of Sections 91 (1) (a) (b) & 91 (2) (a) (b) and 94 (1) (b) (i) of the Employment and Labour Relations Act [CAP 366 R.E 2019] (herein the Act) and Rules 24 (1), (2) (a) (b) (c) (d) (e) (f), (3) (a) i (b) (c) (d) and 28 (1) (a) (b) (c) (d) (e) of the Labour Court Rules, GN. No. 106 of 2007, henceforth the Rule. The application was supported by the joint affidavit of the applicants. The respondent SHARED NETWORKS TANZANIA LIMITED bitterly challenged the application through the counter affidavit of his advocate, Juvenalis Ngowi. Brief background facts of the dispute are as follows; the applicants were employed by the respondent on different dates as per their employment contracts. On 31/10/2016 the applicants were retrenched from their employment, on the reason that the respondent sold its license to Vodacom Tanzania Limited therefore the respondent could not operate anymore. Upon termination the applicants were paid in lieu of notice as per their employment contracts, payment for pending leave not taken, severance pay equal to one month's salary for each completed year of service with the respondent, salary up to 31st October, 2016 and Certificate of service. Dissatisfied by the respondent's decision to retrench them, the applicants referred the dispute to CMA. They appointed MR. EMMANUEL URASSA to represent them before CMA hence the matter preceded in a representative suit. CMA decided in favour of 2 the respondent on the basis that had valid reason to retrench the applicants and procedures were followed. Being aggrieved by the CMA award, the applicants approached this court armed with this application seeking to set aside the said award on the following grounds:- a. That the arbitrator erred in law and in fact by holding that the termination of the applicants was fair basing only on procedure and leaving the issue as to the reason of the same not determined. b. That the Arbitrator erred in law and in fact by holding that the termination was fair without considering the evidence and testimony adduced by the applicants. c. That the Arbitrator erred in law and in fact by holding that the termination was fair while on record there was no proof of the existence of the said operational requirements. d. That the Arbitrator erred in law and in fact by holding that, the termination was fair while the process of retrenchment was not carried out by the respondent. e. That the Arbitrator erred in law and in fact by holding that the termination was fair while it is on record that, there was no agreement on the said retrenchment between the Applicants and the respondent. At the hearing of the application both parties were represented by Learned Counsels. Mr. Godfrey Joseph Lugomo was for the applicants whereas Mr. Juvenalis Ngowi appeared for the respondent. Arguing in support of the application Mr. Lugomo withdrew two grounds of revision, to wit (a) and (d) above, therefore he submitted on the remaining grounds. On ground (b) above he submitted that, it is a settled law that, when deciding the matter the Arbitrator was supposed to consider evidence and testimonies adduced by both parties, something which was not done in this application. He submitted that arbitrator did not consider the fact that Vodacom bought all shares of the respondent and took the responsibilities of everything including the employment of the applicants. Thus, applicants were supposed to be under the management of Vodacom Tanzania Ltd who would have determined whether to continue working with them or to retrench them. The learned counsel further submitted that, since the reason that triggered the said retrenchment was the fact that the target and 4 purpose of the establishment of the respondent were not met then the respondent ought to have disclosed the said alleged targets. Submitting in respect of ground (c), the learned counsel strongly stated that the respondent targets were unknown to them. To robust his argument he cited section 38 (1) (b) of the Act and the case of Managing Director Southern Link vs. Khamis M. Mgeleka, Revision No. 227 of 2010 Labour Division, Dar es Salaam (Unreported). In respect of last ground (e) the learned counsel submitted that, the Arbitrator erred in law and fact by holding that the retrenchment was fair while there was no agreement or consensus between the parties. He stated that, for the retrenchment to be valid the employer and employees must agree in a consultative meeting to carry out the retrenchment process as well as the terminal packages to be paid to the retrenched employees, which is in accordance with section 38 (2) of the Act. In addition, he argued that the respondent did not follow the procedures for retrenchment because the parties never reached to an agreement on such process and the package to be paid. He finally prayed the application to be allowed. 5 Responding to ground (a) Mr. Ngowi submitted that, the Arbitrator considered evidence adduced by both parties as it is reflected at page 6, 7, 8 and 9 of the award. That the evidence of PW1 is specifically reflected at page 8 and 9 of the award. He stated that exhibit D1 and D2 on record proves that the respondent had a valid reason to retrench the applicants. On the issue of respondent's targets, the learned counsel submitted that, the reason for retrenchment was transfer of license to the Vodacom Tanzania Limited and not failure to met targets. He added that, the issue of target was neither raised before consultative meetings nor before CMA hence it's a new fact brought before this court. Responding to ground (c), the learned counsel submitted that the applicants counsel misconceived the meaning of operational requirement. He argued that the term is elaborated under section 23 (1) of the Employment and Labour Relations (Code of Good Practice) GN. No. 42 of 2007 (here forth The Code). He submitted that no evidence which was tendered to contradict the testimony of DW1 regarding the reason for retrenchment. Counsel further argued that, the respondent discharged his duty as provided in law, to wit section 6 38 (1) (b) of the Act after he informed the applicants that the Telecommunication licence has been transferred to the Vodacom Tanzania Limited. On the last issue Mr. Ngowi submitted that, as per the testimony of DW1 and Exhibit D3 (first consultative meeting) the parties agreed on the reason for retrenchment, statutory and discretion entitlements. He therefore submitted that, there was valid reason for retrenchment and the procedures were followed. He therefore prayed for the CMA award not to be faulted. Having gone through parties submissions, Labour laws, CMA and court records with eyes of caution I believe the issue for determination are, whether the respondent had a valid reason to retrench the applicants, secondly is whether the retrenchment procedures were adhere and lastly is to what relief are the parties entitled. On the first issue as to whether the respondent had a valid reason to retrench the applicants. I have to say that retrenchment is one of the types of termination recognized in our Labour laws which is based on operational requirement. The term operational requirement is defined 7 under section 4 of the Act which is to the effect that:- "Means requirement based on the economic, technological, structural or similar needs of the employer". The law under Rule 23 of the Code provides for circumstances that might legitimately form the basis of a termination under operational requirement. The relevant provision is to the effect that:- "Rule 23 (1) A termination for operational requirements (commonly known as retrenchment) means a termination of employment arising from the operational requirements of the business. An operational requirement is defined in the Act as a requirement based on the economic, technological, structural or similar needs of the employer. (2) As a general rule the circumstances that might legitimately form the basis of a termination are:- a) economic needs that relate to the financial management of the enterprise; b) technological needs that refer to the introduction of new technology which affects work relationships either by making existing jobs redundant or by requiring employees to adapt to the new technology or a consequential restructuring of the workplace; c) structural needs that arise from restructuring of the business as a result of a number of business related causes such as the merger of businesses, a change in the nature of the business, more effective ways of working, a transfer of the business or part of the business. [Emphasis is mine] In the instant matter the reason for retrenchment was based on structural needs of the business as elaborated to the applicants as per exhibit D3 (first consultation minutes) on record. The respondent 9 transferred its license and shares to Vodacom Tanzania Limited, this is evidenced by exhibit D1 (approving letter from Tanzania Communication Regulatory Authority - TCRA) and exhibit D2 (merger approval from Fair Competition Commission). Linder such circumstance it is my view that the respondent had a valid reason to retrench the applicants. The respondent transferred its license to another company which directly impacted running of its business. The Court also considered the applicants' submission that the respondent reason for retrenchment was because it did not reach its business target, but they did not present its target to prove to the applicants. However, according to the record in this application as rightly submitted by the respondent's counsel the reason for retrenchment was sale and transfer of telecommunication license; therefore it was unnecessary for the respondent to disclose the alleged targets. The reason for the transfer in question was disclosed to the applicants in a first consultative meeting (exhibit D3). I quote the relevant part for easy of reference:- "Mwenyekiti aliwaeleza wafanyakazi kuwa sababu ya retrenchment kwa mujibu wa SNT ni kwamba 10 wameuza mfumo wao kwa mtu mwingine (wameuza mitambo)". The above quotation expresses that the Chairman of the consultative meeting informed the employees that reason for retrenchment was because the SNT business system, that is telecommunication licence was sold/transferred to another company. On the basis of the above discussion, it is very clear that applicants were aware of the business license transfer process before retrenchment. The applicants' allegation that it was for the Vodacom Company Tanzania to take over responsibilities in deciding about their fate in my considered view is baseless. The Vodacom Company bought the former Company's license and technology was not obliged to continue with the service of the applicants as they allege. According to the court record there is no any agreement tendered to prove that the applicants were entitled to become the Vodacom Company Tanzania employees. In the situation is crystal clear that respondent took legitimate business decision to retrench the applicants after its restructuring process. In the case of Hendry vs. Adcock Ingram (1988) 19 ID 85 (LC) at 92 B-C the Labour Court of li South Africa held that:- "When judging and evaluating an employer's decision to retrench an employee, the court must be cautious not to interfere to the legitimate business decision taken by employers who entitled to restructure" In view of the above discussion I have no hesitation to say this Court need not to interfere the respondent's legitimate business decision to transfer it license to the other company. In the event I find no reason to fault the Arbitrator's award which is based on a valid reason to retrench the applicants, to wit its business restructuring. On the second issue as to procedures for retrenchment, the same are provided for under section 38 of the Act. I quote the relevant section for easy of reference:- "Section 38 (1) - In any termination for operational requirements (retrenchment), the employer shall comply with the following 12 principles, that is to say, be 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 (v) severance pay in respect of the retrenchments, [Emphasis is mine] The above stipulated procedures and principles are mandatory requirements and must be followed by any employer who decides to 13 terminate his employees by retrenchment. The section is in pari materia with Rules 23 and 24 of the Codes. Having considered the records of this matter and the discussion above, it is crystal clear that the relevant stipulated procedures were properly followed. It is revealed that as soon as the respondent thought of transferring its shares to Vodacom Company Tanzania he notified the applicants as was testified by PW1 (Emanuel Urasa) in his testimony before CMA. I quote the testimony in his verbalism:- "Kwa hicho kipindi cha 2012 hadi 2016 mwishoni tuliitwa kikao ofisini kuelezwa mpango wa uuzwaji wa Co. kutoka shared Network na kuuzwa Vodacom". The above quotation reflects that in between 2012 and the end of 2016 respondent held a meeting with applicants and informed about the intention to sale the company's business licence to Vodacom. Not only that but also respondent disclosed all the relevant information of the said retrenchment process as elaborated in the first issue discussed herein above. 14 As regards to the requirement of consultation as is in section 38 (1) (c) of the Act, the respondent held two consultative meetings with the applicants where he communicated on the reasons for the intended retrenchment and the applicants entitlements. This is reflected by exhibit D3 (first consultative minutes) and D4 (second consultative minutes). I have noted the applicant's submission that the parties never agreed on the retrenchment process and the package to be paid, however the record reveals the contrary. The respondent in the first consultation meeting offered the applicants payment of golden hand shake amounting to one month salary for each completed year an employee has worked for. The golden hand shake was offered to be paid separately from other mandatory statutory entitlements. This is evidenced at page 9 (nine) of consultation minutes (exhibit D3 on record). I quote for easy of reference:- "Kwa upande wa SNT wameamua kutoa golden hand shake ya mshahara mmoja kwa kila mwaka uliofanya kazi. Hii ni discretion yake na ameamua kuitoa kama mkono wa heri kwa wafanyakazi na kwa kuwa sio suala la kisheria 15 hatutolijadili. Hii golden hand shake haihusiani na zile mandatory za sheria kama zilivyoelezwa hapo juu". The applicants in the first consultative meeting urged the respondent to increase the golden hand payment to the tune of three months' salary for each completed year. In the second consultative meeting the respondent rejected the applicants' prayer of paying golden hand to the tune of three months. Following the employer's decision the applicants accepted the one month salary offer for golden hand shake and insisted that severance pay and golden hand shake should be paid separately. I quote the applicants comments from page 4 of exhibit D4 on record "Severance pay and golden hand shake: wafanyakazi wanataka severance pay ilipwe separate na golden hand shake iwe separate na iwe one month salary for every year worked". Under such circumstances, I do not agree with the submission by the applicants' Counsel that the parties never agreed to payment of entitlements. The parties agreed to all the mandatory statutory entitlements and the payment of golden hand shake was agreed to 16 be one month salary for each completed year an employee has worked for. In the situation of the case, I find nothing demanded the respondent to refer the dispute to mediation before retrenchment as submitted by the applicants. In my general understanding of section 38(2) of the Act, a matter should be referred to mediation when parties do not agree on reasons of termination and entitlement as stipulated under section 38 (1) of the same Act which was not the case in the present application. Therefore, I entirely and respectfully agree with the learned arbitrator that the retrenchment procedures were followed. On the last issue as to parties' relief, it is on record that, from the applicants' opening statement before CMA they prayed for these reliefs; 12 months salaries, prior and sufficient notice, Annual leaves and severance pay. Upon termination the applicants were paid notice in lieu as per their employment contracts, payment for pending leave not taken, severance pay equal to one month's salary for each completed year of service with the Company, salary up to 31st October, 2016 and Certificate of service as indicated in exhibit D5 (Notice of termination of employment). Having held that the reason for retrenchment was valid and the procedures were followed, I find 17 the applicants were paid their statutory entitled terminal benefit after retrenchment save for the mixed up in calculation of severance pay. I have careful examined the consultation minutes (exhibits D3 and D4) on record which reveals that, the parties agreed the terminal benefit will include severance pay as well as golden hand shake. They also agreed severance pay to be paid separately from golden hand shake. To the contrary the respondent payment to the applicants did not separate golden hand shake from severance payment as a statutory terminal benefit. Thus, it is my view that the respondent failed to honour the agreement as discussed. The payment of one month salary to applicants indicated as severance pay should have been considered as golden hand shake as agreed in exhibit D3 and D4 on record. The respondent offered the one month salary payment as golden hand shake for each completed year in a continued service and, applicants accepted the offer as indicated in exhibit D4. It is the established principle that payment of golden hand shake is discretional as it depends on the employers wishes and severance payment is provided in law, therefore the two payments are separable. Severance pay is a mandatory statutory entitlement which 18 cannot be legally joined with other entitlements, its calculation is provided under section 42 of the Act which provides:- "42 (1) For the purposes of this section severance pay means an amount at least equal to 7 days basic wage for each completed year of continued service with that employer up to a maximum of ten years. (2) An employer shall pay severance pay on termination of employment if:- (a) the employee has completed 12 months continuous service with an employer; and (b) subject to the provisions of subsection (3) the employer terminates the employment. (3) The provisions of subsection (2) shall not apply:- (a) to a fair termination on grounds of misconduct; (b) to an employee who is terminated on grounds of capacity compatibility or 19 operational requirements of the employer but who unreasonably refuses to accept alternative employment with that employer or any other employer. (4) the payment of severance pay under this section shall not affect an employee's right to any other amount payable under this or any other written law". On the basis of the above discussion it is crystal clear that, the applicants are entitled to severance payment separately from golden hand shake payment at the calculation provided by the law, that is, seven days basic wage for each completed year of continuous service up to a maximum of ten years depending on each applicant's contract. It is the court's considered view that, the already paid one month salary to the applicants should be treated as golden hand shake payment only instead of severance pay as indicated in exhibit D5. In the result I find no reason to fault the Arbitrator's finding that the respondent had valid reason to retrench the applicants and the retrenchment procedures were followed except that, the Arbitrator 20 overlooked the issue of severance payment, the claim which the court found to have merit. Thus, the respondent should pay severance pay to all legally entitled applicants as per their contracts and in accordance to the provisions of section 42 of the Act. And the respondent payment of one month salary to the applicants is considered as golden hand shake payment only. It is so ordered. I.D. Aboud JUDGE 15/05/2020 21