Shita Mohamed Kanuka vs Freigth In Time (T) Limited (Civil Appeal No. 657 of 2024) [2026] TZCA 511 (8 May 2026)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM fCORAM: NDIKA. J.A.. LEVIRA. J.A.. AND MGEYEKWA. J.A.) CIVIL APPEAL NO. 657 OF 2024 SHITA MOHAMED KANUKA ........................................................... APPELLANT VERSUS FREIGTH IN TIME (T) LIMITED..................................................RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania, Labour Division at Dar es Salaam) (Mlvambina. J.) dated the 20th September, 2023 in Revision No. 150 of 2023 JUDGMENT OF THE COURT 3ffhApril & 8thMay, 2026 MGEYEKWA. J.A.: This is an appeal by Shita Mohamed Kanuka, hereinafter referred to as the appellant, challenging the decision of the High Court of Tanzania (Labour Division) dated 20th September, 2023 in Revision No. 150 of 2023. In that decision, the learned Judge revised the award of the Commission for Mediation and Arbitration (the CMA), dated 30th May, 2023, which had found that the appellant's retrenchment was substantively and procedurally fair. i The brief facts culminating to this appeal are as follows: The appellant, Shita Mohamed Kanuka, was employed by the respondent, Freight in Time (T) Limited, on 1st March, 2021, and was subsequently promoted to the position of Supervisor. It would appear that, following a downturn in the respondent's business, the respondent contemplated a retrenchment exercise and, in that regard, issued a notice of retrenchment to her employees on 12th November, 2021. While some employees accepted the retrenchment package and brought the matter to a close, the appellant took issue with the process. Consequently, she lodged a complaint before the CMA, challenging the retrenchment on the grounds that it was not supported by valid operational reasons and that the prescribed procedures were not complied with. In rebuttal, the respondent called two witnesses, namely Mazengo Ramadhani (DW1) and Prince Kairo (DW2), who testified in support of the retrenchment. Their evidence was to the effect that the respondent's business had been adversely affected by financial constraints occasioned by the COVID-19 pandemic, as well as changes in Government regulatory policies, including those relating to GPSA and TASAC, which impacted their 2 clearing and forwarding operations. They further maintained that the retrenchment process was conducted in accordance with the law, stating that a retrenchment notice had been issued on 9th November, 2021, followed by a consultative meeting held on 16th November, 2021. The appellant (PW1) alleged that the reasons for retrenchment were not sufficient. She disputed the allegation of loss of profits and argued that the respondent failed to exhibit the financial statements. The appellant clarified that the respondent did not abide by the proper retrenchment procedure. The appellant further testified that there was no proper and exhaustive consultation, engagement and meeting as well as consultation for alternative means to mitigate the intended retrenchment. Following the arbitration hearing, the arbitrator held that the respondent who had the burden of proof on the fairness of retrenchment had failed to discharge that burden, thereby upholding the appellant's complaint. On that account, the arbitrator awarded the appellant compensation equivalent to twelve months' salary in the sum of TZS 22,698,130.00, together with one month's salary in lieu of notice, a 3 certificate of employment, and all terminal benefits as provided under CMA Form FI. The respondent was aggrieved by the award of the CMA and filed Revision No. 150 of 2023 before the High Court (Labour Division) against the entire award. The respondent complained that the retrenchment exercise in question met both substantive justification and procedural propriety. Upon hearing the parties, the learned Judge sustained the respondent's grounds of appeal holding that the appellant's retrenchment was upon fair and valid reasons. It did so having been satisfied that the evidence by the respondent's witnesses, particularly DW1 and DW2 together with documentary evidence, amongst others, exhibits Dl, D2 and D6 proved the case against the appellant warranting a finding that the retrenchment was fair contrary to the CMA's award. It therefore quashed and set aside the CMA's award. Dissatisfied with the decision of the High Court, the appellant lodged this appeal, advancing four grounds of appeal faulting the High Court's decision. The grounds of appeal, may be condensed into two issues for determination, namely: whether the respondent had a valid and fair 4 reasons to retrench the appellant; and whether the procedure leading to the retrenchment met the requirements of the law. In canvassing the first issue, Ms. Martha Mwita, learned counsel for the appellant, took a firm position against the decision of the High Court. She contended that the High Court's findings on the existence of valid operational reasons were fundamentally flawed. The centerpiece of her grievance is that the learned Judge improperly leaned on the Financial Audit Report which was never part of the trial record at the CMA. Supporting that line of argument, Ms. Mwita contended that exhibit D6, the alleged financial report tendered at the CMA, was a mere two-page document which could not prove that the respondent company was in financial distress for the period covering years 2018, 2019, and 2020. Ms. Mwita further asserted that the financial report relied upon by the High Court was prepared by an internal accountant of the respondent company rather than an independent external auditor, and therefore, she argued, it ought not to have been relied upon. On that basis, she maintained that there was no valid reason to justify the termination of the appellant. In response to the first issue, Mr. Hassan, learned counsel for the respondent, supported the decision of the High Court, contending that it was sound and well-reasoned. He submitted that the learned Judge was right in finding that there existed valid reasons to retrench the appellant. Elaborating on that position, he stated that the learned Judge was satisfied, on the strength of the statement of profit and loss (exhibit D6), that the respondent had suffered a loss of business occasioned by a downturn in the global economy, which constituted a genuine basis for retrenchment. He further added that, in reaching that conclusion, the learned Judge was properly guided by section 88(4) of the Employment and Labour Relation Act, Cap. 366 [R.E 2023] (the ELRA), which enjoins an arbitrator to conduct proceedings with minimal legal formalities. When pressed by the Court to respond to the appellant's complaint that exhibit D6 was incomplete before the CMA but appeared as a complete report before the High Court, learned counsel for the respondent submitted that Rule 24(2) (f) of the Labour Court Rules, Government Notice No. 106 of 2007, permits an applicant before the Labour Court to list and attach documents that are relevant and material to the application. It was 6 therefore his contention that the document in question met the statutory threshold. He further submitted that, in any event, the Financial Audit Report annexed to the affidavit in the revision application did not form the basis of the learned Judge's decision. Rather, reliance was placed on exhibit D6 as presented before the CMA, which, in his view, sufficiently established valid reasons for the retrenchment. We have carefully considered the rival submissions in light of the record, the impugned judgment, and the applicable law. The central question under this issue is whether the respondent had a valid and fair reasons to retrench the appellant. It is apparent that the High Court was satisfied that the respondent had demonstrated financial loss through exhibit D6, covering the period 2018, 2019, and 2020. The relevant part of the High Court decision is on page 253 of the record of appeal stating that: "Second, the applicant tendered the statement o f profit and loss (exhibit D6) to prove that the company was operating at a loss. Exhibit D6 shows the income and loss o f the company from 2018 to 2020. Thus, the Arbitrator should have considered such evidence. I don't agree with the Arbitrator's finding that exhibit in question was incomplete contrary to Section 30A (1) o f Act No. 7 o f 2021. The referred law is specifically enacted to regulate accountants and auditors. It has no any relation to labour matters. Additionally the law empowers the Arbitrator to conduct Arbitration with minimal legal formalities. This is provided for under Section 88(4)(a) o f the ELRA (supra)". Guided by the above excerpt, we are in agreement with respondent's learned counsel that exhibit D6 sufficiently demonstrated the existence of genuine operational requirements to justify the appellant's retrenchment. It is apparent on the record of appeal that, the the High Court judgment reveals that the learned Judge anchored his conclusion principally on exhibit D6, the statement of profit and loss, which formed part of the material presented before the CMA. We therefore find that the learned Judge did not, as alleged, rely on an extraneous Financial Audit Report in reaching his conclusion on the existence of valid reasons to retrench the appellant, but properly treated exhibit D6 as sufficient indication of the respondent's financial position. With regard to the sufficiency of exhibit D6, we are not persuaded by the appellant's counsel's contention that its brevity, of itself, disqualified it from demonstrating financial distress. That argument, with respect, does not withstand scrutiny. What is material is not the length of the document, but its substance, context, and relevance to the issues in controversy. In the present case, the learned Judge rightly found that exhibit D6 disclosed a downturn in business performance consistent with the respondent's explanation of reduced operations occasioned by adverse economic conditions, including the COVID-19 pandemic. We therefore see no basis for disregarding exhibit D6 merely on account of its brevity. We are also unable to accept the submission that the mere fact that exhibit D6 was prepared internally by the respondent's accountant, rather than by an external auditor, renders it inadmissible. The law does not impose any rigid requirement that proof of operational requirements must be established exclusively through independently audited financial statements. It is noteworthy that Internal financial records, once duly produced and properly explained, are capable of constituting sufficient proof in labour proceedings. This position is fortified by the relaxed evidentiary regime contemplated under section 88(4) of the ELRA, which 9 enjoins the adjudicating authority to adopt a less technical and more pragmatic approach in the conduct of proceedings. We are, therefore, satisfied that there was credible and sufficient material upon which the learned Judge correctly concluded that the respondent had established valid operational requirements justifying the retrenchment exercise. In the result, the first issue is answered in the negative and is accordingly dismissed. The complaint under the second issue is concerning the High Court's finding that the procedure leading to the appellant's retrenchment was fair. The appellant's counsel contended that the learned Judge fell into error by failing to take into account the mandatory requirements governing retrenchment under section 39(1) (a), (b), (c) and (d) of the ELRA. Ms. Mwita clarified that the procedure for retrenchment was not followed as the respondent failed to issue notice of retrenchment, since the respondent failed to address the questions raised by the appellant during the consultation meeting, which were left unanswered by the management. The learned counsel for the appellant further submitted that the respondent was under an obligation to reconvene the consultations so as to 10 adequately respond to the concerns raised before proceeding further with the retrenchment exercise. On that premise, Ms. Mwita maintained that the procedural requirements for retrenchment were not complied with, and that the learned Judge ought to have upheld the award of the CMA. In conclusion, she prayed that the appeal be allowed. In contrast, Mr. Yassin supported the findings and holding of the High Court. He submitted that the retrenchment process was not conducted in a mere checklist fashion, but that there was substantial compliance with the statutory requirements. To support his argument, he placed reliance on the decision in Security Group Tanzania Ltd v. Samson Yakobo & Others, Civil Appeal No. 76 of 2016 [2020] TZCA 6, which was also cited by the High Court, for the proposition that compliance with statutory safeguards ought to be assessed substantively rather than in a mechanical or ritualistic manner. The respondent's counsel further submitted that the record of appeal shows that a notice of retrenchment (exhibit Dl) was issued on 12th November, 2021, and was subsequently followed by a consultative meeting (exhibit D2) held on 16th November, 2021. On that footing, Mr. Yassin li submitted that the process culminating in the appellant's retrenchment cannot be faulted, as the statutory safeguards were duly observed. He therefore urged the Court to find the appeal lacking in merit and to dismiss it in its entirety. We wish to state at the outset that retrenchment, being a termination of employment occasioned by operational requirements of the employer, is governed by section 39(1) and (2) of the ELRA. It provides as follows: "39(1) In any termination for operational requirement (retrenchment) the employer shall comply with the following principles, that is to say, he shall: (a) give notice o f any intention to retrench as soon as it is contemplated; (b) disclose all relevant information on the intended retrenchment for the purpose o f proper consultation; (c) consult prior to retrenchment or redundancy on- tf) the reasons for retrenchment, for the intended (ii)any measures to avoid or minimize the intended retrenchment; 12 (Hi) the method o f selection o f the employees to be retrenched. (iv) the timing o f retrenchment and (v) severance pay in respect o f the retrenchment; and (d)give the notice, make the disclosure and consult, in terms o f this subsection, with (1) any trade union recognized in terms o f section 67; (ii) any registered trade union whose members in the workplace not represented by a recognized trade union; (Hi)any employees not represented by a recognized or registered trade union. (2) Where in the consultations held in terms o f sub-section (1) no agreement is reached between the parties, the matter shall be referred to the mediator under Part VIII o f this Act". On the other hand, rule 23 of the Employment and Labour Relations (Code of Good Practice) Rules, GN 42 of 2007 (the Code of Good Practice) provides: "(4) The obligations placed on an employer are both procedural and substantive. The purpose o f the 13 consultation required by Section 38 o f the Act is to permit the parties, in the form o f a joint problem solving exercise, to reach agreement on- (a) the reasons for the intended etrenchment (i.e. the need to retrench); (b) any measures to avoid or minimize the intended retrenchment such as transfer to other jobs, early retirement, voluntary retrenchment packages, fay o ff etc.; (c) criteria for selecting the employees for termination, such as iast-in-first-out (LIFO), subject to the need to retain key jobs, experience or special skills, affirmative action and qualifications; (d) the timing o f the retrenchments; (e) severance pay and other conditions on which terminations take place; and (f)steps to avoid the adverse effects o f the terminations such as time off to seek work". Guided by the above provisions of law, it is clear that compliance with the requirements of section 39 (1), (a), (b), (c) and (d) of the ELRA and rule 23 (4) (a) to (f) of the Code of Good Practice in respect of the intended retrenchment by the employer is mandatory. For this position, see among others, the decisions of the Court in Haider Mwinyimvua & Others v. 14 Deposit Insurance Board & Another, Civil Appeal No. 250 of 2018 [2022] TZCA 97, Sharaf Shipping Agency (T) Ltd v. Bacilia Constantine & Others, Civil Appeal No. 56 of 2019 [2022] TZCA 291, and Joseph Fissoo & Others v. ITHNA Asheri Charitable Hospital, Civil Appeal No. 514 of 2020 [2024] TZCA 190. In Haider (supra), the Court held that: "In our view it is dear that subsection (1) (a), (b) and (c) above creates three preconditions for retrenchment, one, that it imposes on the employer the onus to give notice o f any intention to retrench as soon as it is contemplated. Secondly it requires the employer to disclose all relevant Information on the intended retrenchment for the purpose o f proper consultation. Thirdly it enjoins the employer to consult prior to retrenchment or redundancy on the matter..." [Emphasis added] Reverting to the appeal at hand, our careful perusal of the evidence on the record, leaves us with no doubt that the respondent complied with the requirements prescribed under section 39 (1) (a) (b) and (c) of the 15 ELRA. It is evident that the respondent issued a notice of impending retrenchment to the appellant on 12th November, 2021 (exhibit Dl). Thereafter, on 16th November, 2021, a staff meeting on retrenchment was convened and attended by several employees, including the appellant. The minutes of that meeting (exhibit D2) show that the appellant was informed of the respondent's decision to undertake retrenchment on account of loss of business, occasioned by a decline in customers arising from the effects of the COVID-19 pandemic. In view of the evidence on record, we find no reason to disagree with Mr. Yassin that a notice was duly issued and pre-retrenchment consultative meetings were conducted, as correctly found by the learned High Court Judge. The procedural requirements under section 39 of the ELRA are therefore satisfied. The complaint by the appellant's counsel that her questions were not answered during consultation is without merit. It is noteworthy that the law does not require an employer to engage in interminable consultations; what is required is meaningful engagement, not endless negotiation. The appellant's dissatisfaction with the responses given 16 cannot, by itself, render the process procedurally defective. Accordingly, the second issue is answered in the negative and is hereby dismissed. In the final analysis, we hold that the appeal is unmerited. It stands dismissed without costs. It is so ordered. DATED at DAR ES SALAAM this 6th day of May, 2026. G. A. M. NDIKA JUSTICE OF APPEAL M. C. LEVIRA JUSTICE OF APPEAL A. Z. MGEYEKWA JUSTICE OF APPEAL Judgment delivered this 8th day of May, 2026 in the presence of Ms. Martha Mwita, learned counsel for the appellant, also holding brief for Mr. Hassan Yasin, learned counsel for the respondent who appeared virtually and Ms. Nise Mwasalemba, Court clerk; is hereby certified as a true copy of the original.