Wakilii

Akankwasa v Equity Bank (Labour Dispute 302 of 2014)

Industrial Court · [2019] UGIC 45 · 2019 Judgment for Claimant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Labour dispute arising from High Court Civil Suit No. 320 of 2013, concerning termination of employment
Decision
Claimant awarded general damages and severance pay for unlawful termination

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Industrial Court held that the termination was unlawful because the employer failed to comply with the procedural requirements under sections 66 and 68 of the Employment Act 2006. The employer did not state a reason for termination in the termination letter and did not afford the employee a hearing before termination. The court rejected the employer's argument that it terminated the contract purely in exercise of contractual rights without reference to poor performance, holding that sections 65, 66, and 68 must be construed together and that any termination requires a stated reason and an opportunity to respond.

Outcome

Claimant awarded general damages and severance pay for unlawful termination

Facts

On 23 November 2011, the claimant was employed by Equity Bank as a Business Growth Development Manager earning UGX 3,300,000 per month and posted to Kabale as Branch Manager. In May 2013, he began receiving communications alleging poor performance and failure to meet targets. On 10 October 2013, he was placed on a one-month performance improvement plan. On 17 July 2013, he was issued with a notice of termination. The termination letter did not state any reason for the termination. The claimant alleged that the bank set unrealistic targets, issued conflicting directives (including a directive to cease lending when the branch's advance-to-deposit ratio fell below 110%), and failed to address bureaucratic challenges he raised. He was not accorded a hearing before termination. The claimant had served for approximately 18 months at the time of termination.

Issues

  1. Whether the termination of the claimant's employment was fair and lawful?
  2. What remedies are available to the parties?

Orders

  • A declaration that the claimant was unlawfully terminated.
  • An award of UGX 9,600,000 as general damages.
  • An award of UGX 4,950,000 as severance pay.
  • Interest of 18% per annum on general damages and severance pay from date of judgment until payment in full.
  • No order as to costs.

Rules and key headnotes

Termination of Employment — Procedural Requirements — Sections 65, 66, and 68 of Employment Act 2006 Must Be Construed Together
Sections 2, 65, 66, and 68 of the Employment Act 2006, which concern termination of employment and the procedure to be followed, must be considered and construed together as complementing each other, not contradicting one another. The right of an employer to terminate a contract cannot be fettered by the court so long as the procedure for termination is followed.
Termination of Employment — Duty to State Reason — Section 66 Employment Act 2006
Before reaching a decision to dismiss an employee on grounds of misconduct or poor performance, an employer must explain to the employee the reason for which the employer is considering dismissal, and must hear and consider any representations the employee may make. Whether the employer chooses to 'terminate' or 'dismiss' an employee, the employee is entitled to reasons for the dismissal or termination.
Termination of Employment — Proof of Reason — Section 68 Employment Act 2006
In any claim arising out of termination, the employer must prove the reason or reasons for the dismissal. The reason or reasons for dismissal must be matters which the employer, at the time of dismissal, genuinely believed to exist and which caused the employer to dismiss the employee. Where the employer fails to prove the reason, the dismissal shall be deemed to have been unfair.
Termination of Employment — Unlawful Termination — Failure to State Reason and Afford Hearing
Where an employer issues a termination letter that states no reason for termination and does not afford the employee a hearing before termination, the termination is both substantively and procedurally unlawful, notwithstanding the employer's assertion that it terminated the contract purely in exercise of contractual rights under section 65(1)(a) of the Employment Act 2006.
Remedies — Severance Pay — Calculation Method
Where an employee has been in continuous service for at least six months and is found to have been unfairly dismissed or terminated, the employee is entitled to severance pay under section 87(a) of the Employment Act 2006. Where the employer and employee have not agreed on a method of calculating severance pay, the reasonable method is payment of one month's salary for every year the employee has served.
General Damages — Unlawful Termination — Compensatory Nature
An employee who is unlawfully terminated is entitled to an award of general damages in addition to the remedies prescribed under the Employment Act. General damages are compensatory in nature and are intended to return the aggrieved party to as near as possible in monetary terms to the position if the wrong complained of had not been occasioned. Factors such as anguish and inconvenience suffered as a result of arbitrary and unfair termination should be taken into consideration.
Aggravated Damages — Requirement to Plead and Prove Aggravating Factors
Aggravated damages are compensatory in nature but are damages enhanced on account of aggravation such as malice and arrogance. Where no aggravating factors are pleaded and proved, there is no basis to award aggravated damages.

Legislation cited (15)

Cases cited (17)

  • Turyatemba and Others v Attorney General (Constitutional Petition No. 15 of 2006)
  • Kagwa v Plan International (Labour Dispute No. 175 of 2014)
  • Mufumbo v Uganda Development Bank (Labour Dispute No. 138 of 2014)
  • Mukooli v The New Forest Company Limited (High Court Civil Suit No. 173 of 2008)
  • Nassanga v Stanbic Bank (Labour Dispute No. 227 of 2014)
  • Akeny v Uganda Communications Commission (Labour Dispute No. 023 of 2015)
  • Stanbic Bank v Kiyemba Mutale (Supreme Court Civil Appeal No. 2 of 2010)
  • Musinguzi v Stanbic Bank (U) Ltd (Supreme Court Civil Appeal No. 5 of 2016)
  • Okuo v Stanbic Bank (Labour Dispute No. 171 of 2014)
  • Adetoun Oladeji (NIG) vs Nigeria Breweries PLV+C S.C, 91/2002
  • Independent Electrol and Boundaries Commission and anor vs Stephen Mutinda Mule & 3 others CA
  • Edace v Watoto Child Care Ministries (Labour Dispute Appeal No. 16 of 2015)
  • African Field Epidemiology Network v Kityaba (Court of Appeal No. 124 of 2017)
  • Kapio v Centenary Bank (Labour Dispute No. 300 of 2015)
  • Obonyo & Another Vs Municipal Council of Kisumu 1971(EA,)
  • Ahmed Ibrahim Bholm Vs Car & General
  • Kamuli v DFCU Bank (Labour Dispute No. 2 of 2015)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Akankwasa_v_Equity_Bank_(Labour_Dispute_302_of_2014)_[2019]_UGIC_45_(21_November_2019)
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.