- In simple term, retrenchment is done with the view of reducing expenditure. It may be caused by various factors, including economic, technical and structural reasons, which in their combination or as a single factor may affect the operational requirement of the employer.
For most employees, retrenchment is not something they expect to experience frequently. It is like termination of employment in workplaces where job security is not guaranteed, so for most employees, the fear of losing their job becomes very high.
In simple term, retrenchment is done with the view of reducing expenditure. It may be caused by various factors, including economic, technical and structural reasons, which in their combination or as a single factor may affect the operational requirement of the employer.
Elizabeth Munisi, a Human Resource practitioner based in Dar es Salam, said an employer may retrench employee when the business is not doing well and the employers may dismiss workers based on their operational requirements as defined in Section 38 of the 2004 Employment and Labour Relations Act.
“Operational requirements” means needs based on the economic, technological, structural or similar needs of an employer.
Human Resources Manager of Swissport Tanzania Jumbe Onjero says retrenchment becomes inevitable when the business cannot generate profits to the extent that it cannot sustain paying its entire employee as well as running of the business.
When the nature of business changes or a transfer of part of the business or acquisition of entire business occurs, the retrenchment may be effected.
“When the employer has introduced new technology that renders a section of human resource redundancy and when certain staff members cannot perform their work plus when there is an optional requirement,then retrenchment is inevitable,” he noted.
In putting things into perspective, Mercy-Grace Kisinza, an Advocate based in Arusha, says apart from liquidation or failure to sustain its operational cost, it may happen that an employer may want to reduce expenditure and decide to merge financial with human resources department to form one department. “In this case some of the employees have to be retrenched,” she said.
“On the other hand, due to technological advancement, there are some works that have to be done by machines and in so doing, some people lose their jobs,” she explained.
Whatever the reasons are for retrenchment, the exercise should be fairly handled in accordance with the law. Consultation between the employer, the human resources office, legal department and trade unions should be effected in the course of retrenchment.
“The employer must be very fair to the affected employee by disclosing all relevant information on the intended retrenchment,” said Elizabeth.
“The reasons for the intended retrenchment, the method of selection of the employee to be retrenched, all employees benefits including accrued leave, notice payments, and Severance pay in respect of the retrenchment etc, number /percentage of employee to be retrenched, the time when, or the period during which, the dismissals are likely to take effect and possibility of the future re-employment should all be discussed,” she noted.
Mr Onjero says it is very important that the employer openly communicates to employees the intention to retrench the workforce.
“Clear reasons as to why the exercise will be taken, timeframe, the selection process, the affected staff, the compensation package and the likes should be made clear to avoid unfair retrenchment exercise,” he said, adding that employer should consult with trade union if there is a branch at the workplace or consult with labour office for guidance.
On the other hand, he says, the retrenchment process depends also on the agreement between the employer and employees. “The process can take between three months and six months depending on the pace in reaching an agreement between the employer and employees as well as the number of employees to be retrenched,” he explained.
Life after retrenchment
With the combination of economic, technical and structural reasons, tens of thousands of employees have found themselves being affected by retrenchment.
Economic downturn and technological advancement have rendered thousands of employees jobless. It is an exercise which causes feelings of worry and uncertainty to employee. For employers, retrenchment is the last resort for the survival of business.
It is not a secret that for most employees who have been entirely dependent on month salary to run their lives, the sense of being out of job brings a lot of mixed feelings. How they will run their lives without salary is the biggest question.
But for employees who will take it in a positive way, retrenchment opens a new wide range of self-employment opportunities, the beginning of a new life that will make former employees think outside the box on how they would run their lives without monthly salary.
Revina Mugyabuso received the news of her retrenchment with shock. She was among the workers who attended a meeting when her employer announced the decision to retrench some of the staff but she was not aware that she is among the employees lined-up for the same.
“I knew that, they were going to retrench some staff but I didn’t know that I am one of them. After the meeting, a human resources officer called me and broke the news. I was so shocked,” she recalled.
“Within a minute, I was asking myself hundreds of unanswered questions. What do I do now? Where should I go from here? Where do I begin?” Revina recalled.
“It was like I received sad news of passing away of someone I know,” she added. Few months before she got the retrenchment notice, her husband was also retrenched.
“I was the one who was comforting my husband, telling him he shouldn’t worry much as long as I still had a job, things would be fine,” she noted.
“But I couldn’t believe that it was my turn, the bad thing was that I had a company loan, that meant all my savings would be deducted so as to repay the loan. I felt empty, I cried, my children cried too, the whole family was distracted. We all depended on monthly salary, I didn’t have even some capital to start business,” noted the 38-year-old woman.
She said after retrenchment she faced a myriad of challenges. Due to her dependence on monthly salary, she failed to pay her children’s school fees on time. “I am now looking forward to receiving my social security contributions claims so that I can start a small business. To tell you the truth, life has not been the same anymore,” she said.
According to her, she feels that the retrenchment was unfairly conducted as she was only informed barely few days before the exercise was carried out.
“I wish they would have informed us in advance, at least three months before,” she added.
Jerome Garimoshi shares Revina’s sentiments. He said that life has never been the same again as things have changed a lot.
“I was sleepless for a couple of months. I lost weight over three kilogrammes due to stress. Friends, relatives and colleagues urged me to keep praying and seek another job in the city. They urged me to imbibe the Swahili saying: ‘Tutabanana hapa hapa’—loosely translated as we should never relent from staying in the city….because all good opportunities emanate from there” he noted.
After the incident Jerome decided to go to his rural home in Singida where he spent a one-month holiday to calm down.
“I felt so bad being retrenched because I was happy and believed I was doing a good job. It reduced my self-esteem and was very overwhelming. I had a sense of worry about financial insecurity, uncertainty and depression were a common place, and thank goodness I secured another job after hassling in the city for over 6 solid months,” he added.
Jerome said his retrenchment orchestrated by malice and personal vendetta with his boss.
He says he was not paid all his benefits.
“It was not easy to fathom. I thought about my family, children who were using health insurance cards, relatives and my reputation. I did not get any answer,” he noted.
For Celestine Moshi, a father of five, the day he received his retrenchment letter is still vivid. At the age of 39, he said his boss told him he does not want to work with old people like him. At first he thought he was joking but he realised that he was serious when he received the retrenchment letter.
“I can never forget that day, it was painful. Being retrenched at 39 was like a compulsory retirement. I lost passion for my job and panic engulfed me. I was furious and became angry. Thanks be to God, my wife stood by me, praying and comforting me. Now I have accepted and moved on with my life,” noted Celestine.
On the other hand, that redundancy was the opportunity for Celestine. He ventured into farming and he is doing a wonderful work. “I had a five-acre land before being retrenched. I decided to venture into farming, poultry, livestock and aquaculture.
In two years down the line, I really regret the time I had lost during my formal employment. I should have ventured into self-employment,” he said, encouraging others who have been retrenched to think outside the box. Indeed, retrenchment has never been easy for both employers and retrenched employees as it may affect them in different ways.
A lawyer who prefer anonymity said that upon retrenchment, an employee is entitled to some reliefs which are enshrined under the Tanzania’s Employment and Labour Relations Act and it’s subsidiary regulations. These include severance payment, pay in lieue of notice, pay for any unpaid work done up to retrenchment, unutilised leave, and repatriation allowance.
All these benefits do not apply automatically. There are conditions, calculations and other requirements laid down for each benefit to apply. There can also be in addition to that, a retrenchment package payment based on agreement negotiated and reached by employers, employees, and/or workers union. But this agreement package is not mandatory. Another entitlement for a retrenched employee is the certificate of service.