Wakilii

David Kayondo v Cooperative Bank Ltd [1995] UGSC 3

Supreme Court · 1995 Appeal Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal to the Supreme Court from the High Court's dismissal of the suit following an earlier remittal.
Decision
Appeal allowed in part; dismissal set aside; appellant awarded cash in lieu of two months' notice and pension and gratuity under Standing Order 24.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Supreme Court held that bye-laws governing the appointment and removal of the Bank's Secretary formed part of his contract of service, even though his appointment letter did not refer to them. His termination was subject to the Registrar's approval and to a fair hearing; as neither was given, the termination was unlawful, and the Minister's belated purported ratification could not cure the illegality. The court declined to declare the contract still subsisting, since no employer can be compelled to retain an employee. However, the termination amounted to retirement under Standing Order 24, entitling the appellant to pension, gratuity and pay in lieu of notice. The appeal was allowed in part, with costs.

Outcome

Appeal allowed in part; dismissal set aside; appellant awarded cash in lieu of two months' notice and pension and gratuity under Standing Order 24.

Facts

The appellant had been employed by the respondent Bank since 1987, was appointed acting Secretary on 1 March 1987 and confirmed in the post on 1 February 1988. In 1989 the Board of Directors embarked on restructuring and set up a task force. By letter of 18 August 1989 the Chairman directed the appellant to go on leave. On 16 October 1989 the Chairman wrote terminating the appellant's service "forthwith", with cash payment in lieu of notice. Neither the Board nor any other authority interviewed or heard the appellant before he was suspended and retired, and there was no adverse report against him. The Registrar of Co-operative Societies, the technical officer on the matter, disrecommended the course taken because proper procedure was not followed. The Bank deposited Shs. 2,110,717 as the appellant's terminal benefits, which he declined to collect. He sued for a declaration that he remained an employee and for payment of dues withheld since his dismissal.

Issues

  1. Whether the bye-laws of the respondent Bank formed part of the terms and conditions of the appellant's contract of service.
  2. Whether the letter of 16 October 1989 lawfully and effectively terminated the appellant's employment.
  3. Whether the court should declare that the appellant's contract of service was still subsisting.
  4. Whether the termination amounted to retirement under the Standing Orders and what relief, if any, the appellant was entitled to.

Orders

  • Appeal allowed and the order dismissing the suit set aside.
  • Respondent to pay the appellant cash in lieu of two months, in addition to the one month's pay already included in Shs. 2,110,717.
  • Appellant to be paid pension according to the Standing Orders.
  • Costs of the appeal and of the court below awarded to the appellant.

Rules and key headnotes

Contract Law — Employment Contracts — Incorporation of Statutory Bye-laws as Terms of Service
Bye-laws made under statutory regulations that provide for the appointment, suspension and removal of a society's officers form part of an officer's terms and conditions of service, even where the letter of appointment does not expressly refer to them.
Administrative Law — Natural Justice — Right to a Hearing Before Dismissal
Terminating an employee's service without affording him a hearing violates the rules of natural justice and renders the termination unlawful.
Employment & Labour — Termination — Statutory Requirement of Registrar's Approval
Where, by delegated regulation, the power to appoint and dismiss an officer is made subject to the express approval of the Registrar, a termination effected without that approval is unlawful.
Administrative Law — Ratification — Belated Ratification Cannot Cure Illegality
A belated purported ratification by a Minister cannot validate a termination that was unlawful when effected; the Minister directs how directors exercise their powers but cannot ratify their illegality.
Employment & Labour — Remedies — No Reinstatement or Specific Performance of Employment
A court will not declare a contract of employment still subsisting or compel an employer to retain an employee, as no employer can be forced to retain an employee for the rest of the employee's working life.
Employment & Labour — Retirement Benefits — Entitlement to Pension and Gratuity
An employee retired by the appointing authority under the applicable standing orders is entitled to his terminal benefits, gratuity and pension as provided by those standing orders.

Legislation cited (10)

  • Co-operative Societies Act 1970 s.73
  • Co-operative Societies Act 1970 s.79
  • Co-operative Societies Act 1970 s.85
  • Co-operative Societies Act 1970 s.87
  • Co-operative Societies Act 1970 s.89
  • Co-operative Societies Act 1970 s.30
  • Co-operative Societies Regulations 1971 reg.6
  • Co-operative Societies Regulations 1971 reg.27
  • Co-operative Societies Regulations 1971 reg.28
  • Interpretation Act 1974 s.24

Cases cited (2)

  • Eley Vs. D.C Sitivelife Assurance Co. (1876) 1 Ex. D 88
  • Hickman v Kent or Romney Marsh Sheep-Breeders' Association [1915] 1 Ch 881

Full judgment

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David Kayondo v Cooperative Bank Ltd [1995] UGSC 3 (19 July 1995)
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.