Unfair termination in Tanzania :employers to comply with terminal benefit entitlements

April 29, 2025

Unfair termination is strongly prohibited in the labour relationship as it defeats the gist of fair labour practices. This being the case, section 40 of the Employment and Labour Relations Act, Cap. 366 R.E 2019 (ELRA) remedies the situation by setting out the redresses in case it is judicially established by evidence upon satisfaction that an employee was unfairly terminated. There is a plethora of case law justifying the same ranging from the Labour division of the High Court and the Court of Appeal of Tanzania.

On the other hand, the battle has been on the concept of other benefits enshrined under section 40(3) of ELRA (supra). This legal battle has been levelled on the physical presence of an employee who has been established to be unfairly terminated by the labour judicial bodies. The contest is basically whether an employee qualifies to be paid other terminal benefits if they have been in continuous service with the defaulting employer.

This has been clearly cured by the Court of Appeal of Tanzania sitting at Dar es Salaam on 14 March 2025 in Civil Appeal No. 243 of 2021; NMB Plc v. Mica Mwakila [2025] TZCA 205, where the Court was invited, among others, to address on this.

In the above case, the respondent was once employed by the appellant as a branch manager at Makambako branch. He was terminated in 2014 upon being found guilty by the disciplinary committee for gross misconduct whereby he solicited and demanded bribes from customers who applied for loans.

The respondent successfully lodged his complaint before the CMA at Dar es Salaam whereby it was established that he was unfairly terminated both procedurally and substantively. The CMA ordered the appellant to reinstate the respondent without loss of remuneration on the same terms and conditions.

The appellant was not amused with such award and unsuccessfully sought to revise the award before the Labour division of the High Court. The High Court dismissed the revision application and upheld the CMA award. The appellant, in complying with the award of reinstating the respondent, chose to pay him compensation of 12 months' salary. During payment of compensation, the appellant computed the entitlements based on the respondent's salary before his termination.

This aggrieved the respondent as he expected the compensation to be computed based on his new salary, as there was an increase in salary to other staff between 2015 and 2016. The respondent preferred his grievance of outstanding balance and other entitlements which were not paid to him vide labour execution before the Labour division of the High Court. The High Court referred the matter to the CMA for computation of the payable amounts due to the respondent.

The parties appeared before the CMA and, after being heard, it was established that the respondent was to be paid on the basis of his new salary. The CMA awarded the respondent a total of TZS 57,709,617 covering, among others, housing allowances.

The appellant was aggrieved with the award and partly succeeded to revise the CMA award before the Labour division of the High Court on the ground that the respondent was not entitled to responsibility allowance, fuel allowance, repatriation expenses and subsistence allowances. The High Court heard the parties and gave its judgment to the effect of reducing the amount to TZS 24,586,167.

The appellant again was aggrieved with the High Court's judgment, arriving at the Court of Appeal of Tanzania (Court) armed with three grounds that, among others, the High Court erred in awarding housing allowance to the respondent while it is on record that he was repatriated to his place of recruitment. During the hearing of the appeal, the appellant's counsel invited the Court to fault the High Court for awarding housing allowance while there was evidence on record that the respondent was repatriated back to his place of recruitment. It was the appellant's counsel submission that housing allowance is not statutory by nature and it is only given to employees who are in service. It was the counsel's proposition that the respondent did not deserve to be awarded housing allowance considering that he was not in service.

The Court, while referring to section 40(3) of ELRA, was of the view that it is clear that the compensation of 12 months' salary is paid to the employee in addition to payment of wages due and other benefits to which the employee is entitled. Other benefits to which the employee is entitled under section 40 (3) are paid from the date of unfair termination to the date of final payment. The fact that the law requires other benefits to be paid from the date of unfair termination to the date of final payment signifies that other benefits should be paid regardless of the fact that the employee was out of service.

Also, the Court was of the reason that, in pursuance of section 40 (3) of ELRA, on being reinstated, the respondent was entitled to be paid housing allowance from the date of the unfair termination to the date of final payment. It was the Court's considered view that such an entitlement could not be extinguished by the fact that the appellant opted not to reinstate the respondent or by the fact that the respondent was repatriated to his place of recruitment.

Finally, the Court was of the view that the appellant, who had unfairly terminated the respondent and who has declined to reinstate him as per the award, could not be permitted to avoid paying the housing allowance to the respondent as required under section 40 (3) of ELRA. The Court recommended that the rationale behind the requirement for an employer (the appellant inclusively), who has not only unfairly terminated an employee but who has also refused to reinstate him, to pay to the employee wages due and other benefits from the date of unfair termination to the date of final payment, is not only to penalise the employer but mostly is aimed at recompensating the employee who had been denied his entitlement for reinstatement.

Employers are reminded that terminating their employees must comply with the legal requirements and good labour practices in Tanzania. In contrast, the labour judicial organs will finally sanction their defaults by redressing the victims. The redresses granted to victims of unfair termination should also tally with the labour judicial organs' reliefs, especially from the date of termination until final payment as is statutorily required under section 40(3) of ELRA.