Protection of Employees Upon Corporate Liquidation: A Case of The Companies ACT, [CAP. 212 R.E. 2002]

Abstract

Purpose: This paper examines the scope of protection of employees under the Tanzania Companies Act, the expected reasonable protection standard and the implication towards employees upon company liquidation. The objectives are to assess the effectiveness of Tanzania Companies Act Cap 212 R.E 2002 on the protection of employees and to draw experiences from other jurisdictions in the treatment of employees.

Design/ Methodology/ Approach: The data presented were based on documentary reviews. Various legislation decided cases, books, articles, and reports were reviewed to examine the treatment of employees’ interests during the liquidation of the corporate entity.

Findings: The study revealed that the Companies Act does not protect the employees should the event of liquidation materialize. Similarly, the legal framework on the protection of employees during liquidation in some other jurisdictions is fairly adequately compared to the Tanzania jurisdiction.

Research Limitation/ Implication: The study concentrated mainly on the scope of protection of employees during the liquidation process in line with Tanzania Companies Act Cap 212 and five (5) other countries on the same phenomenon for comparative analysis.

Practical Implication: The study created awareness of the ineffectiveness of company legislation towards the protection of employees upon corporate liquidation. In light of this study, the corporate employees will be exposed to their statutory rights and entitlements in priority ranking should a corporate entity proved insolvent.

Social Implication: The knowledge advanced by this study will help law and policy-makers in the amendment of the Companies Act and enactment of specific Acts for insolvency matters.

Originality/ Value: This study also invokes the knowledge to the public on the corporate law and subsequent procedure during the corporate financial distress as far as the settlement of debts is concerned.