Legal Update – 27 March 2020

Labour Laws and Coronavirus – what you need to know

Frequently Asked Questions – reduced pay, termination, retrenchment and unpaid leave during the Coronavirus crisis.

What are the main Labour Laws of Tanzania?

The labour laws of Tanzania can be divided into two categories namely the laws that are exclusively applicable to public servants and the laws that are applicable to both public servants and servants in the private sector.

  • The labour laws that are exclusively applicable to public servants are Public Service Act, 2002 and the regulations made under it namely, the Public Service Regulations, 2003, the Public Service Scheme, 2003 and the Local Government (Teachers’ Service) Scheme, 2016; the Public Service (Negotiating Machinery) Act, 2003; the Teachers’ Service Commission Act, 2015 and the regulations made under it; the Teachers’ Service Commission Regulations, 2016.
  • The labour laws that are applicable to employees in the private and public sector are the Employment and Labour Relations Act, 2004 (ELRA), the Labour Institutions Act, 2004 and all the regulations and rules made under them.
Do the labour laws of Tanzania expressly address employer-employee relationship during pandemics like the Coronavirus pandemic?
  • There is no specific labour laws or provisions that addresses the pandemics like Coronavirus but there are provisions in the ELRA and the Employment and Labour Relations (Code of Good Practice) Rules, 2007 (Rules) that may be invoked to address common employment and labour related issues that commonly arise during the state of emergencies like the Coronavirus emergency.
What is unpaid leave? Is it addressed by the labour laws of Tanzania? Who initiates it?
  • Unpaid leave means leave taken by the employee without being paid wages when the employee is on leave.
  • There is no express provisions in the ELRA and its regulations made under it that addresses unpaid leave. The law expressly addresses sick leave, annual leave, paternity leave and maternity leave.
  • Since unpaid leave goes to the essential term of employment contract which is remuneration, it is normally initiated by the employee but it should obtain the consent of the employer. The employer may also initiate it as an alternative to retrenchment where there are compelling forces for retrenchment.
In a pandemic state like now, when some of the businesses have totally shut down, whilst some are running under capacity and others making losses for lack of customers, can the employer reduce the salaries or force employees to take leave without pay or terminate or retrench them?
  • Section 15(4) of the ELRA prohibits unilateral change of terms of employment including the reduction of wage without consultation with the employees or their trade union. So even in a state like the situation of the Coronavirus we are in now, if the employer cannot afford to pay salaries or other contractual or statutory allowances because of the loss of business or profit caused by the Coronavirus pandemic, the employer must consult the employees or their trade union in order to get their consent to reduce their wages.
  • Where the employer’s business is totally lost due to the Coronavirus pandemic and the employer is unable to pay even the reduced salary, the employer may decide to terminate the employees from employment. Loss of employer’s business for whatever reason including the Coronavirus pandemic amounts to automatic termination of employment contract in terms of rule 5(1) of the Rules. Automatic termination does not require undergoing retrenchment procedures.
  • Where the company is running under its capacity and does not make profit to afford paying the running costs including the salaries, the employer may think of retrenchment as a means of reducing the business loss suffered due to the Coronavirus crisis. One of the legally recognised reasons for retrenchment is the economic needs of the employer to mitigate the financial difficulties he/she is facing- rule 23(2)(a) of the Rules. But the urgency of the Coronavirus pandemic is not an excuse for the employer not to follow the procedure for retrenchment.
  • There is no statutory duration of the retrenchment process. The time taken to retrench depends on the urgency of the factor giving rise for the retrenchment. All the procedures for retrenchment must be followed as per rule 23(7) of the Rules, which includes notice of retrenchment to be given to the employees intended to be retrenched and their trade union- section 38(1)(a) of the ELRA. The notice must disclose the grounds for retrenchment; the measures taken to avoid or minimise the intended retrenchment; the method used to select the employees to be retrenched; timing of retrenchment and severance pay- section 38(1)(c) of the ELRA. The management should also hold consultation meetings with the trade union or the employees with the view to finding a joint solution to the problem causing the retrenchment- rule 23(4) of the Rules. In the consultation meetings the management will tell the trade union or the employees all the alternatives to the retrenchment that the management have contemplated. The employer is not bound by the recommendations made by the employees or the trade union but is required to respond to the recommendations whether positively or negatively.
  • In case the business is only temporarily shut down for lack of customers or to keep the employees safe and the employer is unable to pay the remunerations, the employer may ask the employees to take unpaid leave as a measure of avoiding retrenchment. Section 38(1)(c)(ii) of the ELRA and rule 23(3)(6) of the Rules require the employers to exhaust all available alternatives before they resort to retrenchment caused by economic difficulties or other reasons. Before the employers resort to retrenchment due to economic crisis caused by the Coronavirus pandemic, they have to consult their employees and the trade unions to persuade the employees to take unpaid leave as an alternative way of avoiding retrenchment. Retrenchment should only be resorted to when the employees have refused the proposals of the employer to take unpaid leave or reduced salary. Hence options of reduced salary or unpaid leaves are open to employers.
What about reduced salaries?
  • Another alternative to retrenchment as touched upon above may be a reduction in salary. The employer may ask the employees to take reduced salary during the time when the business is temporarily shut down or the business is going down due to the Coronavirus pandemic. The employer must engage employees or their trade union to agree on the salary cut. The employees and employer or the employer and the trade union may agree on the rate of wage to be reduced and the duration of the reduction. The law does not bar extension of an agreement to unpaid leave or reduced salary. This means if the crisis persists, the employer and the employees or a trade union may extend the period of unpaid leave or reduced wage. This might be a good opportunity instead of retrenchment, but it depends on the financial ability of the employer to continue paying reduced salaries during a period when business has shrunk or is closed.
  • If the crisis persists for a long time and the employer totally loses the business for lack of customers and becomes unable to pay even the reduced salary, the employment will be deemed to have automatically come to the end in terms of rule 5(1) of the Rules. For that matter the employer may serve the employees with termination notices and pay the terminal benefits.
What if I cannot continue paying reduced salaries?
  • If for the reason of the persistence of the crisis, the employer cannot afford to pay the reduced salary for all the employees, the employer can retrench some of the employees and retain the few he can afford to pay.
  • Employees automatically terminated for loss of employer’s business due to the Coronavirus or retrenched for employer’s inability to pay wages during the crisis should be considered first during reemployment in the event the employer’s business resumes or the business is taken over by another employer after crisis. This is a requirement of rule 5(2) and 25 of the Employment and Labour Relations (Code of Good Practice) Rules, 2007.
I have worked for this highly profitable company for over 30 years. Can I force my employer to keep me employed during Coronavirus crisis?

Unfortunately not. If the company cannot afford to keep you at this time, you will either be retrenched, terminated, paid a reduced salary or forced to take unpaid leave. If a company is unable to continue surviving because of the Coronavirus, unfortunately it has no choice but to do one of the above.

Is termination or retrenchment challengeable?
  • An employee aggrieved with the decision to retrench or terminate him for loss of business due to the Coronavirus crisis may challenge the termination or retrenchment in a Court or quasi- judicial body vested with the power to decide labour disputes. The employee may challenge termination or retrenchment if s/he thinks the employer is using the Coronavirus as a pretext to terminate or retrench her/him.
  • Employee or trade union may go to the Commission for Mediation and Arbitration to challenge the intended retrenchment for either failure to follow the procedure or lack of good or bonafide grounds for retrenchment- section 38(2) of the ELRA and rule 23(8) of the Rules allows this.
If an employee is forced to self-isolate by the employer or government authority or s/he voluntarily self-isolates, is s/he entitled to a sick leave? What if one catches Coronavirus, is such a person entitled to sick leave?

Good question. We are unaware of any case law on this. However, we opine that self-isolation for coronavirus may be treated as a temporary ill health under rule 19(1)(1) of the Rules. But for it to be treated as temporary ill health it should be a forced self-isolation or voluntary true self-isolation taken with a good motive of avoiding the possibility of infecting others, and not of trying to avoid work. We have heard of employers complaining that a number of employees have purportedly started coughing to get 2 or more weeks off! The employee who is in self-isolation is entitled to a full salary for a period not exceeding 63 days and half salary for a period of 63 days. The actual period of self-isolation will depend on the medical recommendation or order given by the government authority. The same rule applies to an employee who falls sick due to coronavirus.

Please note that one may catch Coronavirus but may not necessarily fall sick, but such a person must be isolated and may still be able to work. As we drafted this Legal Update on the afternoon of 27 March 2020, we were informed that even the UK Prime Minister now has Coronavirus but is continuing to work, albeit in isolation.

Can an employer force an employee s/he suspects to be coronavirus positive to remain at home or self-isolate to avoid the possibility of infecting other employees at the work place?

Employer has the duty to make the work place safe and can force an employee he suspects to be Coronavirus positive to self-isolate or remain at home or go to the hospital for medical check-up in order to avoid infecting other employees at the work place.

My children are back home and I need to stay at home to look after them. Does the law allow me to get leave during this time?

The answer is no. There is no leave to look after children. But an employee may approach the employer and ask for unpaid leave or the employee may take their annual leave in advance. There is no right to an unpaid leave. The grant of unpaid leave requires mutual agreement between the employer and the employee.

What do you recommend an employer should do?

These are tough times. Considering that unemployment is high, as a good corporate citizen we would recommend you consider allowing employees to take their paid leaves, and if the crisis does not end by then, to either look at reduced pay followed by unpaid leave. Termination and/or retrenchment should be considered as a last resort.