Do’s and Don’ts of Retrenchment Due to Financial Difficulties in Tanzania
|Author: Nicole Mbowe|
|Dated: May 19, 2020|
The novel Coronavirus disease (COVID-19) has not only had a negative impact on people’s health across the world. It has equally affected the global economy leading to significant adversity on businesses, which in turn has affected their ability to retain and create jobs. The financial difficulties occasioned by COVID-19 are likely to force certain employers to restructure their businesses and/or workforce, to enable easier navigation through the rough seas during these times. The restructuring may inevitably lead to retrenchment. Against that backdrop, we deem it fit to share the do’s and don’ts of retrenchment in Tanzania, in accordance with the Labour laws.
Retrenchment or redundancy, in the context of Employment Law, can generally be defined as the act of an employer discharging their employees, often due to operational requirements. Section 4 of the Employment and Labour Relations Act 2004 (hereinafter ‘ELRA’), as reiterated by Rule 23(1) of the Employment and Labour Relations (Code of Good Practice) Rules, 2007 (hereinafter ‘Code of Good Practice’), defines operational requirements as requirements based on the economic, technological, structural, or similar needs of an employer; forming the legal basis under which retrenchment may take place. The reason for retrenchment, due to COVID-19 and for the purposes of this read, in light of the aforesaid provision, shall be ‘economic needs’. To that effect therefore, the following table demonstrates the Do’s and Don’ts when implementing a retrenchment.
In conclusion, although businesses are struggling to stay afloat amid these uncertain times and would find it difficult to incur the stipulated retrenchment costs, it is advisable that businesses should strive to comply with the above
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