Q&A – 25 January 2021

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Computation of terminal dues

I have been recently retrenched by my employer. What is confusing me is the way my terminal dues have been computed by the HR manager. Some of the dues have been computed on the basis of my basic salary alone while some have been computed on the basis of my total monthly income which includes allowances payable to me monthly. Can you guide on what terminal due is paid on the basis of the basic salary alone and what due is paid on the basis of the total monthly remuneration?
PD, Mwanza

Upon being retrenched there are normally six statutory terminal dues payable to the employee. These are notice pay in lieu of one month’s notice of termination; severance pay; annual leave pay for any untaken annual leave accrued to the employee during termination; repatriation allowance to the place of recruitment, subsistence allowance pending repatriation to the place of recruitment and remuneration for any work done before termination. Apart from the statutory dues the employer may pay any other dues on the basis of the employment contract, collective bargaining agreement, if there is one in place, or negotiation done during retrenchment meetings between the management and the employee or a trade union.

In view of section 41(5) of the Employment and Labour Relations Act [Cap.366 R.E 2019] notice pay is equivalent to monthly remuneration that the employee would have received had he worked during the notice period. Section 4 of the Act defines remuneration as total value of payments in money or kind made or owing to an employee arising from the employment of that employee. This means notice pay is calculated on the basis of the basic salary and all allowances payable to the employee monthly like, housing allowance, responsibility allowance, fuel allowance, telephone allowance, electricity allowance and the like. Because notice pay is given in monetary form, allowances that are paid to the employee in kind should be converted into monetary value for the purpose of getting the actual figure of notice pay due to the employee. For example, if the employee resides in the employer’s house and/or uses the employer’s car, the value of the employer’s accommodation and/or transport shall be converted into monetary form for the purpose of calculating the monetary value of notice pay.

Severance pay is computed on the basis of basic salary alone without including allowances. Section 42(1) of the Act and rule 26 of the Employment and Labour Relations (Code of Good Practice) Rules, 2007 provide that upon termination of employment, the employer shall pay an employee at least an amount equal to seven days’ basic wage for each completed year of continuous service capped at ten years.

The rate used to calculate the severance pay is the salary scale of the employee at the time of termination. Although severance pay is capped at 70 days basic salary, the employer may pay the employee more than what the law provides on the basis of the employment contract or collective agreement or negotiation between the employee and the management. All the law does is provide the minimum rate of severance pay and not the maximum rate.

Calculation of annual leave pay for any annual leave accrued to the employee at the time of termination of the employment is made on the basis of the basic salary alone. This formula for computing annual leave pay as a terminal due is provided under section 31(7)(8)(a) of the Act.

Where the employee’s service is terminated at a place other than the place of recruitment, the employer is required to repatriate the employee and his/her personal effects to the place of recruitment. Section 43 of the Act does not impose a duty on the employer to incur the cost of transporting the employee’s spouse and children. The statutory obligation is to transport the employee and personal effects only. The employer has three options of paying the repatriation cost. He can transport the employee to the place of recruitment by using the employer’s vehicle; hire a vehicle to transport the employee or pay the employee a transport allowance. The transport allowance is equal to at least a bus fare. In addition to the transport cost, the employer is obliged to pay the employee daily subsistence allowance pending repatriation to the place of recruitment. The rate of daily subsistence allowance pending repatriation is equivalent to the daily basic wage. Subsistence allowance pending repatriation to the place of recruitment does not include allowances that were previously paid to the employee before termination.

Remuneration for work done before termination includes allowances. The days worked before termination for which salary has not been paid shall be calculated on the basis of the daily basic wage and other allowances payable to the employee.

Finally, the law does not provide the method of computing non-statutory dues. The rate and the basis of their calculation is negotiable unless it is provided under the collective bargaining agreement or the Company Policy or the employment contract.

Power of Sungusungu to arrest or search a suspect for revenue offences

Last week I was arrested by traditional security and defence militia commonly known as sungusungu. During arrest they stormed into my shop and seized goods from the shop on allegation that I was doing business without the necessary documentations like a valid TIN Number. I would like to know if sungususungu has legal authority to arrest me for revenue offences.
GH, Dar

Sungusungu derive their power from section 4(1) of the Peoples Militia Act [Cap.111 R.E 2002]. That provision gives them power similar to that of a police constable.

Since sungusungu are equated to a police constable the law gives them power to arrest and search a place or person for breach of any written law including the revenue laws. However, when they exercise their power they are bound by the same limitations, conditions and restrictions like a police constable. Therefore they should have seized your shop goods with a seizure note.

All in all it is important that you make sure you are fully compliant with all laws at all times.