JULIETH MASAWE AND ANOTH Vs

THE UNITED REPUBLIC OF TANZANIA IN THE HIGH COURT OF TANZANIA (DODOMA SUB-REGISTRY) AT DODOMA LABOUR REVISION NO. 9481 OF 2024 (Originating from the Award of the Commission for Mediation and Arbitration in Complaint No. CMA/DOM/21/2023/10 and CMA/DOM/20/2023/9 delivered by Hon. Herman Komba, Arbitrator) JULIETH MASSAWE ……………………….………………………………1ST APPLICANT REGINA BONIFACE …….…………………………………………………2ND APPLICANT VERSUS KAIZARI GENERAL SUPPLIES CO. LTD.…..……………………………RESPONDENT JUDGEMENT Date of last order: 08th October, 2024. Date of Judgment: 15th November, 2024. E.E. KAKOLAKI, J. This judgment seeks to determine applicants’ application for revision assailing the decision of the Commission for Mediation and Arbitration (CMA) for Dodoma handed down on 08/03/2024, concerning the merged Complaints No. CMA/DOM/21/2023/10 and CMA/DOM/20/2023/9, jointly adjudicated by the Arbitrator after failure of mediation process. The 1 application is preferred by way of chamber summons supported by the affidavit duly sworn by Ms. Joanitha Paul, applicants’ advocate and Notice of Application requesting the Court to call and examine the CMA record, revise them, quash and set aside the arbitral award on the compensation made to the applicants on 08/03/2024 by CMA and any other relief deemed just by the Court. The application was made under sections 91(1)(a), 91(2)(a), and 94(1)(b)(i) of the Employment and Labor Relations Act, No. 6 of 2004 [R.E. 2019], alongside with Rules 24(1), 24(2)(a)-(f), 24(3)(a)-(d), and 28(1)(b)-(e) of the Labor Court Rules, 2007, G.N. 106 of 2007. The background story giving rise to this application is simple to tell and it goes thus. The 1st and 2nd applicants were respondent’s employees in the capacities of cashier and personal secretary since the year 2003 and 2008, respectively as per their employment contracts (exhibits P1 and P3) until 18/08/2023 when they were handed with letters terminating their employment (exhibits PE2 and PE4) which they signed and later on each one of them received terminal benefits including monthly salary, severance pay, salary of the remaining months under the employment contract and payments in lieu of Notice (exhibit D5). Dissatisfied with that decision the 2 applicants filed their complaints before the CMA challenging their termination contending that it was substantively and procedurally unfair hence praying for either re-instatement in the employment or payment of their terminal benefits. Their claims were vehemently resisted by the respondent who deposed that, reasons for their termination and the procedures adopted were all reasonable and fair and both applicants were paid their terminal benefits accordingly. She averred that, applicants’ termination resulted from change of company’s organization structure whereby the positions of cashier and personal secretary held by the applicants ceased to exist. Since the applicants were paid their terminal benefits, the respondents pray the CMA to dismiss their complaints for want of merits. Having heard and evaluated the evidence adduced by both sides the Arbitrator was satisfied that, the reason for their termination was disclosed and the same was reasonable save for the procedures adopted by the respondent in the whole process of their termination that contravened the provisions of sections 37(2)(c) and 38(1)(c)(i) – (iv) of the Employment and Labour Relations Act, [Cap. 366 R.E 2019] (the ELRA), for failure to consult the applicants before terminating them hence proceeded award the applicants a total amount of Tshs. 3,852,000/- being applicant’s monthly 3 salaries for 6 months. Each part was further ordered to bear own costs. It is the said award that seem to have aggrieved the applicants who expected more hence the present application for revision premised on four grounds going thus: 1. The CMA misdirected itself in making a finding that applicants’ termination was fair and reasonable. 2. The CMA misdirected itself in law and fact by calculating applicants’ compensation basing on unknown basis and contrary to the law. 3. The CMA misdirected itself in law and facts relying on its own findings that applicants were provided with certificates of services. 4. The CMA misdirected itself in law and facts by not putting into consideration other reliefs in which parties were entitled to. In view of the above grounds for revision the applicants believed the application involves the following issues in which this Court is called to determine: - 1. Whether the Compensation given to the Applicants was legally fair and just. 2. Whether Termination was substantively and procedurally fair. 4 3. Whether the applicants were entitled to other reliefs. The application was opposed by the Respondent who filed the notice of opposition and the counter affidavit duly sworn by one, Lilian Nehemia Jacob, a Human Resources Manager to the Respondent. Basically, the counter- affidavit refuted most of the claims while asserting that, one, the retrenchment process was orchestrated by change of respondent’s organizational structure, second, reason for termination was never contested by the applicants during hearing and third that, the affidavit does not support the application or the sought orders in the chamber summons. When hearing took place both parties were in attendance and represented as applicants hired legal services of Mr. Johanitha Paul, learned counsel while the Respondent represented Mr. George Bega and Mr. Dunstan Mbunda both learned counsels. In her submission in chief in favour of the application that generally canvassed all grounds, Ms. Paul made it known to the Court that, according to the CMA’s decision at page 10 of the judgment, applicants herein were unfairly terminated. She argued that, the well-established legal principle is that termination of an employment without following due procedure constitutes unfair termination in which when committed by the employer the arbitrator is bound under section 40 (1) (c) of the ELRA to 5 award compensation of not less than 12 months’ salary to the employee. In the present matter she faulted the Arbitrator’s decision to award the applicants compensation for 6 months only without assigning any reason for such deviation of the law adding that, compensation is awarded in additional to and not as a substitute to any other amounts in which the employee is entitled. It was her submission therefore that, apart from that compensation of unfair termination applicants are also entitled to other statutory benefits payable upon termination, as outlined in section 44 (1) (b), (c), (d), and (e) of the ELRA, which she contended were not provided to them. In the end she requested the Court to consider her submission together with the averments in the affidavit and grant the application by awarding the applicants their statutory entitlements. Resisting the submission by the applicants Mr. Mbunda for the Respondent having adopted the counter affidavit to form part of his submission, while acknowledging the specifics of section 40(1) (c) of the ELRA in terms of payment of compensation of employee’s remuneration for not less than 12 months was quick to counter that such consideration in payment is valid only when the termination is both substantively and procedurally unfair. In this case he emphasized, applicants’ termination was substantively fair though 6 some procedural aspects were partially violated, but not entirely. To bolster his position the Court was referred to the cases of Felician Rutwaza Vs. World Vision Tanzania, Civil Appeal No. 213 of 2019 (CAT) and Pangea Minerals Limited Vs. Joseph Mgalisha Bulabuza, Civil Appeal No. 282 of 2021 (both CAT) Tanzlii where the Court of Appeal reduced the award on the ground that, the same was ordered in excess since termination was based on violation of procedural laws only. Regarding the interpretation of Section 40 of the ELRA, reference was made to the case of Sodetra (SPRL) Ltd vs. Mezza and Another, Labour Revision No. 207 of 2008 (HC) as cited in Felician Rutwaza (supra) where it was observed that, the law abhors substantive unfairness than procedural unfairness, thus the remedy attracts heavier punishment that the latter. Regarding the assertion that, the applicants were not paid their entitlements, Mr. Mbunda contested the claim submitting that, the terminal benefits were duly paid as evidenced in exhibit D5 and stated at page 19 of the CMA proceedings, which include the monthly salary, severance pay, subsistence allowance equivalent to three months’ salary, and payment in lieu of one month’s notice. He emphasized that, these payments were separate from the CMA award leave alone certificates of services in which they were entitled 7 to, but failed to collect them from the Respondent’s office. In view of the above submission this Court was prayed to dismiss the application for want of merit. In her re-joinder submission, Ms. Paul reiterated her submission in chief while insisting that that applicants were entitled to compensation under Section 40 (1) (c) of the ELRA due to procedural unfair termination and that, the cases cited by the Respondent’s counsel were inapplicable to the present case’s circumstances for being grounded on termination due to misconducts and illness. Regarding payment of applicants’ entitlements, she disputed the assertion that all benefits including annual leave, were paid as required by sections 44(1) (b), (c), (e), and (f) of the ELRA, read together with sections 42 and 43 of the same law. She maintained that, the awarded compensation was insufficient and contrary to the law thus this application be granted by increasing the award. Having painstakingly reviewed the evidence on record and considered at length the fighting submission by the parties, there is no dispute that the CMA award to the applicants was based on procedural unfairness only the aspect which no doubt led to unfair termination. It is so as when cross examined both applicants admitted to have no issue with the reasons for 8 their termination as correctly submitted by Mr. Mbunda, learned advocate. Equally parties are at one when it comes to interpretation of the provisions of section 40(1)(c) of the ELRA that, when the Court or arbitrator finds that termination in unfair then, may order compensation to the employee of not less than 12 months remuneration. What brings them into locked horns are two issues. One, when is the said compensation for not less than 12 months on the ground of unfair termination is payable and second, whether applicants herein were paid all their terminal entitlements under the law. In addressing them in this judgment I will also adopt the style opted by the applicants when addressed their grounds of revision generally. To start with the first issue the law is settled that, payment of compensation for not less than 12 months’ remuneration as provided under section 40(1)(c) of the ELRA flowing from unfair termination is not mandatory in all cases of unfair termination. It is so in my view as that depends on whether termination is grounded on both substantive and procedural unfairness or one of the grounds only since substantive unfairness termination attracts a heavier penalty than procedural unfairness. In the case of Felician Rutwaza (supra) the Court when upholding the High Court decision that reduced appellant’s compensation from 12 months awarded by the CMA 9 based on interpretation of section 40(1)(c) of the ELRA, to 3 months’ remuneration on the reason that termination was grounded on procedural unfairness only had the following observation to make: ’’The learned Judge discussed the remedies flowing from unfair termination in the light of section 40 (1) (c) of the ELRA and held (at page 225 of the record) that it is not mandatory that in all cases of unfair termination, the arbitrator should order compensation of not less than 12 months' remuneration. In the context of the case in which the unfairness of the termination was on procedure only, guided by some decisions of that court, the learned Judge reduced compensation from 12 to 3 months. With respect, we agree with her entirely. In Sodetra (SPRL) Ltd v. Mezza & Another (supra) referred to by Mr. Mkumbukwa, the High Court (Rweyemamu, J.) interpreted section 40 (1) (c) thus: "...a reading of other sections of the Act gives a distinct impression that the law abhors substantive unfairness more than procedural unfairness, the remedy for the former attracts a heavier penalty than the latter…’’ (Emphasis supplied). Similar stance was taken by the Court of Appeal in the case of Pangea Minerals Limited (supra) where the Court of Appeal had this to say, on 10 when an arbitrator can order compensation of more than 12 months remuneration: ’’…We have also considered the fact that the remedies flowing from unfair termination are not mandatory for an arbitrator to order compensation of more than 12 months remuneration. We are saying so because the unfairness of termination is on procedural ground, therefore, obviously, it counts less in favour of awarding 30 months’ compensation since the termination is partly procedurally unfair than in the case if it is both substantively and procedurally unfair.’’ (Emphasis added) From the principle obtained in the above cited cases, it is now evident to this Court that, compensation of not less than 12 months’ remuneration based on unfair termination under section 40(1)(c) of the ELRA will only be payable when the termination is grounded on both substantive and procedural unfairness and not when the ground involved in only one, more so procedural unfairness which principally counts less than substantive unfairness. In this case since appellant’s termination was based on procedural unfairness and guided with the above principle of the law, this Court finds itself barren of grounds to fault the CMA’s decision that awarded the appellants 11 compensation of 6 months’ salary which obvious is less than 12 months’ remuneration. Instead, it respectfully endorses Mr. Mbunda submission that, the awarded amount of Tshs. 3,852,000/- was sufficient and arrived at in compliance with the law as compensation of not less than 12 months’ remuneration is payable only when unfair termination involves both substantive and procedural unfairness. The above finding is premised on the settled law in our jurisdiction that, compensation award and determination of the quantum is vested in arbitrator’s discretion. While the law is setting threshold of the compensation to be awarded, the maximum amount awardable is determined by the arbitrator depending of each case, after taking into account the evidence presented before him/her and the relevant legal guidelines as the law on compensation due to unfair termination aims at redressing the employee against the consequences of procedural flaws and not his enrichment unfairly. See the case of Gaspar Peter Vs. Mtwara Urban Water Supply Authority (MTUWASA), Civil Appeal No. 35 of 2017 and Rule 32 (5) of the Labour Institution (Mediation and Arbitrators Guidelines) Rules, 2007, GN. No. 67 of 2007. What I agree with Ms. Paul’s submission is the proposition that, the compensation is payable separate and in addition to any other amount to 12 which the employee may be entitled in terms of any law or agreement as provided under section 40(2) of the ELRA flowing from subsection (1)(c) of the same section. Section 40(1)(c) and (2) reads: 40.-(1) Where an arbitrator or Labour Court finds a termination is unfair, the arbitrator or Court may order the employer – (a) N/A. (b) N/A (c) to pay compensation to the employee of not less than twelve months remuneration. (2) An order for compensation made under this section shall be in addition to, and not a substitute for, any other amount to which the employee may be entitled in terms of any law or agreement. (Emphasis added) The above legal stance and findings takes me to the second issue for consideration and determination as to whether applicants herein were paid all their terminal entitlements under the law other than compensation of 6 months’ salary awarded by CMA. The law under section 44 (1) and (2) read together with section 41 (1) (a)-(b) and (2) both of the ELRA sets down 13 terminal benefits payable to the employee upon termination of his/her employment. Section 44 (1) and (2) reads as follows: “44 (1) On termination of employment, an employer shall pay an employee – (a) any remuneration for work done before the termination; (b) any annual leave pay due to an employee under section 31 for leave that the employee has not taken; (c) any annual leave pay accrued during any incomplete leave cycle determined in accordance with section 31(1); (d) any notice pay due under section 41(5); and (e) any severance pay due under section 42; (f) any transport allowance that may be due under section 43. (2) On termination, the employer shall issue to an employee a prescribed certificate of service.” And section 41(1)(a) and (b) and (2) of the ELRA provides that: 41.-(1) Where a contract of employment can be terminated on notice, the period of notice shall not be less than- 14 (a) seven days, if notice is given in the first month of employment; and (b) after that - (i) 4 days, if the employee is employed on a daily or weekly basis; or (ii) 28 days, if the employee is employed on a monthly basis. (2) An agreement may provide for a notice period that is longer than that required in subsection (1) provided that, the agreed notice period is of equal duration for both the employer and the employee. In compliance with the above provision of the law DW1 for the respondent tendered before CMA two slips particularizing the remuneration paid to the applicants at the time of termination, the document which was admitted as exhibit D5 collectively, without objection from the applicants who were represented by advocate. It is noted, nothing came forth from applicants during cross examination of DW1 or when adducing their evidence complaining over insufficiency of the said payments. The said payments as per exhibit D5 included one month salary as provided under section 44(1)(a) of the ELRA, one month salary in lieu of notice as per section 44(1)(d) of the ELRA as well as severance pay in terms of the requirement of the law under 15 section 44(1)(e) of ELRA. As regard to annual leave payment due or any accrued during incomplete leave cycle as provided under section 44(1)(b) and (c) of the ELRA, this Court finds itself barren of any evidence from the appellants enabling it to determine whether the same were due or not. On transportation allowance as provided under section 44(1)(f) of the ELRA, this Court is satisfied and holds that applicants were not entitled to that allowance since their employment contracts in exhibit D1 collectively established that both were recruited from Dodoma which was also the place of work at the time of their termination. What is not clear to the Court is whether applicants were provided with certificates of service which is their entitlement under section 44(2) of the ELRA as their termination was not grounded on misconduct rather operational requirement. Aside of the said certificate of service this Court is satisfied that, appellants were paid all their necessary entitlements according to the law, hence have no genuine claims against the respondent. In view of the above findings this application is partly granted to the extent that, applicants are entitled to certificates of service in which an order is issued for them to be provided with. Otherwise, the remaining part of the application for revision stand dismissed by upholding the arbitrator’s award. 16 Each party to bear own costs. It is so ordered. Dated at Dodoma this 15th of November, 2024. E. E. KAKOLAKI JUGDE 15/11/2024. Court: The Judgment has been delivered at Dodoma today on 15 th day of November, 2024, in the presence of Ms. Joanitha Paul, advocate for the 1 st and 2nd applicants, Mr. Dunstan Mbunda, advocate for the Respondent and Ms. Veradina Matikila, Court clerk. Right of appeal explained. E. E. KAKOLAKI JUGDE 15/11/2024. 17