nimrod elireheemah mkono ta mkono co advocates vs faraji taratibu 2022 tzhcld 914 29 august 2022

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA LABOUR DIVISION AT PAR ES SALAAM REVISION NO. 499 OF 2021 NIMROD ELIREHEEMAH MKONO t/a MKONO & CO. ADVOCATES..................... APPLICANT VERSUS FARAJI TARATIBU.................................................................... RESPONDENT JUDGEMENT S. M, MAGHIMBI, J, The applicant filed the present application challenging the award of the Commission for Mediation and Arbitration for Ilala ("CMA") in Labour Dispute No. CMA/DSM/ILA/121/19/284 ("the Dispute") by Hon. Mbena, S, Arbitrator. The application is lodged by a Notice of Application and a Chamber Summons supported by an affidavit sworn by Mr. Grayson Laizer, applicant's advocate on the 16/12/2021. On the other hand, the respondent challenged the application through a Notice of Opposition and counter affidavit affirmed by the respondent in person on the 15th March, 2022. Before venturing into the merits of this application, it is only prudent that what has caused the current dispute is narrated. Sometimes in 2012, the respondent was employed by the applicant as an Intellectual Property Assistant Officer on permanent basis. Following i the respondent's successful enrolment as an Advocate in December, 2015, he was offered another position as an IP Associate, a position which he resumed on 01st January, 2016. However, the new position changed the terms of employment contract to a fixed term contract of three years commencing on 01/01/2016 and agreed to end on 31/12/2018. Sometimes in May, 2016, the applicant firm experienced management problems leading to resignation of two of its managing partners. Due to his good relationship with the remaining partner and a scholarship promise, the respondent continued to work in the firm despite the financial crisis facing the firm. The respondent alleged that after continuation of working without being paid any salaries and after getting wind of misuse of funds on part of the management, he strongly started to claim for his salary arears in vain. After the negotiation failed, the applicant's management locked the respondent out of the office. Following the lock out, the respondent referred the matter to the CMA claiming for unfair termination. At the CMA, the respondent prayed for the following; payment of USD 15,895 being outstanding salary arrears, payment of USD 24,000 being compensation for unlawful termination and breach of contract, severance allowance and a 2 certificate of service. After considering the parties' evidence the CMA awarded the respondent the reliefs claimed, a compensation totalling to sum of USD 35,144.961. Aggrieved by the CMA's award, the applicant filed the present application on the following grounds:- i. That the Arbitrator erred in law and fact for failure to observe that there were exist special circumstances which lead to automatic termination to the respondent. ii. That the Arbitrator erred in law and in fact in assessing the evidence on record in her finding that the applicant unfairly terminated the respondent without following proper procedure under operational requirements (retrenchment) which was not the issue before the Commission or issue framed by the parties. iii. That the Arbitrator upon holding that the reason for termination was fair erred in law and in fact for awarding the respondent twelve-month salary to the tune of USD 18,036 and severance payment of three years to the tune of USD 1,213.96. iv. That, the Honourable Arbitrator erred in law and fact for failure to observe evidence that the respondent was only entitled for his 3 salary arrears to the tune of UAD 13,985 only and not 15,895 as awarded. The applicant's prayer was for this court to revise and set aside the CMA award. On his part, the respondent opposed the application praying for its dismissal. The application proceeded by way of written submissions. Before this court, the applicant was represented by Mr. Grayson Laixer, Learned Counsel whereas the respondent was unrepresented, he appeared in person. At the onset of his submission in chief, Mr. Laizer narrated the following facts, that the applicant, that is Mr. Nimrod Elirehema Mkono, has been sick and suffering from Dementia for a very long time. He was taken to United State of America for treatment sometimes in 2018 where he is still admitted in a hospital for treatment. That Mr. Mkono not remember most of the things as his memory is completely impaired therefore he does not have any capacity to appear and defend any allegation during the CMA or in this Court. He added that his long sickness resulted to the closure of the business since 2019. He emphasized that the respondent was well aware of the situation that occurred in the firm. 4 On the substance of the dispute, Mr. Laizer admitted that the issue between the applicant's firm and the respondent was on payment of salaries arrears as testified by the applicant's daughter (DW1) at the CMA. He added that even DW1 in her testimony admitted to know the Respondent's claims as one of the employees who were listed to be paid. He stated that the dispute arose because the respondent refused to be paid in installments and it was following such refusal that the respondent went to CMA to seek for his Salaries arrears. He argued that at the CMA, the respondent raised unfounded complaint of breach of contract and unlawful termination which never occurred basing on the situation narrated above. He submitted further that from the above facts, basing on the three issues framed during the hearing, the trial Arbitrator was correct in holding that according to evidence provided by both parties, the reason for complainant's (at the CMA) termination was fair since the situation was well explained by both parties, as it is reflected at pages 15 and 16 of the impugned Award. Mr. Laizer contended that the trial Arbitrator erred in law and in fact for going further to discuss the procedure for termination of employment under operational requirements (Retrenchment). He stated that firstly, the issue of retrenchment was 5 never framed during the hearing. He argued that the Arbitrator would have seen that the applicant is suffering from dementia, the business collapsed, thus, the requirement of section 38 of ELRA would not apply. Further that the Arbitrator was supposed to hold for automatic termination under Rule 5(1) of Employment and Labour Relation (Code of Good Practice) G.N. 42 of 2007 ("the Code"). Mr.Laizer continued to submit that the Respondent was employed by the Firm which was registered by Partnership Deed to render legal services. That it is in Evidence the business become frustrated after the Managing Partner became sick and the business had been making losses onwards due to various economic reasons and finally everything was sold by the creditors including the office premises, and therefore nothing is left. The Counsel submitted that this clearly shows the Arbitrator failed to observe the existing special circumstances which led to automatic termination of the employees including the Respondent. He emphatically submitted that the operational requirement (Retrenchment) exist only when the said business is ongoing concern and it is where the obligations placed on an employer are both procedural and substance. He stated that this matter is very different because the business was automatically warped. He argued that even if we say that the 6 termination was based on operational requirement, the trial Arbitrator erred in law and in fact for holding that the commission is inquisitive on which procedure was used by the Applicant to terminate the Respondent's Contract. He continued to submit that Annexture F5 to the Respondent's Counter Affidavit is the Memorandum written by the Applicant before he was hospitalized. In page 2, paragraph 2, the Applicant stated categorically that his financial circumstances have not been satisfactory and thus he is unable to meet with employees' salaries and other payments, therefore it is all possible that they will remain unpaid for a while. That if they cannot accept the situation then they were free to find another employment whilst reserving their rights. Mr. Laizer submitted further that reading the Memorandum, it was clear that employees including the Respondent opted to remain in the firm; therefore they are estopped to claim for unfair termination while they consented. That the employees were consulted and made aware of what is going on in the firm, the Memorandum expressed that the Applicant has health problems. The counsel argued that if the trial Arbitrator considered such Memorandum, she could have come to the 7 correct finding and see that the Respondent was only claiming for unpaid salary therefore not entitled to any other relief. Mr. Laizer further argued that Rule 23(3) of the Code provides for the court to scrutinize a termination based on operational requirement carefully in order to ensure that the employer has considered all possible alternatives to termination before the termination is effected. He then submitted that if the trial Arbitrator scrutinized the evidence properly, she would have appreciated that termination of the respondent was justified in the circumstances of this case. He insisted that evidence led by both sides clearly shows that the situation of the Applicant would not even allow him to consider any possible alternative due to his sickness. Mr. Laizer continued to submit that the Arbitrator erred in law and in fact for failure to observe the evidence that the Respondent was only entitled for his salary arrears to the tune of 13,985 only and not 15,895 as awarded. He added that, the proceedings and award at page 8 clearly shows that the Respondent admitted that his claims are within the salary slip which is 13,985 USD. He concluded that the respondent was wrongly awarded. Mr. Laizer submitted further that looking into the exhibit and evidence tendered at the CMA, the dispute was on the payment of 8 outstanding salaries. That as per Annexture FT-6, various emails conversation and memorandum of Agreement, the parties failed to reach agreement on modality of payment following various discussions. The counsel submitted that the claims in CMA form No. 1 which were relied on by the Arbitrator were not justified. He contended that there was no unlawful termination of employment and breach of contract as alluded by the respondent. In conclusion of his submissions, the counsel urged the court to revise and set aside the CMA's award. On his reply submissions, the respondent submitted that the court has been improperly moved for there is no material irregularity in the records or misconduct on part of the Arbitrator as pointed out by the applicant, to warrant this court to revise the award. He submitted that the Arbitrator decided the dispute fairly. As to the merit of the application, the respondent submitted that to win sympathy of this court, Mr. Laizer raised a number of unjustifiable claims in contradiction to the evidence on record. That he sued Nimrod Elireheem Mkono trading as Mkono & Company Advocates and summons were served to him accordingly. That DW1 was given mandate to run the office with any liability reserved to the applicant himself who went abroad and that the allegation of sickness was not the reason for the closure of the 9 business. He strongly disputed the allegation that he refused to be paid in installments. The respondent went on submitting that he made efforts to resolve this dispute amicably. He further disputed the allegation that the Arbitrator discussed matters which were not in issue. On theissue of retrenchment, his submission was the issue was raised by DW1 in her defense. He added that if the applicant claims to have retrenched the respondent, then he had to follow the stipulated procedures, he continued to submit that the applicant wrongly quoted the memorandum as a defence for failure to pay salaries to his employees. He stated that the memorandum in itself is a proper procedure to follow in case one fails to pay salaries to his employees. That when drafting the memorandum, Mr. Mkono was mentally sound enough to draft the same and appoint successors before the Commissioner for Oaths. He submitted further that the applicant did not dispute the award of 12 months' compensation to the tune of USD 18,036.00 or payment of USD 1,213.96 as severance pay. That he only disputed the award of USD 15,895 claiming that the same ought to have been awarded as USD 13,985/-. io In rejoinder, Mr. Laizer appreciated the history of the applicant's firm narrated by the respondent. He added that the liability of the firm binds all partners severally and individually even after dissolution of partnership. Mr. Laizer submitted at length on who was supposed to be sued in this application of which I find no relevance of the submission because that is not the basis of this application. He further reiterated his submissions in chief. After considering the rival submissions of the parties and the records of the CMA, the court is called upon to determine the following issues; whether the termination of respondent was fair, whether the respondent had any claims of salary arrears and to what extent and the reliefs the parties are entitled to. Starting with the first issue as to whether the respondent was fairly terminated from employment both substantively and procedurally; to begin with the first limb of substantive termination, in his evidence the respondent testified that he was locked out the office after he persistently claimed for his salary arears. In response to the respondent's allegation, DW1 testified at the CMA that due to financial constraints of the business, they decided to retrench some of the employees including the respondent. Unfortunately, in this application 11 there is no termination letter which would have openly state the reason for termination. It should be noted that pursuant to section 39 of ELRA, in any dispute of unfair termination, it is the duty of the employer to prove the employee's termination was fair. In the matter at hand, despite DWl's testimony that the respondent was retrenched, yet the applicant challenges as to why the Arbitrator discussed about the said retrenchment. Taking into account that the allegation of retrenchment was raised by the applicant's sole witness (DW1), it is my view that the Arbitrator was correct to discuss the same. Therefore, the allegation that the Arbitrator discussed issues not raised by the parties lacks merit. The applicant also wants this court to find that there was automatic termination pursuant to Rule 5(1) of the Code which provides that: - "a contract of Employment may be terminated automatically In certain circumstances such as death or loss of profession of the business(sequestration) of the employer." As plainly stated in the above quotation, automatic termination may apply to circumstances of death or loss of profession of business. It is my view that the circumstances mentioned above does not suit to the 12 matter at hand. In this case the record shows that following the sickness of the Managing partner in the firm through a Memorandum dated 24/07/2018 (exhibit P6) he appointed Mr. Rajendra Mashru his good friend to assist his daughter Leah Mkono with management of the firm. Therefore, the firm continued to operate in the absence of the managing partner. Additionally, in the referral form (CMA Fl) the respondent indicated that the dispute arose on 31/07/2018 and DW1 testified that the firm ceased to operate in 2019 after the respondent was terminated from employment. However, it is also clear in his CMA Form No.l that the respondent lodged a complaint on 08/02/2019 which is the year the firm ceased to operate. One of the reasons for his application for condonation was that he was making negotiations with the employer therefore there were ongoing negotiations between the parties. However, this could not amount to an automatic termination hence the argument of automatic termination cannot stand. I have noted the respondent's allegation that in the memorandum, the Managing partner expressly stated that he had no capacity to pay employees (exhibit P6). In my view, the relevant memorandum cannot act as a termination notice because the employment contract between the parties had to be formally terminated according to the law and not 13 otherwise. After all, the record shows that even after the EXP6 was issued, the respondent had intention to continue working for the applicant's company but he was locked out. Therefore so long as the respondent's employment contract was still in existence, formal procedure had to be followed to terminate the same. On those findings my conclusive finding is that the respondent's contract was terminated for unfound reasons and no required procedures were followed. Thus, the Arbitrator rightly found that the respondent was unfairly terminated from employment. Coming to the second issue as to what reliefs are the parties entitled to, Mr. Laizer disputed the award of USD 15,895 as unpaid salary arears to the respondent. He stated that the respondent was entitled to the award of USD 13,985 being the amount of unpaid salaries. Going through the record I have noted that according to the calculations agreed by the parties the arrears claimed sum up to USD 13,985/- hence the Arbitrator wrongly awarded the amount of USD 15,895/-. As to the award of compensation of 12 months salaries, the available evidence shows that the respondent was on a fixed term contract of three years which was to expiry on 31/12/2018 as evidenced 14 by the employment offer (exhibit Pl) thus, since there was breach of a fixed term employment contract, the respondent is entitled to the salaries for the remaining period of the contract. The respondent's salary per year was USD 18,036 therefore, per month he received USD 1,503. The remaining period was only 5 months hence he is entitled to compensation to the tune of USD 7,515/-. I find no need to labour on the award of severance pay since the same is not disputed by the applicant. In the result, I find the present application to have partly succeeded. The award of USD 35,144.961 is varied because the award of salary arrears and compensation of unfair termination has been reduced as elaborated above. Consequently, the applicant is ordered to pay the respondent a total sum of USD 21,500/- being salary arrears (USD 13,985) and compensation for the remaining period of 5 months (USD 7,515). It is so ordered. Dated at Dar es Salaam this 29th August, 2022. JUDGE 15