finance industrial banking utilities commercial and agro processing industries trade union fibuca vs akiba commercial bank plc 2023 tzhcld 1447 22 september 2023

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (LABOUR DIVISION) AT DAR ES SALAAM REVISION NO. 146 OF 2023 BETWEEN FINANCE, INDUSTRIAL, BANKING, UTILITIES COMMERCIAL AND AGRO PROCESSING INDUSTRIES TRADE UNION (FIBUCA).................................................................................. APPLICANT VERSUS AKIBA COMMERCIAL BANK PLC........................................ RESPONDENT JUDGEMENT Date of last Order: 14/ 08/2023 Date of Judgement: 22/ 09/2023 MLYAMBINA, 3. In the instant matter the Applicant urges the Court to intervene by quashing and setting aside the Award of the Commission for Mediation and Arbitration (herein CMA) on the following legal issues: i. That, the Award is unlawful procured to the fact that the Commission had failed to recognize that the dispute is improper for determination before the Commission. ii. That, the Award is unlawful, illogical and contains material irregularity on the face of records as the Hon. Arbitrator erred in law and in fact to order, that the Respondent has met legal i requirement and by ordering the proposed package by the Complainant to be used for paying the affected employees. That, the purported retrenchment was invalid for want of procedure and reasons and for lack of Board resolution of the Bank and or permit of the Bank. That, the Honourable Arbitrator erred in law and fact for holding that, the proposed package of retrenchment by Complainant is fair and just while it was not discussed anywhere during the consultation meetings. That, the Hon. Arbitrator erred in law and fact for holding that the Respondent claimed by adhering to procedures while there is no notice issued to the impacted employees, no list of names given for the intended retrenched, no Audited skills report conducted by the Job Evaluation Committee as per Bank HR Policy 2021, no notice issued for the involvement of ATE members in Consultation meeting and meeting conducted in discriminatory circumstance between unionized and non-unionized employees and there was no criterion for selection conducted as per law. vi. That, the Hon. Arbitrator erred in law and fact by deciding or determining the issue which were not framed. vii. That, the Arbitrator erred in law and fact by deciding and granting the reliefs which were not sought in the Referral form No. 1. viii. That, the Hon. Arbitrator was biased on the whole process of entertaining the dispute and on her decision and Award. ix. That, the Hon. Arbitrator erred in law and fact by ordering the impacted employees to be paid accordingly, while there was no list of affected employees and or amount or calculation tabled for confirmation of the parties during hearing or in a consultation meeting. x. That, the Award given by Hon. Arbitrator is opening the fora shopping to the Respondent to choose whom one (employee) to retrench at their own free will instead of complying with law. The application was argued by way of written submissions. Before the Court, the Applicant was represented by Mr. Idd A Mrema, learned Counsel. On the other hand, Mr. Emmanuel Miage, learned Counsel appeared for the Respondent. Arguing in support of the application, Mr. Mrema generally argued that the procedures for retrenchment in the matter at hand were not followed as they are provided under Section 38 o f the Employment and Labour Relations A ct [Cap 366 RE 2019] (herein ELRA). That the Respondent neither shown how the retrenchment process was contemplated and its validity nor did they disclose all relevant information to the Applicant including the impacted employees. It was contended that the notice issued was the general notice to all staff members. Counse Mrema further submitted that the Respondent initiated the process of retrenchment without obtaining the approval or Board Resolution of the Akiba Commercial Bank or the approval or resolution from Bank of Tanzania (BOT) as prudential Regulator of all Banks pursuant to Section 38(1) o f ELRA and Section 147 o f the Companies Act Cap 212 Revised Edition 2019. He was of the view that the dispute was improper for determination under the CMA. As to the requirement of Board Resolution, Counsel Mrema referred the Court to the case of Stanbic Bank Tanzania Limited v. Sumry Bus Services and Company Limited and 4 Others, Civil Case No. 125 of 2018, High Court of Tanzia, Dar es Salaam. He therefore, urged the Court to quash and set aside the CMA's decision. Responding to the application, Mr. Miage strongly submitted that the Respondent proved the reason for retrenchment due to financial reason as per exhibit PI and exhibit P4. He stated that the process of retrenchment started with a notice to all staff and the intention to retrench was contemplated. He added that the Applicants' employees were consulted through various meetings. Counsel Miage argued that the Applicant in their submission did not show how the presence of ATE at the meetings prejudiced the Applicant or its members. He was of the view that the employer has much right to be represented as the employees and ATE were doing their legal duty. It was further submitted that, to avoid any form of discrimination, the Respondent consulted the unionized staff through their representative FIBUCA and for the non-unionized, were consulted in their capacity. He added that the unionized and non-unionized employees had the same package regardless the fact that they were consulted separately. Thus, there is no issues of discrimination as claimed. As regards the allegation of having board resolution, it was submitted that, there is no mandatory provision for the employer to have board resolution before retrenchment. In the upshot, Counsel Miage insisted that the Respondent had valid reason to retrench, and he followed the procedures required by the law. Rejoining the application, the Applicant reiterated his submissions in chief. From the submissions of the parties, Court records and applicable laws, I find the Court is called upon to determine the following issues: One, whether the Respondent had valid reason to retrench the Applicants' employees. Two, whether the Respondent followed procedures in terminating the Applicants' employees and; Three, To what reliefs are the parties entitled. To start with the first issue on the validity of the reason to retrench, the circumstances under which retrenchment exercise may take place are provided under Rule 23 o f GN. No. 42 o f2007which 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 the economic needs of the business. The Respondent tendered the financial report (exhibit PI) to prove that the bank was operating under loss. I have critically examined the financial report tendered. The report shows that for the year ending 31 December, 2017 the bank had a loss before tax of TZS 10.9 billion (2016: Profit before tax was TZS 12.3 billion). Again, for the year 2017 the bank recorded a loss before tax of TZS 10.9. The financial report proves that the bank was operating under loss. I have noted the Applicant's contention that the Respondent did not tender any letter of approval from the Bank of Tanzania. With due respect to the Applicant Counsel's submission, he did not cite any provision of the law which demand such alleged mandatory requirement. It is my view that the financial report tendered suffice to prove the loss incured by the bank. Therefore, the bank had to take measures to rescue the situation. I therefore join hands with the Arbitrator that the Respondent had valid reason to retrench the Applicant's staffs. Coming to the second issue as to procedures for retrenchment, as rightly submitted by both parties, the procedures for retrenchment are provided under Section 38 o f the ELRA which provides: Section 38 (1) In any termination for operational requirements (retrenchment), the employer shall comply with the following principles, that is to say, be 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 of proper consultation; (c) consult prior to retrenchment ox redundancy on - (i). the reasons for 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 \r\ respect of the retrenchments, 8 [Emphasis is mine] The provision is also in pari materia with Rule 23 and 24 o f the Employment and Labour Relations (Code o f Good Practice) Rules, GN. No. 42 o f2007. Looking at the application at hand, it is my observation that the above quoted procedures were followed by the Respondent in terminating the Applicant's staffs. The Applicants alleges that they were not properly consulted. Their submission is contrary to the evidence available in record. The Respondent tendered minutes of the consultation meetings which commenced from 22nd March, 2023 up to 12th May, 2023. The record clearly shows that the Applicant prolonged the consultation process. As per the letter dated 6th April, 2023 (exhibit P13), the Respondent informed the Applicant as follows: Management of Akiba Commercial Bank and Trade Union had the first meeting on 22nd March, 2023 and a second meeting on 29th March, 2023. Following deliberations, FIBUCA requested for additional time to review management's proposal in order to prepare and submit a counter proposal. On 30th March, 2023 Management provided FIBUCA with all the necessary information/documents to facilitate review and preparation of a counter proposal. On the above meeting held on 29th March, 2023, FIBUCA committed to submit the counter proposal on 5th April, 2023 in order for management to review and proceed to finalize the consultation process with the Union. Regrettably, FIBUCA has not adhered to the committed timelines and to date the counter proposal has not been submitted to the Bank. We have also extended the said deadline to today 6th April, 2023 but yet the counter proposal has not been submitted. In view of the above letter, it is my considered view that the Applicant's staffs were properly consulted, as submitted by the Respondent's Counsel. However, they kept on making counter proposal to bar the retrenchment process to proceed. The law only provides for the mandatory requirement for the employer to consult employee's termination but the time to consult is not provided. It is my view that consultation should be done within reasonable time to allow the employer to proceed with the retrenchment process targeted. If consultation will be conducted for more than four months as in this case, the target intended won't be achieved. Retrenchment process is taken as a last resort to restructure the business. Therefore, in adhering to retrenchment procedures, interest of both parties should be considered. I have noted the allegation of having board resolution. I entirely agree with the Respondent's Counsel that the Applicant's representative did not cite any mandatory provision of the law on that regard. As to the cases cited, they are distinguishable to the circumstances at hand. The referred cases places for the requirement to have board resolution when a company institutes legal proceedings which is not the case at hand that concerns about retrenchment. On the basis of the evidence in record, I find no justifiable reason to fault the CMA's Award. The Award is hereby upheld. It is so ordered. Y J. MLYAMBINA JUDGE 22/09/2023 Judgement pronounced and dated 22nd September, 2023 in the presence of Counsel Iddi Mrema for the Applicant and Emmanuel Godson for the Respondent. Y J. MLYAMBTIStff JUDGE 22/09/2023 li