Mwesigwa and Another v Uganda Consolidated Properties Ltd (Civil Appeal No. 2 of 2001)

Court of Appeal · [2001] UGCA 52 · 2001 Appeal Dismissed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Civil appeal from High Court dismissal of a claim for severance allowance

Decision

Appeal dismissed; trial court's dismissal of the severance allowance claim upheld

The full judgment

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Holding

The Court of Appeal dismissed an appeal by two former employees who claimed severance allowance on the basis that their services had been terminated by the Government rather than the respondent company. The court held that, although the company was listed for privatisation under the PERD Statute, the temporary closure and termination of employment were initiated and resolved by the respondent's Board of Directors, with the Government merely sanctioning the Board's own request as the privatisation monitor. As termination was therefore effected by the employer and not by an external third party under abnormal circumstances, the appellants were not entitled to the severance pay provided for in Provision XVII Regulation 9 of the Staff Manual.

Facts

The appellants were former employees of the respondent company, serving as General Manager and Accounts Assistant. The respondent was listed under Class IV of Schedule I of the PERD Statute for 100% privatisation. Before privatisation, the respondent's Board of Directors requested the Government to sanction a temporary closure of the company to safeguard its assets during restructuring. The Ministry of Finance communicated the Government's approval of the closure, expressly noting it was at the company's request. Following the closure, the Board, in a meeting held on 22 June 1998, resolved to terminate the appellants' services with effect from 30 June 1998. The appellants were paid their terminal benefits but not the severance pay of one year's house allowance provided under Provision XVII Regulation 9 of the Staff Manual, which was payable only where termination occurred under abnormal circumstances not caused by the employer. The appellants sued, alleging termination by the Government. By the time of the appeal the company had not yet been privatised.

Issues

Whether the appellants' services were terminated by the respondent's Board of Directors or by the Government.
Whether the appellants were entitled to severance allowance under the Staff Manual.

Orders

Appeal dismissed.
Costs of the appeal and in the court below awarded to the respondent.

Key headnotes

Employment & Labour — Severance Pay — Termination by Employer versus Third Party

Where a staff manual provides for severance allowance only when employment is terminated under abnormal circumstances not caused by the employer, an employee whose services are terminated by the employer's own Board of Directors is not entitled to such allowance.

Company Law — Board of Directors — Authority to Hire and Fire Staff

The responsibility for the day-to-day management of a company, including handling personnel and the power to hire and fire staff, rests with its Board of Directors, even where the company is a public enterprise undergoing restructuring pending privatisation.

Statutory Interpretation — PERD Statute — Role of Government as Monitor of Privatisation

Under the PERD Statute and Divestiture Rules, the Minister responsible for privatisation monitors restructuring activities of listed companies; where the Government merely sanctions a closure requested by the company's Board, the decision to terminate employment is that of the Board, not the Government.

Legislation cited (3)

Public Enterprises Reform and Divestiture Statute No.9 of 1993
Divestiture Rules SI 1997 No.12 r.3
Divestiture Rules SI 1997 No.12 r.6

Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.