Q&A – 22 October 2012

Severance pay during termination

I was working with a construction company until termination of my employment recently. I was paid all my dues except severance pay which I believe I was underpaid. My employer said that he computed it on the basis of the employment law not following the clause in my employment contract which states that severance pay will be payment of six months of my salary at the time. The challenge is that the amount I was paid based on the employment law is lower than what I would get paid if the employment contract was to be followed. Can the employer do this? What should I do?
TD, Dar

Severance pay is among the payments which an employer is supposed to pay an employee on termination of employment. This payment however is only for those who have completed 12 months continuous service with an employer and they have not been terminated on grounds of misconduct, capacity compatibility or operational requirements of the employer.

The computation of the severance pay as per the Employment and Labour Relations Act No 6 of 2004 (“ELR”) is an amount at least equal to seven days’ basic wage for each completed year of continuous service with that employer up to a maximum of ten years. Hence if one works for a five year period, the severance pay would be 35 days of the basic wage. If one works for twenty years, then the severance pay is 70 days of basic wage.

In your case, we think your employer was wrong to resort to the statutory computation if the severance pay in the contract of employment was clear and not below the seven days.

In short, the law merely provides for minimum computation standards and does not preclude the employer to opt for higher standards in favour of the employee. In that regard and subject to time limitation under the law, you may refer this dispute to the Commission for Mediation and Arbitration for an order compelling your employer to honor the contract of employment and pay you a severance pay accordingly.

One more note. There is a common doctrine that the law prevails over a contract that parties may enter into. This statement must be construed in the circumstances of the law and the contract. For example, the ELR provides a minimum of seven days of severance pay. Had this been a maximum of seven days, the severance clause in your contract would be illegal. The law provides for a safety net and hence your severance clause in your contract is legal.

Single shareholder company

I would like to incorporate a single shareholder company in your country. Is it possible?

Currently the Companies Act is clear that every company registered in Tanzania must have not less than two shareholders. However there is the Business Laws (Miscellaneous Amendments) Act of 2011 which amends, among others, the Companies Act of 2002 to the effect that a single shareholder company can be registered in Tanzania. This Act is yet to come into force as it is waiting for presidential assent.

When it comes into force, we strongly advise you to consult your attorney for further explanation on the conditions for single shareholder companies prior to registering one. Just so that you know, the new law provides for personal liability on the single shareholder should he or she be in breach of any of the provisions of the Companies Act. That, perhaps, is one of the biggest drawbacks persons will face when deciding whether or not to register a company with a single shareholder.

Non delivery of service by mobile company

I am using a mobile company in Tanzania whose services have become worthless. Most times you cannot reach anyone and when you are calling my phone it will say unreachable despite the phone being switched on. I also get unsolicited smses inviting me to buy ring tones amongst others. How can I stop this?
SK, Singida

The authority which is responsible for mobile companies in Tanzanian is the Tanzania Communication Regulatory Authority (TCRA). Hence if you have a complaint you can file it with TCRA and can appeal to the Fair Competition Tribunal should you still be dissatisfied with the service. This complaint mechanism is provided for by the Law.

The less exciting option is for you, perhaps, to consider changing your mobile operator.

Fighting in public place

Few months ago, my brother was arrested by the police and charged with fighting in the streets. In fact he was merely trying to stop a fight as a good Samaritan. The police have been very unfair with my brother as he was arrested and even though he explained himself to the police. He was subsequently charged. What does the law state on street fighting?
SA, Moshi

From your question, it seems your brother was unfairly arrested and charged. However approach this with an open mind and try understand why this has happened just to make sure you have not missed anything.

The Penal Code is clear in that any person who takes part in a fight in a public place is guilty of an offence and is liable to imprisonment for six months or to a fine not exceeding five hundred shillings.

If your facts are as per your question, apart from defending your brother in Court with appropriate evidence you can consider writing to the Director of Public Prosecutions (DPP) to reconsider on why your brother has been charged in Court. If the DPP is convinced, he may enter a nolle prosequi ie not willing to pursue the criminal charges against your brother which would mean that he would be discharged. Your lawyer can guide you further.