self microfinance fund limited self mf vs teddy syprian mallya 2023 tzhcld 1324 15 june 2023

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA

LABOUR DIVISION

AT PAR ES SALAAM REVISION APPLICATION NO. 13 OF 2023 (Arising from an A ward issued on 08/12/2022 by Hon, Wiiiiam R, Arbitrator in Labour Dispute No. CMA/DSM/ILA/38/21/93/21 at I/a/a) SELF MICROFINANCE FUND LIMITED (SELF M F ) ...................... APPLICANT

VERSUS TEDDY SYPRIAN MALLYA.......................................................RESPONDENT

JUDGEMENT Date of last Order: 25/05/2023 Date of Judgement: 15/06/2023 MLYAMBINA, J. This Judgment is in respect of an application for revision filed by the Applicant who was aggrieved with the Award issued by the Commission for Mediation and Arbitration (herein CMA) in Labour Dispute No. CMA/DSM/ILA/38/21/93/21 at Ilala issued on 8th December 2022. At CMA, Teddy Syprian Mallya, the Respondent was complaining of unfairly termination by Self Microfinance Fund Limited (SELF MF), the abovementioned Applicant. In the Referral Form (CMA FI), the Respondent indicated that there was unlawful termination of renewed contract before due date hence breach of contract and procedures for termination were not followed as there was no consultation. In the said CMA FI, the Respondent claimed compensation for breach of contract, repatriation cost, subsistence allowance and severance pay to the tune of TZS. 86,738,079.38/=. It was alleged by the Applicant that the Respondent was consulted on the changes of employment tenure but refused to consent which necessitated the Applicant to terminate her employment on the basis of changes of Schemes of Services and salary structure and prayed the dispute be dismissed as it was fair termination of employee and employer relationship. On 8th December 2022, William, R, Arbitrator, having heard evidence and submissions from both sides, found the Applicant to

have breached the employment contract as there was no valid reason as well as procedures for termination were not adhered to. With those findings, the Arbitrator Awarded the Respondent the sum of (i) TZS 60,563,830/= being 10 months' salaries compensation and (ii)TZS 6,056,383/= being one month leave pay, all amounting to TZS 66,620,213/=. The Applicant was dissatisfied with the impugned Award, hence this application for revision. The Notice of Application was supported by an affidavit sworn by Angela Kokuhumbya Lushagara, Principal State Attorney. In the said affidavit, the Applicant is seeking the Court to revise the said Award on three issues namely: 1.Whether the Commission for Mediation and Arbitration was correct in holding that the Applicant breached the employment contract unlawfully. 2.Whether the Commission for Mediation and Arbitration was correct in holding that the Applicant had no valid reasons of terminating employment contract as well as did not adhere to prescribed procedures of terminating Respondent.

3. To what reliefs are the Parties entitled to. In opposing the application, the Respondent filed both the notice of opposition and the counter affidavit. By consent of the parties, the application was disposed by way of written submissions. The Applicant enjoyed the service of Ms. Debora Mcharo, Principal State Attorney from the Office of the Solicitor General. It was submitted on behalf of the Applicant that the Commission for Mediation and Arbitration (CMA) erred for not considering that the Applicant had fair reasons to terminate the Respondent. It was submitted that at page 26 of the Award, the Arbitrator acknowledged that there were changes of the Schemes of Service and/or Salary Structure (exhibit D4) and the same fact was also admitted by the Respondent but the Arbitrator wrongly proceeded to hold that the Respondent was asked to consent to be on Permanent and Pensionable scheme while she did not understand the 3 benefit and condition of the said arrangement as well as the Applicant failed to follow directive of exhibit D5. Ms. Debora Mcharo submitted further that; the Applicant clearly and lucidly acted upon clause 15 of the employment contract (exhibit D4) and after receiving several letters from the Ministry of Finance which confirmed the structure of the Fund and Merged the two offices whereby on that arrangement all employees were supposed to be on permanent and

pensionable scheme. Counsel added that the Respondent was duly informed on that process which necessitated changes of Respondent's job description which resulted to her transfer from Arusha to Dar es Salaam (exhibit D3). Ms. Mcharo submitted further that the change of the scheme of services in the organization in accordance to Section 8(3)(h) and (g) o f the Public Service A ct [Cap 298 Revised Edition 2019] was conveyed to the employees and that all employees including the Respondent were required to give their consent if they were ready to be included in Permanent and Pensionable scheme. However, the Respondent was not ready hence became redundant and that fact necessitated Applicant to apply clause 15 of the employment contract to terminate the Respondent because Respondent was no longer compatible with the new scheme. In cementing her submission, counsel referred this Court to the case of Terevael M. Ngalami v. Kampuni ya Simu (T) TTCL, Civil Appeal No. 158 of 2017 Court of Appeal of Tanzania at Dar es Salaam (unreported), p.

13. Ms. Mcharo argued further that the letter (exhibit D5) was written on 22nd September, 2020 and received in the office on 12th October, 2020 whereby the Respondents Contract was to expire in four days only. She added that the employment Contract of the Respondent expired on 16th October, 2020. Therefore, there is no issue of Automatic Renewal. Ms, Mcharo submitted that, the fact that Applicant was late to communicate to the Respondent that she will not renew her Contract cannot be taken as a default to warrant the Respondent claim for unfair termination. She insisted that there was a valid Reason to terminate the Respondent. She cited the case of Mohamed R. Mwenda v. Ultimate Security Ltd, Revision No. 440 of 2013 (HC), Labour Court Case Digest (LCCD)2013. On the issue as to whether the Applicant followed procedure on terminating the Respondent's Contract, Ms. Mcharo submitted that the Applicant followed proper procedure in terminating the contract by invoking the termination clause 15(I)(II)(f) o f employment contract and advancing reason for that termination (Exhibit D4). She added that, in complying with the termination clause, the Respondent was duly saved with exhibits D8 and D9 respectively to that effect hence the Applicant was justified in terminating the employment Contract. She cited the case of Terevael M. Ngalami, p. 14 (supra). She further submitted that, it is

a trite law that each case should be decided on its own circumstances, hence it was inappropriate for the Arbitrator to hold that, there must be agreement with the Respondent before terminating her contract as that does not apply to the circumstances at hand. For all these, the Counsel for the Applicant prayed that the application be allowed by setting aside the CMA Award. In resisting the application, Mr. Kassim Masimbo, Personal Representative for the Respondent submitted that, the Respondent was employed by the Applicant on 17/10/2019 and the said contract was supposed to expire on 16/10/2020. However, according to the contract of employment which was admitted as exhibit D4, the said contract was renewed by default on 17/10/2020 pursuant to clause 17.3.1.2. Therefore, the new contract was supposed to expire on 16/10/2021. Mr. Masimbo submitted further that, before expiration of the contract period and without either following the retrenchment procedures as set forth under Section 38 o f the Employment and Labour Relations Act, Cap. 366 Revised Edition 2019 and Regulation 23 o f the Employment and Labour Relations (Code o f Good Practice) Regulations G.N. NoA2/2007 and in disobedience of the government directives, and 6 contrary to what was done to other employees of the same nature of contracts, the Applicant unilaterally decided to terminate the Respondent's contract. Mr.

Masimbo argued further that, it was evidently proved before the CMA that the merger and placement of employee was concluded and there was no dispute from the Respondent as she had accepted the unilaterally demotion from Hub Manager to Credit Officer and transferred to Dar es Salaam as indicated by the letter dated 06/05/2019 (Exhibit D.3). Mr. Masimbo added that; DW II acknowledged during trial that he was transferred from UTT Microfinance Fund to SELF Microfinance Fund as a result of merger of the two entity as approved which was before the last circular issued by Permanent Secretary -Establishment dated 22nd September, 2020 (exhibit D5) headed "KUWASILISHA MIUNDO YA UTUMISHI YA SELF MICROFINANCE FUND". So to say, the restructuring process was concluded to that effect as confirmed by the Arbitrator at page 23 as contested by the Applicant Counsel. Mr. Masimbo argued further that; it is wrong for the Applicant to rely on the provisions of clause 15(II)(f) to terminate the Respondent on ground of changes of scheme of services and/or salary structure because the same was concluded and what remained was only to change the nature of contract from fixed term contract to permanent and pensionable to fit with Public Service employee's status as guided by number of the directives of the higher authority. Mr. Masimbo added that; the unilaterally decision of the Applicant to implement

the changes of scheme of services without engaging and getting legal consent of the Respondent and later terminating the valid contract and without giving her an opportunity to make decision to enter into pensionable terms as stipulated in the government circulars after its expiry of the said contract as prescribed by the incidental circulars amounted to breach of employment contract. Mr. Masimbo further argued that; Mergers of the fund or changes of scheme of services and/or salary cannot be used as valid reason for terminating the Respondent since circulars to that effect have laid down the procedures and guidelines to be followed in course of merging of the funds and changes of scheme of services. Mr. Masimbo submitted furter that; since the consolidation/merging of those funds (SELF MICROFINANCE and UTT MICROFINANCE Company Limited) necessitated changes of operation requirements, therefore handling of the employees ought to be in compliance with Section 38 o f ELRA (supra) and Regulation 23 o f the Employment and Labour Relations (Code o f Good Practice) Regulations G.N. No.42/2007. Mr. Masimbo submitted that, an act of the Applicant to terminate the Respondent immediately without following the law, guidelines and prescribed procedures while contract was alive justified the evil intent on part of the Employer. Mr. Masimbo added that such malpractice must be distinguished

from the principles highlighted in the case of Terevael M. Ngalam | v. Kampuni ya Simu (T) TTCL Civil Appeal No. 158 of 2017 (CAT) as cited in the Applicant's submission. Mr. Masimbo insisted that it was on those reasons and evidence tendered before the commission that made the Arbitrator to reach decision in favour of Respondent. Mr. Masimbo submitted further that, the main source of this dispute is concealment of relevant information to the employees in respect of service of schemes and other terms of employment contrary to circulars issued by the Treasury and Permanent Secretary - Establishment, and that the Applicant have totally hindered dialogue with the employees. Mr. Masimbo added that, it is clear that the Applicant have contravened the provision of Regulation 23, 24 and 25 o f Employment and Labour Relations (Code o f Good Practice) Regulations G.N. No.42/2007 together with section 38(l)(b) o f the ELRA (supra) on termination due to operational requirements. Mr. Masimbo added that the requirement of the law in event of the retrenchment were well elaborated by this Court in the case of Bayport Financial Services (T) Ltd. v. Herieth Nashoni, Revision No.05 of 2021 High Court of Tanzania at Mbeya (unreported). Mr. Masimbo insisted that, it was evidently revealed before the Commission and now before this Court that the Applicant had no valid ground (s) and did not follow

the procedures of terminating the Respondent. Mr. Masimbo concluded by praying for the application be dismissed to its entirety with costs for being devoid of merits and that all relief (s) awarded by CMA be upheld. I have dully considered the rival submissions of the parties, CMA and Court records as well as the applicable laws. I find that this Court is called upon to determine only two issues; whether the Applicant unlawfully term inated the employment contract entered with the Respondent; and whether the procedures fo r termination were followed. The Applicant strongly alleges that the termination was valid according to the terms of their contract (exhibit D4). On his part, the Respondent maintained that the Applicant breached the employment contract because the ground of changes to the scheme of service and/or salary structure was backed up by the circulars and guidelines on its execution to the employees (exhibit D5). According to the evidence on record, to be more specific, clause 2 and 17 of the employment contract between the parties which was 10 tendered at CMA (exhibit D4), after expiration of the contract on 16th October 2020, the same was renewed automatically for another one-year term as agreed by both parties. It is a trite law that parties are bound by their contract as it was held by the Court of Appeal in the case of Hotel Sultan Palace Zanzibar v. Daniel

Laizer & Another, Civil. Appl. No. 104 of 2004 (unreported), where it was held that: It is elementary that the employer and employee have to be guided by agreed terms governing employment. Otherwise, it would be a chaotic state of affairs if employees or employers were left to freely do as they like regarding the employment in issue. It was alleged by the Respondent (PW1) that when she received the letter from the Applicant dated 26/10/2020 (exhibit D6) seeking for her consent to enter on a new contract with permanent and pensionable terms, she responded with a letter dated 09/11/2020 (exhibit D7) by withholding her consent as well as explaining the status of their ongoing contract which was automatically renewed with their previous terms and conditions and expected to expire on 16/10/2021. It is from the evidence on record (DW1) that, after the Applicant learned about that fact of a renewed contract, adhered to the terms of their contract (D4) by issuing statutory notice of termination (exhibit D9) accordingly. It is the opinion of this Court that, in such circumstances and as per the terms of their contract, there was no unlawful breach of contract. The li reason is that, as per clause 15 o f the contract (exhibit D4), parties agreed that any party could give one month written notice of termination. It is from the evidence on record that Respondent was issued such notice on

19th November 2020 (exhibit D9). It is my humble opinion that the Applicant was right by abiding to their terms of the contract in issuing a one month notice to the Respondent and giving reasons for termination because there was a valid reason basing on the changes on the Scheme of service and Salary structure (exhibit D5). The Court of Appeal in the case of Joseph F. Mbwiliza v. Kobwa Mohamed Lyeselo Msukuma (Legal Representative/Administratrix of the late Rashid Mohamed Lyeselo), Civil Appeal No. 227 of 2019 held that: Indeed, the doctrine of sanctity of contract must prevail and deliberate or inordinate breach of the terms of the agreement should not be allowed. Parties must fulfill their obligations to the contract they willingly entered. Again, the provisions of Section 41(3) and (4) o f ELRA (supra) requires such notice of termination to be in writing and state the reasons for and the date of the termination. It is from the evidence on record that, the Applicant adhered to those legal requirements as stated hereinabove. Moreover, under our laws, a fixed term contract of service can be prematurely terminated by assigning reasons. The reason is that the 12 conditions under Section 37 o f the ELRA (supra) are mandatory and therefore implicit in all employment contracts. It is the findings of this Court that the Applicant had a valid reason for terminating contract because

the process of changing scheme of service had started way back and even the Respondent was once transferred from Arusha to Dar es S alaam for that matter (exhibit D3). Again, on contemplating the changes of scheme of service, parties entered a new contract which was entered on 18/10/2019 and among agreed terms was termination of contract upon any changes to the schemes of services and/or Salary Structures (exhibit D4). Furthermore, as pointed out hereinabove, parties are bound by their terms of contract. The Applicant relied on clause 15 (I)(II)(f) which is related to the ground of termination upon changes to the Scheme of Service and Salary Structure to which the Respondent agreed on that term upon signing that very same contract. Hence, the Respondent is estopped from denying the Applicant to rely on that clause as a valid reason for terminating the contract. There are a litany of cases cementing on that legal position namely: Unilever Tanzania Ltd v. Benedict Mkasa t/a BEMA Enterprises, Civil Appeal No. 41 of 2009, Philipo Joseph Lukonde v. Faraji Ally Saidi, Civil Appeal No. 74 of 2019, 13 Simon Kichele Chacha v. Aveline M. Kilawe, Civil Appeal No. 160 of 2018, and Kilanya General Supplies Ltd. and Another v. CRD Bank Limited and Two others, Civil Appeal No. 1 of 2018 (all unreported decisions of the Court of Appeal). In the case of Kilanya General Supplies Ltd, (supra),

the Court of appeal held that: We need to underline that, in terms of section 10 of the Law of Contract Act, parties are bound by the terms of contract they freely entered. Again, in the case of Simon Kichele Chacha (supra), the Court of Appeal held that: It is settled law that parties are bound by the agreements they freely entered into and this is the cardinal principle of the law of contract. From the above cited authorities, since parties are bound by their own agreement, I am of the view that, the Arbitrator was wrong in his findings to conclude that the Applicant unlawfully breached the employment of contract. Again, I join hands with the Applicant that all the procedures as per the contract were adhered to in terminating the contract including issuance of statutory notice with reasons for termination which was issued to the Respondent. 14 Now, as a matter of argument, Respondent submitted that Applicant did not honor the instructions from the letter dated (exhibit D5) hence unlawfully terminated the employment contract. The question I pause to ask myself is; whether that letter was superior or bound the parties? The answer to that is negative because such letter was not part of the contract hence parties were not bound by it, rather parties were bound by their previous contract which was renewed by default with the same terms and conditions on 17th October, 2020. For the foregoing, I hereby revise, quash and set aside the CMA Award and allow the application for being merited. It is so ordered. 15/ 06/2023 Judgement pronounced and dated 15th day of June, 2023 in the absence of the Applicant and presence of the Respondent in person. Right of Appeal fully explained. 15