Tanzania Investment Bank vs Benjamin Mazigo & Another (Rev. Appl. No. 348 of 2020) [2021] TZHCLD 341 (27 August 2021)

Key Facts

Issues

• The court examined whether the applicant (Tanzania Investment Bank) had a valid and fair reason for terminating the respondents (Benjamin Mazigo & another) on grounds of gross misconduct and gross negligence related to discounting security rates contrary to Credit Policy. The court found that the respondents as bank officers had a duty to act diligently and in good faith, but they acted negligently by recommending security values contrary to policy despite knowing the defects. The court faulted the arbitrator's finding that the applicant had no valid reason for terminating the respondents.
• The court assessed whether the procedures for terminating the employees were adhered to, including whether they were afforded a right to appeal and fair hearing procedures under GN.42/2007 and the Employment and Labour Relations Act. The court examined the termination letter and disciplinary hearing forms to determine if respondents were properly informed of their right to appeal. The court found that respondents were afforded a right to be heard and that procedure should not be applied in a checklist fashion.
• The court determined what reliefs were entitled to the parties after finding termination was fair both substantively and procedurally. Since the applicant had valid reason for termination and had complied with the procedures for termination, the court quashed the arbitrator's order of 24 months' compensation for unfair termination and set aside the CMA's award.

Holdings

Remedies

Legal Principles

• The court applied Section 37(2) of the Employment and Labour Relations Act, CAP 366 RE 2019, which states that termination of employment by an employer is unfair if the employer fails to prove that the reason for termination is valid, that the reason is a fair reason (related to employee's conduct, capacity, or compatibility, or based on operational requirements), and that employment was terminated in accordance with a fair procedure. The court found the applicant had valid reason for termination and complied with procedures, making termination fair both substantively and procedurally.
• The court applied the principle that no person should be condemned without being afforded a chance to be heard. The court held that the right to be heard is a valued right and the right of a party should not be prejudiced without being afforded an opportunity to be heard. The court found that the respondents were afforded a right to be heard through exhibits TIB-1, TIB-2, TIB-3, TIB-4, TIB-5, D1 (letter to show cause), D2 (respondent's reply), D4 (Notice), and D5 (Disciplinary Hearing forms). The court departed from the arbitrator's finding that termination was procedural unfair.
• The court held that as officers of the bank, the respondents had a duty of acting diligently and in good faith. The court found that the respondents decided to act negligently despite knowing that what they recommended was contrary to the Credit Policy. The court faulted the arbitrator's finding that the applicant had no valid reason for terminating the respondents.

Precedent Name

• National Bank of Commerce v. Eliamin Mbeo
• Scientific and Industrial Research v. Fier
• James Leonidas Ngonge v. DAWASCO
• Mussa Andrea Mfunga v. Tanzania Electric Supply Co. Ltd
• Justa Kyaruzi v. NBC
• World Vision Tanzania v. Charles Masunga Maziku
• Twiga Bancorp Ltd v. Zuhura Zidatu and Mwajuma Ally
• Kastan Mining v. Devota Salum
• Alaf Limited v. Asulwisye Mwalupani

Cited Statute

• Labour Institution (Mediation and Arbitration Guidelines) Rules, GN. 67/2007
• Employment and Labour Relations (Code of Good Practice) Rules, GN. 42/2007
• Employment and Labour Relations Act, CAP 366 RE 2019

Judge Name

Passage Text

• While examining the records I came across exhibit D6 (termination letter) signed by the Managing Director within which, the respondents were informed of their right to appeal to the CMA if aggrieved with the termination. There is no proof of the policy or regulations from the respondents which states that, the appeal must be within the applicant's higher authority. It is apparent from records that respondents were afforded with a right to be heard, this is reflected from exhibit D1 letter to show cause, D2 respondent's reply, D4 Notice and D5 Disciplinary Hearing forms.
• The respondents as officers of the bank had a duty of acting diligently and in good faith. But the respondents decided to act negligently in spite of knowing that, what they recommended was contrary to the policy. The fact that the loan was transacted with various departments and others were not charged, can neither disprove what the respondents did nor, vitiate the validity of the reason for terminating the respondent. The same cannot exonerate the respondent from their liability. I thus fault the arbitrator's finding that the applicant had no valid reason for terminating the respondents.
• Since, this court has found that the applicant had valid reason for termination, and had complied with the procedures for termination hence termination was fair both substantively and procedurally, I thus quash the arbitrator's order of 24 months' compensation for unfair termination. On basis of the above finding, I find the application have merit. I hereby quash and set aside the CMA's award.