Unilever Tea Tanzania Limited vs Stella Kasambala (Civil Appeal No. 1457 of 2025) [2026] TZCA 549 (12 May 2026)

IN THE COURT OF APPEAL OF TANZANIA AT MBEYA (CORAM: MKUYE. J.A., FELESHI, J.A. And NANGELA, J.A.^ CIVIL APPEAL NO. 1457 OF 2025 UNILEVER TEA TANZANIA LIMITED.................................................APPELLANT VERSUS STELLA KASAMBALA..................................................................... RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania (Labour Division) at Iringa (Mwipppo, J.l dated the 19th day of April, 2024 in Labour Revision No. 5 of 2023 JUDGMENT OF THE COURT 27Th April & 12th May, 2026 FELESHI. J.A.: This appeal arises from the judgment of the High Court of Tanzania at Iringa in Labour Revision No. 5 of 2023, whereby the court dismissed the appellant's application for revision against the award of the Commission for Mediation and Arbitration (CMA) in CMA/MAF/ ARB/19/2021. The background to the dispute is fairly straightforward. The respondent, Stella Kasambala, was employed by the appellant, Unilever i Tea Tanzania Limited, on 24th September, 2015 as a Human Resource Business Partner under permanent terms of employment. In April 2021, the appellant instituted disciplinary proceedings against the respondent following an internal inquiry into alleged misconduct. Consequently, she was charged with six disciplinary offences. Upon conclusion of the disciplinary hearing, the Disciplinary Committee found three of the charges proved, particularly those relating to alleged breaches of the employer's Code of Business Principles and policies on conflict of interest. The Committee thereafter recommended termination of her employment. Following the dismissal of her internal appeal, the appellant terminated the respondent's employment on 6th July 2021. Being dissatisfied with the termination, the respondent referred a labour dispute to the CMA alleging unfair termination. After hearing the parties, the Arbitrator found that the appellant had failed to establish a valid and fair reason for termination and consequently awarded the respondent compensation equivalent to twelve months' salary together with annual leave dues and salary in lieu of notice. Aggrieved by the award, the appellant filed an application for revision before the High Court challenging, in ter alia, the Arbitrator's findings on the fairness of the termination. The appellant contended that the Arbitrator erred in holding that there was no fair reason for termination despite evidence showing that the respondent had breached the employer's policies by failing to account for company funds and by engaging in conduct amounting to conflict of interest. In determining the revision, the High Court addressed several substantive issues. On the allegation relating to failure to account for approximately TZS. 45,000,000.00, the High Court observed that although the appellant sought to characterize the conduct as fraud under its Code of Business Principles, the respondent had never been formally charged with fraud either before the Disciplinary Committee or before the CMA. The Court therefore agreed with the Arbitrator that, under the employer's own policies, the failure to retire receipts or account for funds would ordinarily attract recovery or salary deductions rather than termination of employment. Regarding the allegation of conflict of interest, the High Court found no sufficient evidence proving that the respondent rendered human resource services to third parties in breach of company policy. It further noted that documents recovered from the respondent's laptop related to her previous employment and that her dealings with DICA had been conducted through the appellant's procurement system. Equally, the allegation of undue influence was rejected after the court found that the relevant training decisions had been initiated by line managers and not by the respondent in her capacity as Human Resource Business Partner. On the question of remedies, the High Court considered the appellant's challenge against the award of twelve months' salary as compensation and payment in lieu of notice. The Court held that although section 40 (1) (c) (Now Section 41 (1) (c)) of the Employment and Labour Relations Act, Chapter, 366 (ELRA) empowers an arbitrator or a labour court to award compensation for unfair termination, such compensation under section 40 (2) does not extinguish other statutory or contractual entitlements due to an employee. Ultimately, the High Court concluded that the appellant had failed to discharge the burden imposed under section 39 of the ELRA to justify the termination and accordingly affirmed the Arbitrator's finding that there was no valid and fair reason for terminating the respondent's employment. Still aggrieved, the appellant has now preferred the present appeal raising the following three grounds: 1. That the High Court erred in iaw and in fa ct by finding that term ination was not an appropriate penalty fo r breach o f the Accurate Records, Reporting and Accounting Policy. 2. That the High Court erred in iaw and in fact by im properly analysing the evidence on record and thereby w rongly concluding that the respondent did not breach the p o licy on Avoiding C onflict o f Interest. 3. That the learned Judge o f the High Court erred in law by awarding com pensation equivalent to tw elve m onths' salary. At the hearing of the appeal, Mr. Kiariga N. Kiariga, learned advocate, appeared for the appellant, while Mr. Remmy Ephraim William, also learned advocate, represented the respondent. The appellant relied on written submissions filed in terms of rule 106 (1) of the Tanzania Court of Appeal Rules, 2009 (the Rules), whereas counsel for the respondent opted to make oral submissions under rule 106 (10) of the Rules. However, before the hearing of the appeal could commence in earnest, and with leave of the Court, the appellant abandoned the second ground of appeal together with the written submissions filed in support thereof, and proceeded to argue only the remaining first and third grounds of appeal above. Substantially, the appellant's case, both in the written and oral submissions, centred on the contention that termination was the appropriate sanction for the respondent's breach of the appellant's Accurate Records, Reporting and Accounting Policy. Learned counsel submitted that the respondent failed to account for part of the advance payments she received from the company; collected a cash advance intended for another employee for purposes of purchasing a carpet on behalf of the company; and failed either to return the funds or submit the requisite receipts for accounting purposes. According to counsel, such conduct amounted to gross dishonesty within the meaning of rule 12 (3) of the Employment and Labour Relations (Code of Good Practice) Rules, G.N. No. 42 of 2007 (Code of Good Practice). Counsel further argued that the High Court misdirected itself in interpreting the appellant's Code of Business Principles (Exhibit RE2). Referring to page 20 of the document, counsel submitted that failure to accurately record transactions, falsification of records, or influencing others to do so could amount to fraud. In his view, fraud constitutes gross dishonesty under rule 12 (3) of the Code of Good Practice and is therefore a valid ground for termination of employment. He maintained that both the CMA and the High Court failed to properly apply rule 12 (1) of the said Rules in assessing whether termination was an appropriate sanction in the circumstances. He further emphasized that the respondent herself acknowledged the existence and applicability of Exhibit RE2. Counsel also submitted that considering the nature of the’ respondent's position as Human Resource Business Partner and the seriousness of the misconduct committed, the appellant had sufficient and fair reason to terminate her employment. According to him, the provisions of Exhibit RE2 clearly contemplated termination as one of the penalties for failure to accurately record financial transactions. In response, Mr. William submitted that although the respondent had been charged with several disciplinary offences, she was found guilty on only three counts. Significantly, she was not found guilty of breaching the employer's general Code of Conduct. Counsel argued that the misconduct established against the respondent merely concerned failure to retire receipts relating to funds advanced to her for company activities and did not amount to fraud or gross dishonesty. Counsel further contended that Exhibit RE2 did not classify failure to retire receipts as misconduct warranting termination. Rather, the policy contemplated recovery of the unretired sums through salary deductions. He forcefully argued that the respondent had never been charged with fraud either before the Disciplinary Committee or before the CMA and therefore rule 12 (3) of the Code of Good Practice could not properly be invoked by the appellant at this appellate stage. We have impassively considered the submissions by learned counsel for both parties, the record of appeal, the impugned judgment, and the applicable law. From the arguments advanced before us, the central issue for determination is whether the appellant had established a valid and fair reason for terminating the respondent's employment as required under sections 38 and 40 of the ELRA. The appellant's counsel contends that the respondent's conduct amounted to fraud and gross dishonesty within the meaning of rule 12 (3) of the Code of Good Practice. The particulars relied upon include alleged failure to retire receipts for company funds, influencing the finance department to structure loan payments contrary to procedure, and collecting cash advances without proper accountability. It is common ground that section 38 (1) of the ELRA prohibits unfair termination of employment. Under section 38 (2), a termination is unfair unless the employer proves that it was effected for a valid reason and in accordance with a fair procedure. Further, section 40 of the Act places the burden upon the employer to prove the reasons for termination, failing which the termination is deemed unfair. On our careful consideration of the record, we find no basis for interfering with the concurrent findings of the CMA and the High Court. The appellant's Code of Business Principles and Code Policies (Exhibit RE2) provides at page 20 that employees are required to record all transactions accurately, completely, and promptly. The Code further states that failure to accurately record transactions, falsifying records, or influencing others to do so "could constitute fraud" and may result in fines or penalties. The operative phrase in the policy is that such conduct "could constitute fraud." However, in the present matter, the respondent was never specifically charged with fraud or gross dishonesty before the Disciplinary Committee. Equally, there is no evidence demonstrating fraudulent intent or misappropriation on her part. What emerges from the record is essentially failure to retire receipts or account for certain advances received from the employer. Indeed, the respondent testified that under the employer's established practice, failure to retire receipts would ordinarily result in recovery of the amounts through salary deductions. There was also evidence showing that deductions had in fact been made from another employee's salary in relation to the same transactions. In those circumstances, we agree with the High Court that the appellant's attempt to elevate the misconduct into fraud or gross dishonesty was not supported by the evidence on record. Moreover, disciplinary proceedings must be determined on the basis of the actual charges preferred against the employee. It would be contrary to the principles of fairness and due process to uphold termination on the basis of fraud when no such charge had been framed or prosecuted before the disciplinary organs. We are therefore satisfied that both the CMA and the High Court correctly found that the appellant had failed to establish a valid and fair reason for terminating the respondent's employment. Consequently, the first ground of appeal is devoid of merit. With regard to the third ground of appeal concerning the award of twelve months' salary as compensation, learned counsel for the appellant argued that the award was erroneous because the respondent had not specifically prayed for such relief in CMA Form No. 1. On the other hand, counsel for the respondent maintained that compensation was properly awarded pursuant to section 41 (1) of the ELRA once the termination had been found substantively unfair. The law is settled that where termination is found to be unfair, the labour court is vested with discretion under section 40 and section 41 of 10 the ELRA to grant appropriate remedies, including reinstatement, re engagement, or compensation. In National Microfinance Bank v. Leiia Mringo & Others [2020] TZCA 240, the Court reaffirmed that compensation is one of the statutory remedies available to an employee whose termination is found unfair. It is true that the respondent did not specifically pray for compensation in her statement of claim before the CMA. Nonetheless, this Court has previously held that statutory terminal benefits and remedies arising from unfair termination may be awarded even where they were not expressly pleaded, provided the circumstances justify such relief. See Magnus K. Laurean v. Tanzania Breweries Ltd, [2021] TZCA 578. In the present matter, once the High Court affirmed the finding that the respondent's termination was substantively unfair, it was perfectly entitled to uphold the award of compensation equivalent to twelve months' remuneration as provided under section 41 (1) (c) of the ELRA. We therefore find no fault in the exercise of that discretion. The net effect of the foregoing discussion is that the issue posed above is answered in the negative; namely, that in terms of sections 38 and 40 of the ELRA, the appellant failed to establish a valid and fair li reason for terminating the respondent's employment. Consequently, the award of compensation equivalent to twelve months' remuneration was well within the jurisdiction and mandate of the CMA as provided for under section 41(1) (c) of the ELRA. In the final analysis, we find no merit in this appeal. It is accordingly dismissed. Since this is a labour matter, we make no order as to costs. DATED at MBEYA this 12th day of May, 2026. Judgment delivered virtually this 12th day of May, 2026 in the presence of Ms. Edna Mwankenja, learned counsel for the Appellant, Mr. Remmy Ephraim William, learned counsel for the respondent and Ms. Anna Utou, Court clerk, is hereby certified as a true copy of the original. R. K. MKUYE JUSTICE OF APPEAL E. M. FELESHI JUSTICE OF APPEAL D. J. NANGELA JUSTICE OF APPEAL \ DEPUTY REGISTRAR ; COURT OF APPEAL