Q&A – 14 April 2014

PSA not being respected

We have a Production Sharing Agreement (“PSA”) with the Government of the United Republic which has various exemptions some of which the TRA is refusing to grant. These are putting us in a very serious crises as far as our financials are concerned. We fail to understand why the Government has entered into such agreements that are not being respected. Can you guide what options we have?
GP, Dar

The PSAs have a very strong force of law under the Petroleum (Exploration and Production) Act 1980 as they are clearly provided for thereunder. Hence the PSA cannot be challenged so long as it is properly executed, and you have a right to sue the Government for either specific performance or damages based on what you have suffered. If the PSA has an arbitration clause, which likely it has, then the issue can be referred to arbitration after following all the procedures under the dispute resolution clause. Before you rush this way please read the below.

The TRA is not mandated to grant any exemptions and is sometimes hence seen to be aggressive. TRA is the collecting body and is bound to follow the tax laws. For example, if you do not have special relief under the VAT Act you will be bound to pay VAT and claim it back. If you are not formally exempted under the East African Community Management Act then you will be liable to pay import duty. For you to enjoy the benefits of the PSA, you must apply for the exemptions attaching the PSA to such tax waiver application. The only Ministry that has the power to grant you the tax exemptions is the Ministry of Finance. Hence before seeking any recourse in arbitration we suggest you try formalize the exemptions in the PSA, and if those are denied whilst the PSA provides for it, the issue becomes a dispute and arbitrable. TPDC is fully aware of this and our experience is that they are usually quite cooperative.

The Government is quite keen to avoid any disputes with investors in areas it has entered into agreements and we advise you to also contact senior Ministers in the relevant sector(s) who may be able to intervene and resolve this. Your lawyers can guide you further.

Employees with disability demand higher out of station allowance

In my company employees travel a lot in order to service our upcountry clients. We have been paying them out of station allowance as one of their travel benefits among others. Recently we have run into difficulties with two of our employees who are disabled. They have come up with a claim that they should be treated different from others when it comes to out of station allowances. They want this allowance be increased to them only on the ground that they are disabled. They are telling us that this is a statutory requirement. We are stranded and are unsure whether this is a legal requirement and what we should do?
FI, DSM

Perhaps for clarity purposes, legally, a person with disability means a person with a physical, intellectual, sensory or mental impairment and whose functional capacity is limited by encountering attitudinal, environmental and institutional barriers. There is no provisions under the labour laws including the Employment and Labour Relations Act and other subsidiary legislations made thereunder which compels employers to pay persons with disability different rates from other employees particularly when it comes to out of station allowances.

More akin to the above observation, the Persons with Disabilities Act, Act No 9 of 2010 under section 33 requires that an employer shall not treat a person with disability different from a person with
non-disabilities in relation to among others provision of any other benefits or other matters related to employment. This applies both ways.

With the above in mind, there is no legal provisions which requires you to succumb to the additional demands of these employees. However depending on the ability of the company you may listen to their problems/difficulties which they encounter whenever they travel and consider assisting as a matter of courtesy. Your lawyers can guide you further.

Mandatory breastfeeding

I am a mother and am unable to breastfeed my son because I work in the city centre but live 30 kms out of the city. My husband says that I must breastfeed the child as it is provided for by the law. What should I do?
YR, Dar

There is no doubt that breastfeeding is beneficial for the growth of a child. As a matter of right the Employment and Labour Relations Act, has under Section 33 (10) clearly provided that where an employee is breast-feeding a child, the employer shall allow the employee to feed the child during working hours up to a maximum of two hours per day, and such hours are to be paid for. In this situation you may have an arrangement with your employer so that you will be able to leave either two hours before end of job for nursing or use the two hours in between for nursing. As a matter of practicability you may also add one hour of lunch time so that you may leave three hours before end of working hours.

As for whether it is mandatory to breastfeed, as far as we know there is no law which compels you to breastfeed. Think of a situation where a mother has a medical condition and she cannot breastfeed. That is why there is formula-feeding as an alternative. Nowadays there are also breast pumps which lactating mothers may use for extracting their breast milk for later use.