Q&A – 8 February 2021

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Termination of a fixed term employment contract

I am a HR Manager in a local company in Tanzania and intend to terminate an employee for poor work performance. The employee has a fixed term employment contract which is expiring in eight months to come. We want to know in case the employee successfully challenges his termination to the Commission for Mediation and Arbitration (CMA), what minimum compensation is the Company likely to be ordered to pay? In a worst case scenario, what is the maximum compensation the Company is likely to be ordered to pay? Will the compensation include the statutory terminal dues?
PU, Moshi

The minimum rate of compensation for unfair termination as provided under section 40(1)(c) of the Employment and Labour Relations Act [Cap.366 R.E 2019] is twelve months’ remuneration. The Labour Court has further said in a number of cases that this minimum rate depends on the nature or the length of contract but it does not apply to an employee serving a fixed term contract.

An employee serving a fixed term contract cannot be awarded compensation exceeding the remaining period of his/her fixed term contract. Assuming the arbitrator is unaware of these Labour Court decisions (which can be challenged), the maximum compensation he/she can award an employee serving a fixed term contract for unfair termination is twelve months’ remuneration. Section 4 of the Act defines remuneration to cover the salary and all the allowances payable to the employee in monetary form or in kind.

In the instance fixed term contract, section 40(2) of the Act is very categorical that compensation for unfair termination does not include statutory dues like notice pay, repatriation allowance, severance pay, subsistence allowance pending repatriation, leave pay and salary for the days worked before termination.

Building permit requirement

I own an unsurveyed plot located within a municipality. I want to erect a normal building which is not a storey building. Do I need a building permit before I commence the project?
HC, Mbeya

Any kind of development of any land within urban area requires a permit from the planning authority. Section 7(1) of the Urban Planning Act, 2007 defines a planning authority as a city council, municipal council, town council and town authority governing the area. The law requires a landholder to obtain a building permit from the planning authority before erecting or re-erecting any kind of a building in any urban land including unsurveyed land if the land intended to be developed has been declared a planning area by order of the Minister published in the Gazette, which seems to be the case here. Hence it is the declaration of the urban land to be a planning area that makes it obligatory to obtain a building permit from the planning authority and not the nature of the building intended to be erected or re-erected. Nor is it the nature of the plot that determines the need to seek the permit.

The legal process starts by the Minister responsible for land use planning making a declaration under section 8(1) of the Urban Planning Act, 2007 that a certain area is a planning area. The declaration is made by order of the Minister published in the Gazette. The order defines the boundaries of the area declared a planning area. Such declaration gives the planning authority responsible for the area mandate under section 7(5) and 28 of the Urban Planning Act to control and ensure orderly and environmentally sustainable development of urban land.

Once an area is declared a planning area, section 29(1) of the Urban Planning Act requires a landholder to seek and obtain consent from the planning authority before starting any project within it. This provision is supplemented by regulation 124(1) of the Local Government (Urban Authorities)(Development Control) Regulations, 2008 which also imposes an obligation on the landholder to obtain a building permit to erect a new building or re-erect an old building.

Section 74(1) of the Urban Planning Act, 2007 and regulation 139(1) of the Local Government (Urban Authorities)(Development Control) Regulations, 2008 gives a planning authority power to order removal, demolition or deletion of any structure or development done on urban land without its prior written consent. The planning authority is obliged to serve the landholder with a written notice to demolish, pull down or remove the structure or part of structure erected or re-erected without its prior written consent. The enforcement notice should specify the development allegedly done on urban land without a written approval of the planning authority and the measures required to be taken by the landholder. The notice should also specify the time within which the landholder should implement the order of the planning authority but the length of notice should not be less than a month.

In case of disobedience of the enforcement notice of the planning authority, the planning authority may carry out the demolition or removal of the structure erected or re-erected. Under section 74 of the Urban Planning Act and regulation 139 of the Regulations, the planning authority is entitled to recover from the landholder the cost it incurred to carry out the demolition or removal of the structure erected or re-erected without a permit.

Loan given, security not registered

In good faith our bank gave a loan to a customer without completing the security perfection procedures especially the mortgage which remains unregistered. Little did we know that the borrower’s intention was to disappear with this large sum of money. We now realise that the title deed he gave us to register is an old title that was revoked but looks very original. What should we do? The property still exists but belongs to someone else.
TY, Dar

It is a banking 101 principle that you should not give out a loan without perfection. Considering the facts, you are an unsecured creditor and apart from instituting a criminal complaint, will have to sue the individual for recovery and attach his or her personal assets, if any. It is likely the person also used a fake name and you may never find this person. Our experience reveals that such loans are always given in collusion with your officers. You may want to investigate further to conduct an internal investigation. Overall your chances of recovery look very bleak unless there are other securities you can rely upon, including personal guarantees and the like.