somedics health care ltd vs elizabeth kessy and others 2020 tzhcld 429 16 october 2020

IN THE HIGH COURT OF TANZANIA LABOUR DIVISION AT PAR ES SALAAM LABOUR REVISION NO. 828 OF 2019 BETWEEN SOMEDICS HEALTH CARE LTD............................... APPLICANT VERSUS ELIZABETH KESSY & 3 OTHERS.................... RESPONDENTS JUDGEMENT Date of Last Order: 06/08/2020 Date of Judgement: 16/10/2020 Aboud, J. The Applicant, SOMEDICS HEALTH CARE LTD. filed the present application seeking revision of the award of the Commission for Mediation and Arbitration (herein CMA) which was delivered on 04/10/2019 in Labour Dispute No. CMA/DSM/KIN/R.517/18/468 by Hon. Igogo, M, 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) (b) (c) (d) and 28 (1) (a) (b) (c) (d) (e) of the Labour Court Rules, i GN. No. 106 of 2007, (to be referred as the Labour Court Rules in this judgment). The application was supported by the affidavit of Kessy Kisua, the applicant's Principal Officer. On the other hand the respondents did not file their counter affidavit. It is a settled law that when the respondent did not file a counter affidavit he/she is precluded from challenging the application on matters of fact, however he can only do that on matters of law. This is also the position in the case of Finn Von Wurden Petersen and another Vs. Arusha District Council, Civil Appl. No. 562/17 of 2017 where it was held that:- ".... it is settled that where the respondent does not lodge an affidavit in reply despite being served, it is taken that he does not dispute the contents of the affidavit [see Yokobeti Simon Sanga vs. Yohana Sanga, Civil Application No. 1 of 2011 (unreported)]. Therefore, the respondent who appears at the hearing without having lodged an affidavit in . 2 reply is precluded from challenging matters of fact, but he can challenge the application on matters of law." In the application at hand despite the fact that the respondents did not file their counter affidavit they filed their written submission in opposing the application. In the relevant submission the respondents did not raise any point of law to be considered by this Court thus their submission will not be considered because they did not file counter affidavit to oppose the application at hand as held in the case cited above. The background of the dispute can be briefly summarised as follows; the respondents were employed by the applicant in different positions. The first respondent, Elizabeth Kessy was employed in 2015 as a Nurse, the second respondent, Anitha E. Masamu was employed in 2017 as a Secretary, the third respondent, Erica Victoria Mwakalonge was employed in 2015 as a Nurse where as the fourth respondent, Ms. Irene Mayoke was employed in 2017 as a Nurse. On 12/04/2018 the respondents were terminated from their employment on the ground of operational requirement. Aggrieved by the termination the respondents referred a dispute to the CMA claiming 3 for unfair termination. The Arbitrator decided in the respondents favour and awarded each of them 12 months salaries as compensation for unfair termination, one month salary in lieu of notice and severance pay. Being dissatisfied by the Arbitrator's award the applicant filed the present application. The applicant moved the Court to determine the following legal issue i. Whether it was proper for the Arbitrator to ignore and failed to consider documentary evidence tendered by the applicant and admitted by the CMA ii. Whether it was proper for the Arbitrator to ignore and fail to consider documentary evidence tendered by the applicant and admitted by the CMA. At the hearing of the application the applicant was represented by Mr. Christopher Mumanyi, as an Employment Standard Consultant. Arguing in support of the application Mr. Christopher Mumanyi submitted that, the Arbitrator erred in law and fact by failing to consider documentary evidence tendered by the applicant at the CMA. He stated that the applicant tendered an order to appear before 4 a Labour Officer (Exhibit DI) and proof of payment before the Labour Commissioner (Exhibit D2 collectively) which the Arbitrator ought to have considered. He further submitted that it is clear through exhibit DI that the parties were summoned to appear before the Labour Officer where the applicant brought to his attention about the economic status of the hospital and, the applicant was advised to terminate the respondents so as to avoid future problems. Mr. Christopher Mumanyi went on to submit that, the applicant followed the advice and terminated the respondent's employment. He added that the respondents were paid all their dues thus all the termination procedures were followed. He therefore urged the Court to revise and set aside the Arbitration proceedings and award. Having gone through the applicant's submission, Labour laws, CMA and court records with eyes of caution I find the issues for determination are, whether the respondent had a valid reason to terminate the respondents, secondly is whether the applicant followed termination procedures and lastly is to what relief are the parties entitled. 5 On the first issue as to whether the respondent had a valid reason to terminate the respondents. It is a settled law that employers are required to terminate employees on valid reasons only. What amounts to valid reasons is elaborated under section 37 of the Act. In the application at hand the respondents were terminated on operational ground or retrenchment. 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 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 Employment and Labour Relations (Code of Good Practice) GN. 42 of 2007 (here in GN.42 of 2007) 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 6 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; 7 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 applicant alleged that the reason for retrenchment was based on economic needs of the business. He stated that the company was going through financial instability which hindered its performance. It is on record (exhibit A3) that due to financial constrains of the company the applicant failed to pay salaries to his employees (including the respondents) for about three months the fact which was not disputed by the respondents. Under such circumstances unlike the Arbitrator I am of the view that the applicant had a valid reason to terminate the respondents. The applicant could not have retained the respondents in their 8 employment while he was unable to pay their salaries as agreed and was their legal right. In his award the Arbitrator was of the view that the applicant had no valid reason to terminate the respondents due to the fact that the respondents were notified of the redundancy of job placements and continuation (exhibit A3) while they were terminated on the ground of retrenchment. I carefully read the termination letters (exhibit A2 collectively) and it is clear that all respondents were terminated on the ground of retrenchment. Therefore, the applicant correctly notified the respondents about the redundancy and continuation of their job as he was embarking the process of terminating them on the ground of retrenchment. In the situation of this matter is crystal clear that respondent took legitimate business decision to retrench the applicants as was undergoing through financial instability due to the business position and debts and, its need to re-structure its overheads to ensure that it can make timely payments to all activities related to its operation. In the case of Hendry vs. Adcock Ingram (1988) 19 ID 85 (LC) at 92 B-C the Labour Court of South Africa held that:- 9 "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 re-structure its business. In the event I therefore fault the Arbitrator's finding that the applicant had no valid reason to terminate the respondents' employment. On the second issue as to whether the applicant followed termination procedures, the termination procedures on the ground of retrenchment 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 principles, that is to say, he shall:- 10 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]. 11 The above stipulated procedures and principles are mandatory requirements and must be followed by any employer who decides to terminate his employees by retrenchment. The section is in pari materia with Rules 23 and 24 of the GN 42 of 2007. In the instant application it is crystal clear that all the above stipulated procedures were not adhered at all. The respondents were not notified of the intended retrenchment nor were they consulted prior to the said retrenchment. I therefore find no reason to fault the Arbitrator's findings that the termination procedures were not followed. On the last issue as to parties' relief, the remedies for unfair termination are provided under section 40 of the Act. The Arbitrator awarded the respondents 12 months salaries as compensation, one month salary in lieu of notice and severance pay. On the basis of the above discussion since it is proved that in the instant matter the respondents termination were procedurally unfair, it is my view that they are entitled to the reliefs awarded by the Arbitrator thus I find no justifiable reasons to revise the same. In the result I find the present application has no merit. The respondents' termination were procedurally unfair. Thus the applicant is ordered to pay the respondents 12 months salaries as 12 compensation, one month salary in lieu of notice and severance as rightly awarded by the Arbitrator. The application is dismissed for want of merit. It is so ordered. I.D. Aboud JUDGE 16/10/2020 13