Shabani Rashid Athumani vs Trans Highway Trucking Company Ltd (Civil Appeal No. 716 of 2024) [2026] TZCA 542 (12 May 2026)

IN THE COURT OF APPEAL OF TANZANIA AT MBEYA fCORAM: MKUYE. J.A.. FELESHI. 3.A. And NANGELA. J J U CIVIL APPEAL NO. 716 OF 2024 SHABANI RASHID ATHUMANI ...............................................APPELLANT VERSUS TRANS HIGHWAY TRUCKING COMPANY LTD ..................... RESPONDENT (Appeal from the Judgment and decree of the High Court of Tanzania, at Mbeya) (Ng.uny.ale J.) dated the 6th day of December, 2023 in Revision Application No. 6 of 2023 JUDGMENT OF THE COURT 29thApril & 12th May, 2026 MKUYE, 3.A.: The appellant, Shabani Rashid Athuman, was in 1987 employed by the respondent Trans Highway Trucking Company Ltd as a mechanic. In February 2018, a dispute arose between them as the appellant claimed to have been constructively terminated from employment because he had not been paid his salary for three months. The Commission for Mediation and Arbitrator (the CMA) heard the matter and on 24th April 2018, delivered its award in which it found that i the appellant had been constructively terminated and granted him reliefs as follows: payment in lieu of notice; accrued leave; severance pay and unpaid salary for four months. The CMA also awarded compensation equivalent to twelve (12) months renumeration for the unfair termination in the total sum of TZS 10,350,000.00. The other claims were dismissed. That decision was followed by series of procedural hurdles ensued, including striking out revision application due to the name discrepancies and a withdrawal of the appeal to the Court of Appeal. Then, the appellant eventually secured an extension of time to file the impugned revision. In the said revision, the appellant challenged the CMA's award of twelve months compensation for unfair termination arguing that he deserved more (up to thirty six months) because the termination was both substantively and procedurally unfair. He also sought the payment of unremitted NSSF contribution dating back to 1987. On the other hand, the respondent argued that the twelve months is the statutory minimum compensation for unfair termination and that the appellant failed to justify a higher amount. Regarding the NSSF contributions, the respondent contended that that was a new issue not properly claimed in the original CMA pleadings and that the CMA lacked 2 jurisdiction over such claims, which should have been filed in ordinary courts. At the High Court, the High Court Judge dismissed the application in its entirety for the reasons that: One, although the arbitrator did not assign reasons for the award of twelve month's compensation, there was no material evidence to justify the increase of the amount as in his view the appellant also contributed to the souring of the relationship by refusing to sign a mandatory employment contract. Two, terminal benefits and certificates of service are automatic entitlement under section 44 of Employment and Labour Relations Act, Cap 366 R.E. 2023 (ELRA) and do not depend on an arbitrators discretion. Three, regarding the NSSF contributions, the court noted that because no deductions were ever made from the applicant's salary, he was not a member of NSSF, making the claim for those specific payments difficult to grant in this context. Disgruntled with the High Court's decision, the appellant has now approached this Court on five grounds of appeal as follows:- 1. The High Court erred in sustaining the CMA award, which improperly granted compensation o f twelve months. 2. The High Court erred in deciding that the appellant was not entitled to terminal benefits. 3 3. The High Court erred in finding that twelve month's compensation was sufficient\ despite the termination being unfair both substantively and procedurally. 4. The High Court erred in concluding that the appellant refused to sign a contract o f employment, ignoring the fact that he had already worked for the respondent and was therefore an employee. 5. The High Court erred in holding that the issue o f substantive and procedural fairness had not been considered by the CMA, despite it being a central issue before it " When the appeal was called on for hearing, the appellant was represented by M r. Maulid Muganyizi, learned advocate, whereas the respondent was represented by M r. Kamru Habibu Msonde, also learned advocate. M r. Muganyizi, at the very outset prayed to adopt the written submission he had filed on 18/9/2024 to form part of his oral submission without more. In relation to grounds nos. 1, 3 and 5, jointly, relating to: the compensation of twelve months that was wrongly awarded; compensation of only twelve months being inadequate considering that the termination was both substantively and procedurally unfair; and that the issue of substantive and procedurally termination was not complained of or considered while they were paramount before the CMA, we think, in totality all the grounds hinge on the issue whether the 4 award of twelve months compensation was proper where the termination was both substantively and procedurally unfair. In the appellants written submission, it is argued that, principally, where termination is unfair both substantively and procedurally, it attracts greater compensation than when termination is unfair procedurally. This is as per sections 37 (1) and 40 (1) (c) of the ELRA. Also, it is a stance taken in Sodetra (SPRL) Ltd v. Njelu Mezza and Another, Labour Revision No. 207 of 2008; Stanbic Bank (T) Limited v. Iddi Halfani, Civil Appeal No. 139 of 2021 (unreported) pg 33; and H. Me Liebowitz Pty T/A The Auto Industrial Centre Group of Companies v. Fernandes [2002] Zalac 1]. The gist of almost all cited cases is that unfair termination based on substantive grounds attracts greater compensation than when only procedure is flawed. In this case, it is argued, though termination was unfair both substantively and procedurally, the appellant was awarded twelve months salary which is equal to TZS 6,000,000.00 only. However, the CMA and High Court awarded such compensation contrary to section 40 of the ELRA providing for more than twelve months compensation. The appellant argued further that, it was wrong for the High Court to conclude that the issue of substantive and procedural termination was not considered or complained while it was a paramount issue before the Court and in fact it was raised at all levels as shown at page 1 of written 5 submission and paragraph 13 of the affidavit in Labour Revision No. 6 of 2023 which in essence invited the court to determine such issue. In response, M r. Msonde contended that, in fact, the High Court analysed the issue of compensation (See pages 258 - 262 of the record of appeal) and showed why he sustained the CMA award which in his view, was correct in the circumstances of the case. While responding to ground no. 5, the learned advocate argued that, the issue of fairness substantively or procedurally could not arise as the appellant's termination was constructive and therefore even this Court has no mandate to deal with it. The issue which needs to be considered by the Court is whether the claim raised is tenable. In principal, we agree with both counsel's stance that it is a settled law that where termination is based solely on unfair procedure, it attracts less compensation than being unfair both substantively and procedurally. This position was taken in the case of Felician Rutwaza v. World Vision Tanzania [2021] TZCA 2. However, it should be noted that, it is not a requirement of law that where termination is unfair both substantively and procedurally, the compensation should exceed twelve months as clearly shown in section 40 (1) (c) of the ELRA which proyides:- 6 "Where an arbitrator or Labour Court finds termination unfair, the arbitrator or court may order the employer - (a) N/A (b) N/A (c) to pay compensation to the employee o f not less then twelve months remuneration " [Emphasis added.] As it is, it does not require compensation to exceed twelve months as to our understanding that would depend on the discretion of the arbitrator or the Labour Court having regard to the tests in assessing the quantum of compensation as set out in rule 32 (1), (2) and (5) of Labour Institutions (Mediation and Arbitration) Rules, 2007, GN No. 42 of 2007 which states as follows:- "5(1) Subject to subruie (2) an arbitrator may make an award o f appropriate compensation based on the circumstances o f each case considering the following factors:- (a) any prescribed minimum or maximum compensation; (b) the extent to which termination was unfair; (c) the consequences of the unfair termination for the parties including the extent to which the employee was able to secure alternative work or employment; (d) the amount o f the employees'renumeration; i (e) the amount o f compensation granted in previous similar cases; (f) the parties conduct during the proceedings; and (g) any other relevant factors" Next, is whether the termination of the appellant was unfair substantively and procedurally or was constructive termination. Fortunately, the High Court Judge discussed these issues at length at pages 257 to 262 of the record of appeal as opposed to what the respondent tried to suggest. Also, the High Court noted that, the appellant was constructively terminated after working conditions became unfriendly and intolerable. So, the issue of substantive and procedural unfairness did not arise (See pages 257 to 258 of the record of appeal). However, much as the High Court appreciated that the CMA awarded compensation of twelve months, it noted that no reasons were assigned as per the law for such an award. According to section 36(a) (ii) of ELRA and rule 7(1) of the Employment and Labour Relations (Code of Good Practice), constructive termination occurs where an employee exists from his/her employment and lodges a complaint against the employer for making the working environment not friendly (hostile) and leads the employee to resign or to forceful departure. Section 36 (a) (ii) of ELRA provides:- 8 "For purposes this of sub part (a) "termination emp/oyment"\nc\udes - (iii) a termination by an employee because the empioyer made continued employment intolerable for the employee " Rule 7(1) of the Code of Good Practice states as follows:- "7 (1) Where an employer makes an employment intolerable which may result to a resignation to the employee, that resignation amounts to forced resignation or constructive termination. (2) Subject to sub rule (1), the following circumstances may be considered as sufficient reasons to justify a forced resignation or constructive termination: - (a) sexual harassment or failure to protect an employee from sexual harassment; and (b) if an employee has been unfairly dealt with , provided that the employee has utilized the available mechanism to deal with grievances unless there are good reasons for not doing so. (3) Where it is established that the employer made the employment intolerable as result of resignation of the employee, it shall be legally regarded as termination o f employment by the employer". [Emphasis added]. 9 Our understanding of the above provision is that, the decision of an employee to resign from employment will be taken as forced resignation or constructive termination where the employment or working environment is made intolerable to him/her. The bottom line for the said principle to be applied is that: One, the employer should make the employment environment intolerable; two, termination must have been prompted or caused by the conduct of the employer; and three, the employer must have caused the resignation as the employee might have had no intention to resign. (See: Kobil Tanzania Limited v. Fabrice Ezaovi [2021] TZCA 486). It is important to emphasize that in order to establish constructive dismissal or termination all the three conditions above have to be cumulatively present to the employee. This is as opposed to the conventional termination of employment where the employer has to prove that the termination was fair both substantively and procedurally. The follow up issue is whether those conditions were issues considered and determined by the two courts below. The evidence on record reveals that the appellant was terminated from his employment by the respondent under constructive termination following his failure to be paid his salary for three months. This created an intolerable working environment to the appellant after he went to 10 complain to the Labour Officer. That is when the appellant referred the matter to CMA. Essentially, the appellant was terminated constructively after the working condition became unfriendly and intolerable and, in those circumstances the question of substantive or procedural fairness could not apply. So, the issues of unfair termination substantively or procedurally were not discussed or considered by the CMA. This was confirmed by the High Court as seen at pages 257 to 258 of the record of appeal that the appellant was terminated from his employment constructively as was found by the arbitrator after the working condition became unfriendly and intolerable, and that the issue of substantive and procedural reason for termination of the appellants employment was not considered at all. Yet, even in the application for revision it was not among the complaint. Thus, even the argument that the compensation had to be pegged on the substantive and procedural fairness in the circumstances of the case, do not stand and infact it was not the central issue for the determination of the matter. As alluded to earlier on, the appellant's complaint is based on the award of 12 months remuneration for unfair termination being at the lower side. On our side we do not find any material to fault the concurrent finding on the 12 months compensation awarded. This is so li because: One, the said award is within the dictates of the law. Two, the same is awardable on discretion of the court being guided by the tests set out under rule 32 (1) of the Mediation and Arbitration Rules. Three, we ascribe to the reason that was given by the High Court Judge that the appellant might have contributed to his constructive termination from his employment by his refusal to sign the employment contract which in a way was triggered by him after reporting the matter to the Labour Officer who directed for all employees to have employment contracts. In this regard, grounds 1, 3 and 5 fail. In the 2n d ground of appeal, the appellant's complaint is on the High Court sustaining the CMA's finding that the appellant was not entitled to NSSF benefits which were characterised as terminal benefits. The appellant's argument is pegged under section 44 of the ELRA which enlists terminal benefits upon the employee's termination of employment contract. That, since appellant was employed by employer on permanent basis, and was unfairly terminated then, he was entitled to the terminal benefits as per the law. In response, M r. Msonde controverted it contending that such claim was in the first place, not among his prayers or claims as shown in the CMA form No. 1 (see page 12 of the record of appeal). He added that, even if it was properly pleaded, the High Court Judge discussed it 12 and found that the appellant could not be granted that benefit as he was not a member of NSSF (contributing member) and that in fact, the Labour Court had no jurisdiction to deal with it. There is no dispute that under the ELRA terminal benefits for an employee are provided for under sections 40, 41, 42, 43 and 44 of the said Act. Save to benefits governed by section 40, the other terminal benefits include payment in lieu of notice; accrued leave; severance pay; and certificate of service, which the CMA duly awarded. They do not include benefits from NSSF as they are under a different scheme and governed by a separate law. We note an element of misconception on the part of the appellant while admitting that there were no contributions made to the Fund, he thought that such contribution were payable or ought to have been paid to him directly. This claim was rejected by the CMA and sustained by the High Court. We agree with the High Court that such benefit is not available to him simply because as was testified he was not a member of NSSF and no deductions were made from his salary or his employer. This ground has no merit and it is dismissed. With regard to ground no. 4, the appellant faults the High Court for finding that the appellant refused to sign the contract of employment 13 while ignoring the fact that he had already worked for the respondent and thus he was an employee. It is the argument of the appellant that, after the contract which he was given to sign was found to be defective by referring him as driver instead of a mechanic and the respondent had undertaken to amend it, the truth is that it was never amended. Also, the contract still required him to work under probation while he had worked with the respondent for quite a long time. That, the reasons for his refusal to sign the said contract was not taken into consideration. M r. Msonde argued that, much as this ground is factual, insisted that the appellant refused to sign the contract which lead to constructive termination. On our side we find this ground to be without merit. We say so because, the appellant was required to cooperate with the respondent in complying with the Labour Officer directive which was, incidentally, triggered by him. Moreover, signing of contracts of employment is not a mere directive of the Labour Officer but a requirement of the law requiring the employer to provide written contracts to employees as per the dictates of section 15 of the ELRA. However, the appellant declined to sign it before treating the employment having constructively terminated. Thus, the appellants' contention that the High Court 14 disregarded his status as an employee is not tenable. Hence, this ground as well, lacks merit and it is dismissed. In view of the aforegoing, we find the appeal to be devoid of merit and we, accordingly, dismiss it in its entirety. We make no order as to costs. DATED at MBEYA this 12th day of May, 2026. R. K. MKUYE JUSTICE OF APPEAL E. M. FELESHI JUSTICE OF APPEAL D . J. NANGELA JUSTICE OF APPEAL Judgment delivered Virtually this 12th day of May, 2026 in the presence of M r. Maulid Muganyizi, learned Counsel for the Appellant, M r. Kennedy Makafu, learned Counsel for the Respondent and Mr. Elias Nkwabi, Court clerk, is hereby certified as a true copy of the original. D. P. KINYWAFU DEPUTY REGISTRAR COURT OF APPEAL 15