Adoption of Employment and Labour Relation Act (ELRA) No. 6 of 2004 by Private Organizations – in Mwanza City Council, Tanzania

Abstract

Organizations in the world operate under well-defined policies, rules and regulations which are approved by the higher authorities of the particular organizations. The Government of Tanzania (GoT) has set the minimum standards that all the employers should treat their employees with or above the minimum standards as described under ELRA No. 6 of 2004. The study has assessed the magnitude of adoption by private organizations to the act in Mwanza City Council. This study considered few elements of the act such as; working hours, remunerations, leaves, termination procedures, formulation and implementation of trade unions, employer-employee collective bargaining, strikes and proved that private employers are against the act and do not significantly implement at their workplace as required appropriately. The study focused on 32 private companies with a total of 986 employees in which stratified random sampling method was engaged to obtain a sample of 384 respondents. Descriptive statistics involving mean scores were analysed using Statistical Package for Social Sciences (SPSS). Private companies put little consideration to their manpower by utilizing maximally with little payments targeting to maximize output. Private employers need to abide to the act so as to use the platform as motivational strategies to the employees and eventually reduce staff turnover in their organizations.

1 Introduction

1.1 Background and Functions of Employment and Labour Relations Act No. 6 of 2004

On the basis of an employment contract, usually an employee works for employer as subordinate to the management and supervisor on behalf of the employer. The employer remunerates the employee for his or her work done. An employment relationship often begins with little formal agreements about the tasks and responsibilities the employee will be obligated to carry out. For proper employment standards, an employee must be fully contracted with employers so as to put all sides of employment safe in all aspects. The informal nature of such agreements is not good because when disputes arise the court will have little to rely upon when constructing the obligations of each party instead will focus on contract. With poorly defined obligations, determining whether a breach occurred presents a difficult task, as does in choosing an appropriate remedy (MacLeod 2010).

Organizations’ staffs are employees whether are working as part-time or full time. The employer must fulfil certain legal responsibilities and obligations to the employees such as saving for their Social Security Fund, treating employees in accordance to the minimum obligations as described by the government of Tanzania under ELRA No. 6 of 2004 and the standing orders as revised in 2007. Malekela (2015), pointed that in Tanzania, labour relations started during plantation agriculture in 1924 and 1935 where railways and roads were built and many people were employed by the colonialist as casual labourers. The railway line from Tanga to Dar es Salaam in 1929, in 1919 was extended to Moshi and in 1934 the Tabora to Kigoma line was extended to Manyoni. At this moment there were palm gown in Kigoma, coffee in Moshi, tobacco in Tabora and Manyoni, sisal in Tanga and Dar es Salaam harbour for exportation. Hence a pioneer labour force was formed in this way. The study further argued that, the state as an active participant of industrial relations (IRs) assumes the role of formulating laws and policies to ensure proper relationship between employees and employers through the medium of legislation and operational rules and regulations. That means there is a wide range and levels of industrial disputes from latent to manifest. A dispute can either be of interest or of right. United Republic of Tanzania [URT], 2004.

1.2 Problem Statement

Traditionally, any organization aims at maximizing profit and its general growth. The minimum working and benefit standards as stipulated by the Government of Tanzania under ELRA No. 6 of 2004 demand employers to exercise rights of employees in many different aspects like daily working hours, remuneration, leaves, termination procedures, strikes, as few to mention. Kersley et al. (2013); assert that, these minimum standards when practiced properly employees become motivated and work efficiently, while when not can make employees to be negative against employment state. Furthermore observed that, some employees in private and informal organizations are working because they have got no alternative, since their employers utilize them effective to maximize returns of the organization while paid low salaries.

This has been reflected in few different aspects of the act. For instance, the act requires employees to work 8 h per day, while the normal working hours in private organization is not less than 9, any other payments are calculated less as stipulated in the act, remuneration is low as compared to duties and responsibilities performed by employees particularly organizations owned and or lead by Hindi, some leaves like maternity, paternity, and sick leaves are somewhat exercised however not satisfactory, termination procedures are not treated as stipulated in the act. Therefore the study on the hand wants to check out reasons for the private organizations not exercising such right vigorously.

Malekela (2015), most of private organizations are not actively aligned to the demands of the act in some sensitive area like failure to submit the deducted amounts from employees to social security funds (particularly National Social Security Fund); rarely, they do it when forced or sued. Employees’ long working hours with no or less overtime payments, employees termination without following properly the termination procedures, not entertaining collective bargaining at all, and not allowing any strikes at workplace. All these are against the ELRA No. 6 of 2004. Therefore the study on the hand targeted to assess the important reasons for the private organizations to be against the ELRA No. 6 of 2004 which revealed by common features of the private employees such as, turnover, lack of work’s morale, low performance, demotivation and engaging on unethical conduct as summarized in the conceptual framework which influence the researchers to conduct study on an adoption of private companies to ELRA No. 6 of 2004. The objectives of the study are to determine the compliance of ELRA No. 6 of 2004 by private organizations in Mwanza Region and to identify the effects of implementation of the act ELRA No. 6 of 2004 on private organizations.

1.3 Theoretical Framework

Trebilcock (2011) showed that labour relations system incorporates both societal values (e.g., freedom of association, a sense of group solidarity, search for maximized profits) and techniques (e.g., methods of negotiation, work organization, consultation and dispute resolution). Both private and public interests are at stake in any labour relations system. The state is an actor in the system as well, although its role varies from active to passive in different countries. The nature of the relationships among organized labour, employers and the government with respect to health and safety are indicative of the overall status of industrial relations in a country or an industry and the obverse is equally the case. An underdeveloped labour relations system tends to be authoritarian, with rules dictated by an employer without direct or indirect employee involvement except at the point of accepting employment on the terms offered.

Whilst some well-established and a few small- to medium-sized firms consider skilful, committed and motivated personnel as a strategic resource, other firms view the labour force as an easily replaceable commodity and base their operations on contract employees. The predominant form of employment, particularly in newly established firms, is the fixed-term contract or ‘contract work’. There is also the open contract, which is commonly referred to as a ‘permanent contract’ and is prevalent in well-established security firms. One can remain a contract worker for as long as the contract is renewed. One male guard interviewed indicated that he has been on a three-month renewable contract for the last three years. This problem stems from the loopholes in the Labour Act which fails to provide a maximum time limit for fixed-term contracts. A cut-off point is needed in order to minimize the exploitation of workers.

The Employment and Labour Relations Act (ELRA) of 2004 sets fundamental rights at work and regulates hours of work, remuneration, leave, termination of employment, trade unions and employers’ organizations, organizational rights, collective bargaining, strikes, and sets dispute resolution under the Commission for Mediation and Arbitration. The labour laws cover all workers, including foreign and migrant workers.

Several legal reforms of the labour market were approved with some improvements in recent years. However, there are some flaws on the labour legislations of the right to organize, right to collective bargaining and right to strike in relation to the international standards. It is still not easy of doing business. A point often overlooked is that the labour regulations are only reaching a relatively small formal sector in practice, which includes the minimum wages. In reality, a large majority (85%) of the total employment is enclosed by a growing informal economy due to insufficient job creation in the formal sector. (Andreoni 2018).

1.4 Theories of Management

Table 1. Summary of management theories in relation to the assessed issues from ELRA No. 6 of 2004

Management theories are formulated to depict the truth about a specific management aspect or situation. For instance theory X and Y (McGregor) is the one telling about lazy and hard workers in the organization respectively by nature, scientific theory (Taylor) explain about scientific approach in solving organizational problems, administrative theory (Fayol) is stipulated the general practice of managers and the 14 principles to be applied while practicing managerial action, Bureaucratic theory (Weber) highlight the delay of decision and communication due to the disciplinary compliance of chain of command by the employees and need hierarchy (Maslow) reminds managers to be careful when intend to motivate individual employees in the organization. These theories teaches private employers to deal with employees fairly as retention strategies and making them part of the organization in all aspects of decision. The selected components of ELRA No. 6 of 2004 like working hours, remuneration, leaves, termination procedures, involvement of trade unions, collective bargaining, and strikes are less valued by private organization, however if the theories are well adopted by rulers of the private companies would results into better leading manpower and retention strategies in the organization. In the findings and discussion the study managed to assess the effectives of the mentioned parameters relating with theories to test their effective use.

Fig. 1.

Source: Research Construct (2020)

Conceptual framework indicating the impact of unfair treatment of private organization to employees on the key players of ELRA No. 6 of 2004

2 Research Methodology

For the purpose of making the methodology to be meaningful, this section has highlighted the research area, research design, target population, sampling techniques, data collection techniques, methods of data analysis and the statistical measurement model guiding in the analysis process.

Due to the nature of the study, the researchers adopted case study design to make easy during analysis of respondent’s ideas. The case study is considered appropriate because it is the best method to describe the characteristics, perceptions, general situation and preferences of the organizations under study. It also enabled the researchers to critically analyze information gathered from organizations from both personal and professional points of view.

Bryman and Bell (2016), insert that descriptive studies are done when researchers want to establish the relationship of events without interfering with the purpose of reporting facts as they are. Thus, the design is chosen and considered appropriately for this study since it is able to give room for exploratory and descriptive data. This form of data is important in understanding the devotion of private organization to the minimum employment standards sets by ELRA No. 6 of 2004.

2.1 Research Study Area

The study covered private organization situated in Mwanza City Council. The main concern of the study is to assess the effectiveness use of ELRA No. 6 of 2004 by private organizations, where the focus is on working hours, remuneration, leaves, and termination procedures, involvement of trade unions, collective bargaining, and strikes.

2.2 Sampling Size

A subset of the total population which can act as true representative is known as sample (Oso and Onen 2009). This study adopted stratified random sampling approach. The basis of stratification was on the employees picked from private organizations in Mwanza City Council (MCC) and from each organization simple random sampling was applied to select a total of 384 employees from all organizations. The necessary sample size was derived from the formulae presented by Kothari (2004):

$$ {\text{n }} = \, \left[ {{\text{Z}}^{{2}} \sigma \, \left( {{1} - \, \sigma } \right)} \right]/{\text{e}}^{{2}} {\text{for z }} = { 1}.{96}, \, \sigma \, = \, 0.{5},{\text{ and e }} = 0.0{5} $$

Thus,

$$ {\text{n }} = \, \left[ {{1}.{96}^{{2}} * \, 0.{5}\left( {{1} - 0.{5}} \right)} \right]/0.0{5}^{{2}} = { 384} $$

Where by:

• n - The sample size

• z - The Z-score and for the purpose of this study was 1.96 in order to have a 95% confidence level.

• σ - The Standard of Deviation and to be safe the decision is to use 0.5 as this ensures that the sample is large enough.

• e - The margin of error and for the purpose of this study one construed to give a confidence interval of +/− 5%.

Mathematically from the above formulae the study envisaged that a sample size of 384 respondents is needed to be representative of the population.

2.3 Target Population

The population for the study is mainly made up by private organization situated in Mwanza City Council (MCC). The private organizations in MCC have so many employees, but for the selected private organizations considering only people with formal employment and liable to all statutory deductions, the study captured 32 private companies with total population of 986 employees. Thus, some of them were taken randomly to meet the demands of the study.

2.4 Data Collection

A questionnaire, capturing the variables under the study is prepared. Kothari and Garg (2014). The questionnaires contained only closed and open ended questions. The closed questions were used to limit the respondents to the variables of the study while the open ended questions enabled respondents to freely give their opinions in a more pragmatic way (Kothari and Garg (2014)).

The research instrument is divided into six (6) parts. Part I covered general information, part II, III, IV, and V, covered questions related to compliance of private organizations to ELRA No. 6 of 2004 and part VI focused on other information related to work performance as per employees’ views.

2.5 Methods of Data Analysis

Data collected in the course of the research is processed and analysed using. Descriptive analysis in the form of percentages and univariate measures such as mean were used to analyse the data using Statistical Package for Social Sciences (SPSS). After both data have been analysed and presented separately, the interpretation or discussions were presented in such a way that it enabled the researchers to either accept or reject whatever defined idea have about the differences or relationships among variables under study. The main issue is to measure the compliance of private employers to ELRA No. 6 of 2004 and to provide recommendations for both employers and employees.

3 Results and Discussion

3.1 Private Employers’ Compliance to the ELRA No. 6 of 2004

The study aimed at assessing the compliance of private employers to ELRA No. 6 of 2004. To make the situation meaningful, the contents were categorized into two important aspects which are; (1) employees opinions on employers’ compliance to the act, and (2) Management approach and motivational strategies adapted by employers in private organization, which are summarized into Tables 2 and 3.

Table 2. Private employees’ opinions on employers’ compliance to ELRA No. 6 of 2004

Although job satisfaction is mostly related to employee feelings about the job in general, attention must also be given to satisfaction concerning specific facets, such as supervision, pay, opportunity for advancement and morale (Shields et al. 2015). In sum, the responses brought to bear the view held by Noe et al. (2017), that a satisfying job has the following three features: it has inherently enjoyable features; it presents the opportunity for growth and development; and it makes employees feel efficient in the execution of their duties. Thus, to make the study meaningful as per objectives, employees were asked to give their opinions about the following paramount issues reflecting the acceptability or refusal of the employers to the act.

• i. Working hours and overtimes in private organizations:

  Normal working hours per day as stipulated in the act is 8 h a day, 40 per week, and any extra hours must be treated as overtime case. Respondents were asked to rate on acceptance of their organization on working hours, 100% argued that, they work for a minimum of 9 h a day, 45 h per week and if exceeds two hours per day is termed as overtime with minimal payment rates as voted by 98% of the respondents. The reflection is that, private organizations intend to gain profit through intensive utilization of resources in the organization and thus not aligning to the demands of the act.

• ii. Employees remuneration

  73% of the private employees (respondents) argued that, they work very hard with multiple tasks however they are paid very low wages as compared to public servants. Some of them argued that, Hindi employers utilize them fully; engaging more tasks, duties and responsibilities for about eleven hours per day, and paid low salaries and there is no element of overtime. This is evidencing that, private organizations do not abide to ELRA especially for remunerations and other related payments such as overtimes, extra duties, severance pays, fare for annual leaves, as few to mention.

• iii. Leaves to the employees

  ELRA No. 6 of 2004; states very clear about legal leaves to be granted to employees at work place. Section 31 (1) states the annual leave of 28 days to the employees, section 32 (1) and (2) of the act states how the employer should grand sick leaves to the employees, section 33 (1) to (6) tells more about procedures and situations for maternity leave to female employees, and section 34 (1) (a) and (b) reminds the employers to grand paternity leave to male employees. 71% of the respondents argued that private employers do abide with the act for annual leave and maternity leave only, other forms leave they are typically against.

• iv. Employees hiring and termination procedures

  For about 86% of the private organizations do not align to the acts regarding hiring procedure of the employees. Respondents’ voices emphasized by saying most of the employees therein are hired without formal procedures, they normally call for relatives and friends for employments when needs arise. Respondents further argued that, 100% termination procedures are not observed in private organizations as stipulated in the act that is why when employee is terminated they used to raise a case to Commission of Mediation and Arbitration (CMA) demanding their rights.

• v. Employees’ ability to form trade unions and being part of them

  In private organization such situation is there however employers they discourage it a lot to avoid possible frictions between them and employees. 82% of the respondents argued that, private employers they dislike formation and practicing trade unions at work place because brings power to the employees in bargaining capacity. The rejection of trade union resulted into weak or absence of elements of participation in decision making and in collective bargaining for 90% and 92% respectively in the sampled private organization in Mwanza City Council.

• vi. Strikes at workplace

  ELRA No. 6 of 2004; allows lawful strike at work place as described in part (vii) section 75 and 76 of the act. Respondents argued that, 100% the strikes are completely discouraged even when needs arises at workplace.

  Table 3. Management styles and motivation strategies to employees in private organization

3.1.1 Management Styles Commonly Engaged at Workplace

From the theoretical part of this study, Geisler and Wickramasinghe (2015) analysed very clear the popular management and motivation theories practiced mostly but with different faces in different organizations depending on the situation available at particular time. In private organization powers and orders are more exercised than any other things in management. This has been reflected by the respondents’ mean score of 4.03 as authoritarian management style are being engaged in the organizations, where all other management styles like democratic, paternalistic, laissez-Faire, coercive, coaching and bureaucratic management styles recorded insignificant mean scores. Additional information from respondents most of the employers have harsh language when dealing with staff in most circumstances.

3.2 Outcomes of Private Employers to Align Their Operations Towards Minimum Working Standards Set by the Act

The study discussed basing on observable behaviour of the employees developed at work place and its related organizational outcomes. This part is assessed basing on two important aspects (1) employees’ feelings at work place and (2) organizational benefits after engagement of the act in their operations, which are summarized into Table 4.

Table 4. Organizational benefits towards proper exercising of ELRA No. 6 of 2004

The effects of abiding or not abiding by the employers to the act were also measured. The behaviour of the employees at workplace were the tool helped to measure the effective or ineffective employers’ practice of the act while positive direction of the organization as a result of the proper practice of the act is used as a tool to determine the proper treatment of the employees at work place.

Among the benefits an organization will experience when proper exercise of ELRA No. 6 of 2004 is practised the organisation will befits from increase in profits and market share recording a mean score of 3.64 and there will be growth in revenue and stakeholders returns that will be as a result of improved productivity as indicated in Table 4.

3.3 Private Employers’ Views on About the Act

This part of the study reported and discussed the findings basing on observed behaviour of the employees at work place and its related organizational outcomes.

Traditionally, employers aim at utilizing fully the available resource to earn more profit in the course of operations. It has been observed that, Hindi owned organizations are the once with practical examples of utilizing human resources at maximum level with very minimal payments as narrated by respondents (employees). Group of employers were asked to provide their views about general aspects of the act and they rated as; 80% is fair to both employers and employees, 25% is fair to only employees, 47% is fair to only employers, 0% is crucial to involve all the employees in the decision making and 100% the involvement of employees in decision making is the source of wearying the company while the remaining percentages of 14%, 67%, 43%, 100% and 100% respectively are the rejection of all circumstances respectively. The average percent of acceptance (50%) is greater than average percent of rejection (44.8%), from there it can be concluded that, private employers are against the act with the reason that would like to avoid employees excuse, utilize them vigorously to generate more incomes of the organization.

3.4 Employees’ Voices on Their Employment Condition

The methodology of the study provided an extension of the findings by leaving a parameter in its model so as to hear the views of the employees out of those developed by the researchers. Employees’ voices were identified as complains against their employers as following:

• i. Majority of the employees from private organizations demands government to intervene the practical operations in private organizations to enforce employers to abide to the act to secure their rights.

• ii. Companies lead by foreigners, particularly Hindi, are the ones in fore line for not abiding to the act, they treat employees unfairly at intolerable level.

• iii. Private employers engage their employees at work place for an average of ten (10) hours per day, which is total against the act. Private employees’ demands government to harmonize this situation to be the same to the public employees.

• iv. Overtime payments are not paid on time if is agreed as overtime, or mostly rejected while they are forced to work arrogantly.

From the employees’ voice, it is concluded that most of the employees at work place slightly handled with care, despite of their positive commitment in their respective organization. Thus private employers need to oversee on this aspect for productivity improvements.

4 Conclusion and Recommendations

4.1 Conclusion

In private organizations, the commitment of the employees coming from pleasant remuneration, pleasant co-worker relationship coupled with good working conditions, granting all leaves accordingly, involvement of employees in collective bargaining, employees formulation and being part of trade unions, lawful engagement in strikes as well as proper procedural in employees’ termination are one of the paramount things getting employees to be satisfied on their jobs and subsequently directly reflecting in their intention to remain committed in the organization. The objective of the study is to measure how ELRA No. 6 of 2004 is effectively adopted by private organizations in their mode of operations. The study’s findings reveal that; the selected paramount parameters of the act like leaves, collective bargaining, engagement in strikes, involvement in trade unions, procedural employees termination, remuneration and average working conditions are insignificantly practiced and their outcome and impact in the society have low negative correction value between employers and employees at workplace. The first lesson drawn from the study is that employees would be more committed to private institutions when they are given rewards that are commensurate with responsibility and skills, the second lesson is that, private employers should abide their operations to the act in creating good working atmosphere at workplace and the third aspect is that, employers should act fairly and adopt management theories when leading employees in the organization.

5 Recommendations

Based on this study, it is recommended that; measures have to be put in place not just to increase their salaries but also pay all their emoluments promptly. Changes in compensation packages have associated impact on job satisfaction levels of employees. Again, private employers should devise ways of obtaining adequate facilities to enhance effective career management and try to switch their operations in such a way that will be aligned to ERLA No. 6 of 2004 to exercise both employees’ and employers’ rights at workplace. From employees’ responses, is found that about 58.7% feel dissatisfied and therefore there should be incentive packages for employees who stay at the same post for a considerable number of years or accepts posting to rural areas. There is a positive link between performance and incentive packages, where the incentive may be direct or indirect, or may be when the employers are fully practicing the important requirements as demanded by the act, that will automatically harmonize their efficiency, performance and reduce their turnover. It is also revealed in this study that, private employers must have concrete career development structures as well as retention policies for their staff in order to develop and retain them. The promotion and promotion criteria in private organizations need to be reconsidered in order to enhance the morale of staff so as to put them in their best level to help in achieving organizational goals.