A QUICK GUIDE TO RETRENCHMENT IN TANZANIA

RAYAN THE DON

Senior Member
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Aug 21, 2019
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RAYAN THE DON

Senior Member
Joined Aug 21, 2019
179 250
Labour law in Tanzania is generally employee-friendly and very specific procedurally. An error in the procedure followed can result in a seemingly well-intentioned action being overturned by the relevant authorities, resulting in untold financial burdens on your Company. One area where a procedural error can be onerous on a company is during the process of retrenchment. Retrenchment is the termination of an employee, employees or group of employees due to an operational requirement. In Tanzania retrenchment is provided for under section Sect 38 of Employment and Labour Relations Act, Act No. 6 of 2004, read together with Rule 23, 24 & 25 ELRA (Code of Good Practice) GN. 42/2007}. The law in Tanzania allows an employer to retrench on the following grounds:
Financial constraints
Technological changes
Restructuring of the business
Mergers and acquisition
Closing of business
RETRENCHMENT PROCEDURE
In the event an employer decides to retrench an employee, employees and or a group of employees, the employer is required to do the following:
Give notice of any intention to retrench as soon as it is contemplated;
Disclose all relevant information on the intended retrenchment for the purpose of proper consultation;
Consult prior to retrenchment.
The Consultation contemplated by the Act is to be undertaken with a recognized trade union pursuant to section 67 of the Act, any registered trade union with members at the work-place who are not represented by a recognized trade union and any employees who are not represented by the recognized trade union or any registered union. The purpose of the consultation is to permit employers and employees to undertake a joint problem-solving exercise to reach agreement on:
(a) The reasons for intended retrenchment
(b) Measures to avoid or minimize intended retrenchment
(c) Criteria for selecting employees to be retrenched
(d) The timing of retrenchments
(e) Severance and other condition for terminating employee’s contracts.
In the event where parties to the consultation have failed to reach a mutual agreement, an employer is required to refer the matter for mediation before the Commission for Mediation and Arbitration (CMA). Where mediation fails, the dispute shall be referred to an arbitrator for compulsory arbitration, which shall be concluded within a sixty-day period during which no retrenchment shall take effect. The employer can proceed to retrench if arbitration exceeds 60 days.
TERMINAL BENEFITS
Employees terminated due to an operational requirement are entitled to;
• Remuneration for work done before termination,
• Severance pay,
• Notice pay,
• Leave accrued but not taken,
• Repatriation cost
• Certificate of service
RETRENCHMENT DOCUMENTS CHECKLIST
We strongly urge that all employers intending to retrench employees maintain a document checklist to ensure that all requisite procedures have been followed to the letter of the law. In the short the checklist is as follows:
General notice to all employees
Invitation to the consultation to affected employees
Retrenchment agreement
Termination letter
For purposes of records and proof, employers must make sure they keep minutes of all meetings and that minutes are signed, and that all attendees of all relevant meetings sign attendance registers.
CONCLUSION
For retrenchment to be fair it must be procedural and substantively fair, therefore the employer needs to follow the procedures as stipulated by the law to the letter of the law. Should an employer decide to re-hire employees with comparable qualifications to those of persons previously retrenched then preference must be given to those previously retrenched employees.
 

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