Utore Lema vs ECOBANK Tanzania Limited (Civil Appeal No. 52 of 2024) [2026] TZCA 620 (3 June 2026)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM (CORAM: MWANDAMBO, J.A., MGONYA. 3.A. And FELESHI. J.A.^ CIVIL APPEAL NO. 52 OF 2024 UTORE LEMA .................................. .............................. APPELLANT VERSUS ECOBANK TANZANIA LIMITED...........................................RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania (Labour Division), at Dar es Salaam) fMqanqa. J.l dated the 7th day of December, 2021 in Labour Revision No. 546 of 2020 JUDGMENT OF THE COURT 7th November, 2025 & 3rdJune, 2026 MGONYA. J.A.: The appellant, Utore Lema, instituted this appeal to impugn the judgment of the High Court of Tanzania, Labour Division at Dar es Salaam, in Labour Revision No. 546 of 2020, which altered the arbitral award made by the Commission for Mediation and Arbitration (the CMA) in Labour Dispute No. CMA/DSM/ILA/R. 1016/17, an award that had been made in his favor. Briefly, the facts of this matter indicate that the respondent bank had employed the appellant on 1s t October, 2011, as Accounts Manager Value Chain and later promoted him to the position of Head of Credit on 2n d January, 2012. On 10th March, 2017, his employment was terminated by the respondent on allegations of negligence, incompetence, and poor performance associated with the deterioration of the respondent's credit collection and increase of non-performing loans. Aggrieved by the said termination, the appellant referred a labour dispute to the CMA in Labour Dispute No. CMA/DSM/ILA/R. 1016/17 alleging unfair termination. In CMA Form No. 1, the appellant contended that there were no valid grounds for his termination and that the prescribed termination procedures were not followed. Further, he was subjected to discrimination based on race. The appellant sought interaiia, reinstatement without loss of remuneration and an award of general damages. The respondent opposed the reference, asserting that the termination was occasioned by the appellant's unsatisfactory performance in credit management, specifically his handling of non-performing ioans, which resulted in a progressive annual increase in the respondent's non-performing loan ratio. Having heard the parties, the arbitrator found that there existed valid reasons for termination, hence substantive fairness was proved, but held that the procedure leading to termination was unfair for failure to accord the appellant a proper hearing. Consequently, the arbitrator awarded the appellant compensation equivalent to twelve months' salary together with terminal dues. Dissatisfied with the award of the CMA, the appellant filed Labour Revision No. 546 of 2020 before the High Court, Labour Division, challenging, among others, the finding on substantive fairness and refusal to order reinstatement. Upon hearing the submissions from both parties and reviewing the challenged award, the High Court, in its judgment dated 7th December, 2021, affirmed the CMA award as it held the appellant's termination to be substantively fair but procedurally unfair. The court, however, varied the remedies by reducing the compensation from twelve (12) months' salaries to five (5) months' salaries, while upholding all other reliefs granted in the CMA award. Stiil dissatisfied with the High Court's judgment, the appellant instituted the present appeal, preferring five (5) grounds of appeal, namely: 1. That, the trial High Court Judge erred in law and fact by holding that the respondent ably proved substantive fairness without considering the legal conditions stipulated under Rule 16 (1) and 17 (1) (a)-(e) o f the Employment and Labour Relations (Code o f Good Practice) GN. No. 42 o f2007 and Guideline 6 (6) (a), (b) (i) - (iv) o f the Guidelines for Disciplinary, Incapacity and Incompatibility Police and Procedures issued under Employment and Labour Relations (Code o f Good Practice) Rule GN No. 42 o f2007; 2. Thai'f upon finding o f the court that the appellant was denied a right to be heard in total, the trial Judge erred in law and fact for failure to declare that the entire termination proceedings were void ab initio and without any legal effects; 3. That, the trial Judge erred in law and fact by holding that remedy for reinstatement cannot be issued because there was no good mutual relationship between the appellant and the respondent (the bank) while no evidence on record was tendered to prove this proposition. The trial Judge ought to have ordered reinstatement instead; 4. The trial Judge erred in law and fact by failure to evaluate the evidence tendered by D W 1 & DW-2 to the extent that the loss occurred to the respondent (the bank) was caused by the whole team and not only the appellant to be blamed; and 5. That, evidence on record proved ill motive on the party o f the respondent entitling the appellant to damages which were equally proved in evidence. At the hearing of the appeal, Mr. Fredrick Massawe Augusti, learned counsel, appeared for the appellant, while Ms. Mariam Bachuba and Mr. DeogratiusTesha, both learned advocates, represented the respondent. The parties' advocates had previously filed their respective written submissions in support of and in opposition to the appeal, which they adopted at the hearing and incorporated into their respective submissions. Before proceeding to determine the appeal on merits, the learned counsel for the appellant dropped ground No. 4 of appeal for being not on a pure point of law and we accordingly marked it abandoned. Submitting on the first ground, learned counsel for the appellant submitted that the High Court erred in law and in fact in affirming the finding that the respondent had proved substantive fairness. He contended that it was incumbent upon both the Arbitrator and the High Court Judge to apply the mandatory statutory provisions before concluding that the termination was substantively fair. The learned counsel further argued that the record discloses a patent failure by both the Arbitrator and the High Court Judge to examine whether the employer had afforded the employee a reasonable opportunity to attain the requisite performance standards before effecting termination for underperformance, thereby rendering the decision erroneous and unsustainable in law. Under those circumstances, it was the learned counsel's stance that, although the termination letter articulated a purported reason for termination, the employer's failure to afford the appellant a reasonable opportunity to attain the requisite performance standards, particularly following a prior warning letter alleging negligence, notwithstanding evidence that the appellant had subsequently performed in excess of those standards, rendered the stated reason substantively unfair. In his further submission, Mr. Augusti contended that the appellant's grievance lay in the assertion that his dismissal was founded upon alleged incompetence and negligence, while no cogent evidence was adduced before the CMA to substantiate these averments. The learned counsel maintained that the respondent failed to establish the conditions stipulated under rules 16 and 17 of the Employment and Labour Relations (Code of Good Practice) Rules, Government Notice No. 42 of 2007 (the Code). He maintained that it was incumbent upon the High Court to undertake a scrupulous examination of the mentioned provisions before pronouncing the termination substantively fair. In support of this proposition, the counsel relied upon the authority of Tanzania Breweries Limited v. Leo Kobelo, Civil Appeal No. 17 of 2016 [2016] TZCA 2173. On the other hand, Ms. Bachuba refuted the fact that the appellant's termination was occasioned by poor performance, stating that the appellant's termination was expressly grounded on negligence and incompetence, as particularized in the appellant's termination letter and corroborated by the testimony of DW1. She contended that, the dismissal pertained to the appellants misconduct arising from his acts and omissions in discharging his duties at the respondents bank, rendering the authorities cited by the appellant distinguishable from the instant case. Consequently, it was Ms. Bachuba's argument that, the conditions stipulated in rules 16 (1) and 17 (1) (a)-(e) of the Code were not applicable in this case. Therefore, the learned counsel concluded that, under the circumstances, the High Court was justified in not considering the provisions relating to termination based on poor performance when determining the substantive fairness of the appellant's termination. Having reviewed the record of appeal, the written and oral submissions of counsel for both parties in respect of the first ground along with the applicable rules and guidelines governing the appellant's termination, there is no doubt that, the appellant was terminated on grounds of negligence and incompetence in the performance of his duties specifically, his failure to supervise, manage, and oversee the bank's assets. This conclusion is substantiated by Exhibit D7, being the appellant's own letter acknowledging the termination of his employment. At this juncture, the issue for determination is whether the lower court was right in holding that the termination was substantively fair. The law is settled under sections 38 and 40 of the Employment and Labour Relations Act, R.E. 2023 (the ELRA), that an employer bears the burden of proving valid and fair reasons for termination. In determining whether termination based on poor performance, negligence, or incompatibility is fair, regard must be had to the provisions of the Code. We have revisited the evidence on record and found that the appellant was the Head of Credit and was charged with overall responsibility over credit management, monitoring of loan performance, reduction of non performing loans, enforcement of credit policy, and supervision of credit approvals. The respondent tendered documentary exhibits, including the appellant's job description, performance appraisals, and financial statements. Oral evidence from the respondent's witnesses indicated that during the appellant's tenure, the respondent experienced a sharp increase in non-performing loans and substantial financial losses. More importantly, the appellant himself admitted in cross-examination that non-performing loans increased considerably between 2014 and 2016; that management of non-performing loans fell under his department; and that credit approval processes passed through his office. The learned Judge reproduced portions of that evidence in the impugned judgment, specifically at pages 1429 to 1430 of the record of appeal. 8 In our considered view, the learned Judge cannot be faulted for concluding that there was credible evidence connecting the appellant's performance and negligence with the deterioration of the respondent's credit portfolio. Contrary to the submission by learned counsel for the appellant, the law does not require the employer to prove misconduct only through documentary evidence or by calling a particular witness. What matters is whether, on the totality of the evidence, the employer discharged the burden placed upon it by law. We are equally unable to agree with the submission that the respondent failed to comply with rules 16 and 17 of the Code in relation to substantive fairness. The evidence disclosed existence of performance- related concerns and negligence associated with the appellant's managerial responsibilities. We therefore find no basis to interfere with the concurrent findings of the arbitrator and the High Court on substantive fairness. Hence, the High Court Judge was right in affirming the CMA findings that the termination was substantively fair. Thus, we find the first ground of appeal unmerited. Regarding the second ground of appeal, Mr. Augusti asserted that the learned High Court Judge, having found that the appellant was denied the right to be heard, ought to have declared the whole disciplinary process void ab initio . To reinforce that proposition, the appellant counsel cited the cases 9 of Elia Kasalile and 17 Others v. Institute of Social Work, Civil Application No. 1878/18 of 2018, and Jonathan John Mayage v. Board of External Trade, Civil Appeal No. 37 of 2007. Referring to the case of Elia Kasalile and 17 Others (supra), the learned counsel contended that, in that case, the Court granted the application to the extent of correcting some errors in its previous judgment. Further, it ordered that the applicants be paid their entitlements as determined by the CMA, and that the directive requiring the applicants to initiate new proceedings before the CMA be removed. Based on the above decision, the learned counsel submitted that, since the respondent grossly violated the fundamental principle of fair hearing, the substantive fairness was not saved. Hence, the appellant's termination process is void and with no legal effect. He thus prayed that the ground of appeal be allowed. On her part, Ms. Bachuba contended that the appellant's counsel’s submission is misconceived. This is because section 38 (2) (a), (b), and (c) of the ELRA sets the requirement of the law on fair termination. That, under the law, the employer must have a valid and fair reason for termination and must follow a fair procedure. Furthermore, the procedures to be followed depend on the reason for termination. For instance, where the reason is misconduct under rule 13 of the Code, the requirement includes allowing 10 the employee to be heard. ITie learned counsel further submitted that section 41 (1) of the ELRA provides for remedies applicable when termination is found to be unfair. Among the remedies, there is no provision for nullifying the termination process where a fair procedure is not followed. To bolster her submission, the respondent's counsel cited the cases of Veneranda Maro & Another v. Arusha International Conference Centre (Civil Appeal No. 322 of 2020) [2022] TZCA 37, Felician Rutwaza v. World Vision Tanzania, (Civil Appeal No. 213 of 2019) [2021] TZCA 2, and Bati Services Company Limited v. Shargia Feizi (Civil Appeal No. 38 of 2021) [2023] TZCA 17595. Having heard the learned counsel for both parties on this ground, we agree as correctly found by both the arbitrator and the High Court, that the appellant was not accorded a proper hearing before the termination of his employment. However, we do not subscribe to the proposition that failure to accord an employee a right of hearing which constitutes procedural unfairness, renders the entire termination process null and void as contended by the appellant's counsel. There can be no quarrel with the cardinal principle of natural justice that no person should be condemned unheard. Indeed, the right to be heard remains one of the fundamental pillars of procedural fairness in employment i i relations and is well recognized under the ELRA as well as international labour standards, including the International Labour Organization Convention No. 158 on Termination of Employment, 1982, to which Tanzania is a member. However, labour relations are regulated by a specialized statutory framework that draws a clear distinction between substantive fairness and procedural fairness. Under section 38(1) of the ELRA, termination must be founded upon a valid and fair reason relating to the employee's conduct, capacity, compatibility, or the employer's operational requirements. In the present matter, the termination arose from proven negligence on the part of the appellant which occasioned loss to the employer. Such misconduct constituted a valid and fair reason for termination within the meaning of the law. It is equally settled that, procedural impropriety, including failure to accord an employee a hearing does not vitiate substantive justification for termination. What the law requires is that, in determining the fairness of termination, the tribunal must consider both the substantive validity of the reason and the fairness of the procedure adopted. Thus, where substantive fairness is established but procedural defects exist, the remedy lies in the grant of appropriate relief, including compensation. This position is reinforced by rule 32(5) of the Labour Institutions (Mediation and Arbitration 12 Guidelines) Rules, 2007, G.N. No. 67 of 2007, which expressly requires consideration of "the extent to which the termination was unfair" in assessing compensation. The above Rule, in our considered view, recognizes that unfairness may exist in varying degrees and that the absence of procedural compliance does not extinguish the existence of a lawful and valid reason for termination. We are fortified in our stance by the previous decision of the Court in Felician Rutwaza v. World Divion Tanzania (supra), citing with approval the decision of the Labour Court in Sodetra (SPRL) Ltd v. Njelu Mezza & Another, Labour Revision No. 207 of 2008 (unreported), where it held that: "We respectfully subscribe to the above interpretation', for we think it is founded on logic and common sense; it reflects a correct interpretation o f the law. Under the circumstances, since the learned Judge found the reasons for the appellant's termination were valid and fair, she was right in exercising her discretion in ordering lesser compensation than that awarded by the CMA. We sustain that award." It is clear from the record of this appeal that the arbitrator awarded the appellant compensation equivalent to twelve months' remuneration specifically on account of the procedural lapse committed by the respondent. 13 Nonetheless, upon re-evaluation of the circumstances, the High Court reduced the award to five months' salary while maintaining the finding that the termination was substantively fair. We have seen no reason to interfere with the High Court decision in this regard. Consequently, we find no merit in the second ground of appeal which is accordingly dismissed. Turning to the third ground of appeal, Mr. Augusti faulted the High Court for declining to order reinstatement. He contended that the decision was made in the absence of any evidence demonstrating the existence of a strained or hostile relationship between the appellant and the respondent. Expounding on the point, the learned counsel drew the Court's attention to CMA Form No. 1 and argued that the appellant had specifically sought reinstatement and not compensation in lieu thereof. He stressed that a court is ordinarily bound to grant the relief sought by the parties. The learned counsel further submitted that, since there was no material on record establishing a breakdown of mutual trust and confidence between the parties, the High Court lacked justification for refusing the remedy of reinstatement. To bolster his submission, he cited the cases of Victor W. Meena & Another v. Arusha Technical College (Civil Appeal no. 515 of 2020) [2024] TZCA 111 and Tanzania Breweries Limited v. Leo Kobelo (supra). On the strength of those authorities, the learned 14 counsel urged this Court to allow the appeal and order reinstatement as prayed. In reply, Ms. Bachuba supported the High Court's decision. She submitted that, section 40 of the ELRA before being redesignated as section 41 vide Revised Edition of the Laws,2023, provides for discretionary powers to order reinstatement, re-engagement, or the payment of compensation. As such, the choice on which remedies to grant is upon the Arbitrator/court, not the employees' prayers. She maintained that the Arbitrator /court is required under the law to exercise its discretion based on the evidence on record and the circumstances of each case. She thus prayed that the ground of appeal be dismissed. On our part, as rightly submitted by the respondent's counsel, under section 41(1) of the ELRA, reinstatement is one among several remedies available in cases of unfair termination. However, the same is not automatic as the remedy is discretionary and must be exercised judicially upon consideration of the circumstances of each case. See, for instance, Goodluck Ringo v. Corteva Agriscience Tanzania Limited (Civil Appeal No. 94 of 2022) [2025] TZCA 109 where the Court held that: "For that matter, we are o f the view that, the High Court wasjustified in the exercise o f its discretion to choose an order for compensation to the appellant, 15 being among the remedies under the section ; instead o f reinstating him as prayed for... The choice was therefore within the parameters o f section 40(1) o f the ELRA and on that account, the learned Judge did not abuse his discretionary powers as complained by the appellant." Rule 32 (2) (b), (c), and (d) of the Guidelines prescribe factors that should be considered before ordering reinstatement. It provides: "32(2) The Arbitrator shall order re instatement or re-engagement where: (b) The circumstances surrounding the termination are such that a continued employment relationship would be intolerable (c) it is not reasonably practical for the employer to reinstate or re-engage the employee; or (d) The termination is unfair because the employer did not follow a fair procedure . Refusing reinstatement, the High Court Judge observed that: "The facts, circumstances ; and evidence o f the case does not, in my view, warrant reinstatement This is because the banking business requires high level o f mutual trust between an employee and the employer. Trust between the applicant and the respondent has been broken irreparably as the applicant believes that the respondent had no valid 16 reason for termination ; but the respondent is o f the view that all problems she encountered, including but not limited to losses, were caused by the applicant" We find the High Court Judge's reasoning on the refusal to reinstate the appellant is consonant with our previous decision in Charles Mwita Siaga v. National Microfinance Bank Pic (Civil Appeal No. 112 of 2017) [2022] TZCA 227, where it was held that: "We agree with Mr. Kamaia that in view o f the fact that the appellant was employed in the banking industry in which trust and confidence were of paramount importance, the relief given by the High Court was the most reasonable in the circumstances ." In the instant appeal, the record demonstrates serious disagreement between the parties regarding the appellant's competence, responsibility, and integrity in the management of the respondent's credit portfolio. The employment relationship deteriorated due to the loss allegedly occasioned by the appellant. In the circumstances, we affirm the decision of the High Court and dismiss the third ground of appeal for being devoid of merit. Turning to the fifth ground of appeal relating to the refusal to award damages, Mr. Augusti, submitted that both the Arbitrator and the High Court Judge fell into error in declining the said relief. According to counsel, a 17 perusal of the record shows that the two fora took the view that the appellant could not be permitted to benefit from his own misconduct which the respondent had allegedly established. He further argued that one of the considerations advanced for denying damages was that an award of such relief would, in effect, restore the appellant to the position he occupied before the termination of his employment. Further, the learned counsel argued that, in rejecting the claim for damages, the High Court relied on its decision in Dr. Abraham Israel Shuma Maro v. National Institute for Medical Research (NIMR) and Attorney General [2015] LCCD 161, wherein it was held that, a claimant is precluded from recovering damages where the cause of action is founded upon, or substantially tainted by, his own misconduct. Notwithstanding that authority, counsel maintained that, considering the circumstances under which the appellant's employment was terminated, he was entitled to an award of damages, particularly bearing in mind that he was a confirmed employee holding permanent employment. He accordingly urged the Court to determine the ground in the appellant's favour. On the issue of certificate of service, Mr. August! complained that, following the appellant's unfair termination, the respondent failed to issue him with that statutory document thereby prejudicing his prospects of securing alternative employment. Expounding on the point, the learned 18 counsel referred to the appellant's evidence on record that he unsuccessfully applied for the position of Business Manager with Data House Solutions Limited due to the absence of the certificate of service. Counsel argued that, the hardship and inconvenience occasioned by that omission undermined the importance of the certificate, which, as a matter of right, ought to have been issued immediately upon termination of employment. In conclusion, the learned counsel prayed that the appellant be awarded damages and that the respondent be ordered to issue him with the certificate. Responding, Ms. Bachuba insisted that the appellant is not entitled to damages because his termination was substantively fair. She said, even if it the termination was held to have been unfair, remedies for unfair termination are provided for under section 41 of ELRA. It was the learned counsel's submission that, under the said section, there is no provision for payment of special or general damages. As such, an award of general damages in addition to the remedies available under Section 41 of ELRA will amount to double compensation. In the alternative, Ms. Bachuba submitted that, even if it were to be held that general damages are awardable in this case, the circumstances of the case and the evidence on record did not warrant an award of general damages. She thus invited the Court to reject the appellant's prayer for damages. 19 We have given weight to the rival submissions by the counsel for the parties in support and against this ground of appeal. It is trite law that any award of damages must be anchored upon evidence justifying both the entitlement to and the quantum of such damages. This Court so held in Antony Ngoo & Another v Kitinda Kimaro, Civil Appeal No. 25 of 2014 (unreported), wherein it was stated that: "The law is settled that generaI damages are awarded by trialJudge alter consideration and deliberation on the evidence able to justify the award. The judge has discretion in the award o f genera / damages. However, the judge must assign a reason, which was not done in this case." [Emphasize added] In the instant appeal, it was the findings of the High Court that, since the reason for the appellant's termination was considered to be fair, he could not expect the appellant to benefit from his own misconduct, which were proved by the respondent. The High Court Judge also found that the reasons provided by the appellant do not justify how he suffered loss. She finally concluded that the appellant cannot be paid damages, as it is absurd for someone to commit misconduct and benefit from it. We find ourselves in agreement with the reasoning of the learned Judge of the High Court. In the matter at hand, although the respondent 20 failed to accord the appellant a fair hearing before the termination of his employment, the record reveals that there existed genuine concerns regarding the management of the respondent's credit portfolio. Being a senior managerial employee, the appellant was directly responsible for matters touching on credit administration at a time when the respondent had become apprehensive about the increasing level of non-performing loans and the attendant credit risks. Likewise, there is nothing on record to suggest that the respondent acted maliciously, out of ill will, or with any ulterior motive aimed at victimizing the appellant Furthermore, apart from the compensation awarded by the arbitrator for procedural unfairness, no evidence was adduced to establish or quantify any additional loss warranting an award of damages. In the circumstances, we are unable to fault the High Court for declining to grant the said relief. Concerning the complaint on the failure to issue a certificate of service, we note that such relief is expressly provided for under section 45(2) of the ELRA. The respondent was therefore under' statutory obligation to issue the appellant with a certificate of service upon termination of his employment. To that extent, the fifth ground of appeal succeeds. 21 In the event and for the foregoing reasons, the appeal is dismissed serve for second limb of the fifth ground which is allowed. DATED at DODOMA this 3r d day of June, 2026. L J. S. MWANDAMBO JUSTICE OF APPEAL L. E. MGONYA JUSTICE OF APPEAL E. M. FELESHI JUSTICE OF APPEAL Judgment delivered this 3r d day of June, 2026 via virtual Court in the presence of Mr. Fredrick Massawe, learned counsel for the Appellant, Ms. Miriam Bachuba, learned counsel for the Respondent and Ms. Regina Komba, Court Clerk; is hereby certified as a true copy of the original. C. M. MAGESA DEPUTY REGISTRAR COURT OF APPEAL 22