Net Health Limited vs Michael Alfayo Ayo (Revision Application No. 1141 of 2025; Revision Application No. 1141 of 2025) [2025] TZCA 1268 (9 September 2025)

; IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA ARUSHA SUB REGISTRY AT ARUSHA REVISION APPLICATION NO. 1141 OF 2025 (Arising from the Award of the Commission for Mediation and Arbitration at Arusha in Labour Dispute No. CMA/ARS/ARS/99/24/77/2024) NET HEALTH LIMITED............................................. APPLICANT VERSUS MICHAEL ALFAYO AYO ......................................... RESPONDENT RULING 14th August & 9th September, 2025 KAINDA, J.: Before this Court for determination is a Revision Application filed by Net Health Limited, the applicant, which seeks to challenge the legal and factual soundness of the Award delivered by the Honourable Arbitrator on the 20th of December, 2024. That Award was decided in favour of their former employee, Michael Alfayo Ayo, the respondent. At the hearing, the applicant was represented by Mr. Abel Otaro, learned counsel while the respondent had the services of Mr. Elibariki Maeda, also learned counsel. Present were also Mr. Michael Magesa, Legal representative for the applicant. The procedural course for this hearing was set by the court which ordered that the application be argued through the exchange of written submissions. Both parties have duly complied, with the applicant also filing a Rejoinder, thus presenting their complete arguments for the Court's consideration.

The core legal issue distilled from the parties' pleadings is a fundamental one; did the company's decision not to renew the respondent's fixed-term contract constitute an unfair termination of employment, thereby entitling him to compensation? Or, conversely, did the contract simply and automatically conclude through the natural passage of time, a concept known as effluxion of time? The applicant's Case, in summary, is built upon a strict interpretation of contractual terms. They assert that the respondent was employed under a series of one-year fixed-term contracts, the last of which commenced in April 2023 and was destined to expire automatically on the 31st of March, 2024. Their foundational argument is that the principles of unfair termination are not engaged by the natural expiration of a fixed- term contract. They contend that for an employee to successfully claim a legitimate expectation of renewal, that expectation must be founded not on mere subjective hope, but on an objective basis and specific, positive conduct by the employer. In support of this proposition, the applicant heavily relies on the authoritative scholarly work of Prof. Lovemore Madhuku, a Zimbabwean Politician and Professor of Law at The University of Zimbabwe in his Book titled Labour Law in Zimbabwe, Weaver Press, 2015 at page 101 where he stated that;

" The test for legitimate expectation is objective; woulda reasonable person expect re-engagement? This requires an assessment o f all the circumstances of the case. To be legitimate, the expectation must arise from impressions created by the employer . " The applicant highlights that they issued a formal notice of non renewal on the 1st of March 2024, a notice which the respondent acknowledged and replied to on the 15th of March. In the applicant's view, this reply, which engaged on the topic of terminal benefits without contesting the termination itself, signifies a clear acceptance of the contract's end. They argue that the Learned Arbitrator fell into a significant error of law by finding a legitimate expectation based almost exclusively on the respondent's long service and history of renewals. This approach, they submit, directly contradicts the precedent set in the High Court case of National Oil (T) Limited v Jaffery Dotto Msensemi & 3 Others, Revision No. 558 of 2016 where the court held that previous renewals are not an absolute factor and must be coupled with something more, an explicit undertaking or a consistent pattern of conduct that makes renewal a mere formality. Furthermore, the applicant argues the Arbitrator incorrectly concluded that the non-renewal was motivated by the respondent's arrest, a reason the applicant firmly denies. They contend that this finding

was an error, as an employer is not legally obliged to provide a reason for non-renewing a fixed-term contract that expires by effluxion of time. The Arbitrator also committed a clear error on a point of fact by misstating the contractual notice period as three months instead of one. Crucially, the applicant confirms its willingness to pay all terminal benefits lawfully owed due to the contract's expiry, a sum totaling TZS 18,384,615, but it vigorously contests the additional award of compensation for unfair termination, which they view as a double award for the same event. The respondent's case in opposition argues strenuously for the upholding of the Arbitrator's Award. His position is that the nature of his 17-year employment had fundamentally transformed over its duration. The consistent and uninterrupted pattern of renewals, coupled with the conduct of the applicant, created a powerful and objectively reasonable legitimate expectation that renewal was assured. He argues that the relationship had transcended the simple fixed-term arrangement, becoming a permanent one in all but name. The respondent finds significant weight in the applicant's own action of issuing a formal notice of non-renewal, arguing that this very act is a stark departure from past practice and an implicit admission that a simple, silent automatic expiry was not anticipated by either party.

On the substance of the matter, he maintains that the termination was substantively unfair, as it was motivated by his arrest and suspension. During this period, he contends he was presumed guilty by the company without a court determination, and his salary was unlawfully withheld, constituting a separate breach of contract. He also challenges the procedural validity of the termination notice, claiming there is no proof it was served on the date alleged. In his view, the Arbitrator's decision was a correct application of the law to the unique facts of this long-standing employment relationship and should be upheld. The jurisdiction of this Court in a revision application is not to rehear the case afresh as an appeal would, but to perform a more focused review. The task is to examine the correctness, legality, and propriety of the Tribunal's decision, assessing whether it acted with any material irregularity, misdirected herself on a point of law, or arrived at a conclusion that no reasonable arbitrator, properly applying the law to the evidence, could have reached. The legal heart of this matter is the doctrine of legitimate expectation within the context of fixed-term contracts, governed by Rule 4 of the Employment and Labour Relations (Code of Good Practice), GN No. 42 of 2007. The rule is clear; a fixed-term contract terminates automatically when the agreed period expires. The exception, found in

Rule 4(5) of GN No. 42 of 2007 (supra), states that where an employee claims a reasonable expectation of renewal, they must demonstrate an objective basis for it. Our jurisprudence places the burden of proof squarely on the employee to demonstrate this objective expectation. Upon a careful analysis, this Court finds that while the respondent's 17 years of service is a significant factor, the Learned Arbitrator misdirected on the application of this legal principle. The evidence presented, including the respondent's own correspondence, demonstrates a subjective hope based on good performance and long service, but it falls short of revealing the kind of objective basis, such as explicit promises or conduct from the Employer that made renewal a formality, required by the case law, notably National Oil (T) Limited v Jaffery Dotto Msensemi & 3 Others (supra). The burden was on the respondent to prove this objective expectation, and the Tribunal's finding that it did so, was a legal error. Its finding more accurately describes a subjective expectation, which is insufficient in law. Furthermore, the Arbitrator's finding that the non-renewal was based on the arrest was a misdirection. For a fixed-term contract expiring by effluxion of time, and in the absence of a proven legitimate expectation, an employer is not obligated to provide a reason unless an illegitimate motive like discrimination is alleged and proven. The inquiry

into the rationale for non-renewal was, therefore, immaterial to the core legal question and constitutes a further error. The mistake regarding the notice period, while not decisive, also contributes to the finding that the Award contains material inaccuracies. Importantly, the respondent's reply to the non-renewal notice, in which he engaged on the topic of his terminal benefits without protesting the termination itself, is conduct inconsistent with someone who genuinely believed his permanent employment was being wrongfully severed. On the matter of terminal benefits, the applicant has rightly conceded the respondent's entitlement to all accrued dues, and this Court will not entertain new evidential disputes about the computation of salary that were not raised before the Arbitrator. In conclusion, upon a holistic review, this Court finds that the Arbitral Award was founded on a misdirection of law regarding the doctrine of legitimate expectation as defined by the cited authorities. The finding of unfair termination was incorrect. The contract between the parties expired automatically on the 31st of March 2024. Consequently, the Revision Application is allowed. The Award from the Commission for Mediation and Arbitration is set aside in its entirety and substituted with the following orders: It is declared that the contract expired by effluxion of time and did not constitute an unfair termination.

The applicant is ordered to pay the respondent the sum of Tanzanian Shillings 18,384,615 as his lawful terminal benefits within thirty days and to issue him with a Certificate of Service. The award of twelve months' compensation for unfair termination is vacated. The matter being labour in nature, each party shall bear its own costs. Ruling delivered under my hand and seal of the court the 9th September, 2025 in chambers in the presence of Mr. Michael Magesa, legal representative accompanied by Mr. Mzee Paul Vedastus, Human Resource Officer both for the applicant company. The respondent was present in person. It is so ordered. S. J. KAINDA JUDGE 9.9.2025 Right of Appeal to the Coi ‘ I fully explained. / . S. J. KAINDA JUDGE 9.9.2025