Wakilii

Uganda Development Bank v Mufumba (Civil Appeal No. 241 of 2015)

Court of Appeal · [2020] UGCA 2051 · 2020 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Appeal from an award of the Industrial Court on points of law under section 22 of the Labour Disputes (Arbitration and Settlement) Act
Decision
Appeal substantially failed and only partially succeeded; awards varied with general damages, severance allowance and leave pay set aside, aggravated damages upheld, and interest reduced

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Holding

The Court of Appeal held that the respondent's services were wrongfully terminated because she was dismissed with immediate effect without statutory notice and without a fundamental breach justifying summary dismissal. An employer must give reasons where misconduct or poor performance is alleged. Damages must be assessed on restitutio in integrum, not contractual terms. The court held that general and aggravated damages cannot be awarded separately for the same tort, set aside the general damages award, upheld aggravated damages, set aside severance allowance and leave pay, reduced interest from 25% to 18% on special damages and 8% on aggravated damages. The salary loan amounts are offset from special damages. The appeal partly succeeded.

Facts

The respondent was employed by the appellant bank in 1998, rising to Principal Internal Auditor. In June 2011 staff were advised to take their accrued leave; the respondent proceeded on leave from 27 June 2011 but attended office for pressing matters. On 5 July 2011 she received a memorandum to show cause why she should not be disciplined for absconding. On 8 July 2011, while in office, she was served a termination letter from the Chief Executive Officer terminating her services with immediate effect and offering three months' salary in lieu of notice. The letter gave no reasons. She protested and was invited to a Board meeting. On 10 August 2011 the Board maintained the termination, converting it into redundancy arising from restructuring of the Internal Audit Unit, and offered terminal benefits of about UGX 114,291,560. The respondent had taken housing, car, personal loans and a salary advance serviced by salary deductions. She referred the dispute to the Industrial Court, which found the termination wrongful and made several awards. The bank appealed on nine grounds.

Issues

  1. Whether the Industrial Court erred in law in holding that the respondent's contract of employment was wrongfully terminated.
  2. Whether an employer is obliged to give reasons for termination of employment at the time it occurs.
  3. Whether the respondent was entitled to relief from paying loan amounts up to the time she would have officially retired.
  4. Whether special damages not specifically pleaded were properly awarded.
  5. Whether the Industrial Court could award both general damages and aggravated damages for the same tort.
  6. Whether the awards of severance allowance, leave pay, salary arrears, interest and costs were lawful.

Orders

  • The award of special damages by way of 66 months' salary from the time of termination to the date of the Industrial Court award is upheld, less salary loan obligations to the Appellant for the same period.
  • The Appellant shall pay provident fund contributions of UGX 10,182,452 directly to the trustee of any provident fund.
  • The award of UGX 2,341,554 being salary for July 2011 is upheld.
  • The award of UGX 2,341,554 being leave pay for 2011 is set aside.
  • The award of severance pay of UGX 83,215,239 is set aside.
  • The Respondent is entitled to pursue terminal benefits from any provident fund trustee as if she duly retired, with outstanding salary loan amounts offset from terminal benefits.
  • The award of aggravated damages of UGX 200,000,000 is upheld.
  • The award of general damages is set aside.
  • Interest of 18% per annum on special damages and 8% per annum on aggravated damages substituted for the 25% awarded.
  • Costs awarded to the Respondent; ground 9 disallowed.

Key headnotes

Employment & Labour — Termination — Statutory Notice Requirement under Employment Act s.58
An employer cannot terminate a contract of service without giving the employee statutory notice unless the termination is a justified summary dismissal under section 69 of the Employment Act or where the employee has attained retirement age; termination with immediate effect absent these conditions is wrongful.
Employment & Labour — Reasons for Termination — Notification and Hearing under Employment Act s.66
Where an employer is considering dismissal on grounds of misconduct or poor performance, section 66 of the Employment Act requires the employer to explain to the employee the reason for the contemplated dismissal before reaching a decision; reasons formulated only after termination do not cure the breach.
Employment & Labour — Statutory versus Contractual Provisions — Employment Act s.3 and s.27
Statutory provisions of the Employment Act override contractual terms in a contract of service, save where the contract confers terms more favourable to the employee; an agreement excluding the Act's provisions to the employee's detriment is void.
Damages & Quantum — General and Aggravated Damages — Prohibition on Separate Awards for the Same Tort
General and aggravated damages cannot be awarded separately for the same tort; aggravated damages are an enhanced form of general damages reflecting aggravating circumstances, and where awarded the court should not also award general damages in the same breath.
Damages & Quantum — Wrongful Dismissal — Restitutio in Integrum as Measure of Compensation
Damages for wrongful termination are assessed on the common law principle of restitutio in integrum, placing the employee in the position she would have occupied but for the wrong, rather than on the contractual terms of the repudiated contract; salary for the remaining period to retirement may be recovered as special damages.
Employment & Labour — Salary Loans — Relief from Repayment on Wrongful Termination
Where a salary loan is serviced by deductions from salary and the employee is wrongfully terminated, the employee is relieved from servicing the loan for the period up to the award of special damages, and outstanding loan amounts are offset from special damages and terminal benefits rather than awarded separately.
Damages & Quantum — Interest — Reasonableness and Restitutio in Integrum
An award of interest is compensatory and discretionary but must be reasonable; interest on special damages runs from the date of loss while interest on general or aggravated damages runs from the date of judgment, and an excessive rate may be substituted on appeal.

Legislation cited (25)

  • Employment Act 2006 s.2
  • Employment Act 2006 s.3
  • Employment Act 2006 s.27
  • Employment Act 2006 s.58
  • Employment Act 2006 s.61(1)(f)
  • Employment Act 2006 s.65
  • Employment Act 2006 s.66
  • Employment Act 2006 s.68
  • Employment Act 2006 s.69
  • Employment Act 2006 s.71
  • Employment Act 2006 s.73(b)
  • Employment Act 2006 s.75(b)
  • Employment Act 2006 s.77
  • Employment Act 2006 s.78
  • Employment Act 2006 s.87
  • Employment Act 2006 s.88
  • Employment Act 2006 s.89
  • Employment Act 2006 s.90
  • Employment Act 2006 s.93
  • Labour Disputes (Arbitration and Settlement) Act 2006 s.8(1)
  • Labour Disputes (Arbitration and Settlement) Act 2006 s.20
  • Labour Disputes (Arbitration and Settlement) Act 2006 s.22
  • Judicature Act Cap 13 s.14
  • Civil Procedure Act s.26
  • Contracts Act s.61(1)

Cases cited (10)

  • Stanbic Bank Ltd v Kiyemba Mutale (Civil Appeal No. 2 of 2010)
  • Barclays Bank of Uganda v Godfrey Mubiru (Civil Appeal No. 1 of 1998)
  • Bank of Uganda v Betty Tinkamanyire (Civil Appeal No. 12 of 2007)
  • Okello Nymlord v Rift Valley Railways (U) Ltd (Civil Suit No. 195 of 2009)
  • Forest Authority v Sam Kiwanuka (Civil Appeal No. 5 of 2009)
  • Omunyokol Akol Johnson v Attorney General (Civil Appeal No. 6 of 2012)
  • Kiyingi v National Insurance Corporation, [1935] H.C.B 4
  • African Field Epidemiology Network (EFENET) v Peter Wasswa Kityaba (Civil Appeal No. 124 of 2017)
  • Johnson and another v Agnew [1979] 1 All ER 883
  • Riches v Westminster Bank Ltd [1947] 1 ALL ER 469 HL
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