Q&A with Isidora & Company: What Tanzanian law says about retrenchment

ANSWER: Retrenchment is a specific legal process governed under section 38 of the Employment and Labour Relations Act (No. 6 of 2004) read together with Rules 23, 24 and 25 of the Employment and Labour Relations (Code of Good Practice) Government Notice No. 42 of 2007. These provisions are quite specific in terms of the procedure for retrenching employees. Consequently, a procedural error can result in an ostensibly benevolent action by the employer being overruled by the Commission for Mediation and Arbitration (CMA). In terms of section 38 (1), retrenchment is the termination of an employee, employees or a group of employees due to an operational requirement. The employer is required to have justifiable grounds for retrenching. These include financial constraints, technological changes, business restructuring, mergers and acquisitions and closing of business.

Faced with the likelihood of retrenchments, an employer’s first step is to give employees notice of the intention to retrench as soon as it is contemplated. This starts the consultation process in respect of which the employer should disclose all relevant information on the intended retrenchment. As to the question of when the obligation to consult is set in motion, please read: Kibuuka, Paul. “Consultation is vital to retrenchment process.” The Citizen. March 16, 2017). The consultation must be made with (a) a recognized trade union pursuant to section 67 of the Employment and Labour Relations Act No. 6 of 2004; (b) any registered trade union with members at the workplace who are not represented by a recognized trade union; or (c) any employees who are not represented by the recognized trade union or any registered trade union.

The point of the consultation is to allow the employer and the employees to undertake a joint problem solving exercise to try to avoid termination and attempt to reach consensus on the reasons for, and the measures to avoid or minimize, the intended retrenchment. Consensus should also be reached, if possible, on the criteria for selecting employees to be retrenchment, the timing of the retrenchment and on the severance and other conditions for terminating the employees’ contracts. If the parties to the consultation fail to reach a mutual agreement, an employer is required to refer the matter for mediation before the CMA. And if the mediation fails, the dispute must be referred to an arbitrator for compulsory arbitration to be conducted within a period of 6o days. During this period, the law states that no retrenchment shall take effect. However, in the event that the arbitration exceeds 60 days, the employer can proceed to retrench.

Q&A with Isidora & Company: What Tanzanian law says about retrenchment

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