Wakilii

Kizito v Finca (U) Ltd (Labour Dispute 57 of 2017)

Industrial Court · [2019] UGIC 48 · 2019 Claim Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Labour dispute claim arising from alleged unfair dismissal
Decision
Claim for unfair dismissal dismissed on grounds that employment contract was frustrated by operation of law following Bank of Uganda's removal of claimant from management

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Industrial Court held that where an employee's appointment as Executive Director of a microfinance institution is subject to Bank of Uganda approval under the MDI Act 2003, and Bank of Uganda removes the employee from management for failing fit and proper criteria, the employment contract is frustrated by operation of law. The employer's subsequent discharge of the employee does not require compliance with Employment Act s.66 fair hearing procedures because the contract became impossible to perform following the regulatory removal.

Outcome

Claim for unfair dismissal dismissed on grounds that employment contract was frustrated by operation of law following Bank of Uganda's removal of claimant from management

Facts

John Kizito was employed by FINCA Uganda Ltd as Chief Financial Officer and later elevated to Executive Director subject to Bank of Uganda approval under the Micro Finance Deposit-Taking Institutions Act 2003. His appointment was approved by Bank of Uganda. In August 2016, following an onsite inspection, Bank of Uganda removed Kizito from senior management and the Board of Directors on grounds that he received preferential interest rates on fixed deposits, violating fit and proper criteria under s.23(f) of the MDI Act. FINCA Uganda subsequently discharged Kizito on 14 September 2016, stating his contract was frustrated by operation of law. Kizito claimed unfair dismissal, arguing he was not accorded a fair hearing under Article 44 of the Constitution and s.66 of the Employment Act 2006. The High Court had previously upheld Bank of Uganda's removal in Misc. Cause No. 244/2016.

Issues

  1. Whether the Claimant was unlawfully dismissed by the Respondent?
  2. Whether the Claimant is entitled to reliefs sought?

Orders

  • Claim dismissed.
  • No order as to costs.

Rules and key headnotes

Employment & Labour — Termination — Frustration of Contract — Regulatory Removal
Where an employee's appointment to a position in a regulated financial institution is subject to approval and supervision by a regulatory authority under statute, and that authority removes the employee from the position pursuant to its statutory powers, the employment contract is frustrated by operation of law, rendering it impossible for the employer to perform its obligations under the contract.
Employment & Labour — Fair Hearing — Regulatory Context — Scope of Employer's Duty
An employer is not obligated to follow the fair hearing procedures under Article 44 of the Constitution and s.66 of the Employment Act 2006 when discharging an employee whose contract has been frustrated by a regulatory authority's removal of the employee from a statutorily regulated position, where the regulatory authority itself followed due process in effecting the removal.
Banking & Finance — Microfinance Regulation — Fit and Proper Criteria — Director Appointments
Under s.22(2) of the Micro Finance Deposit-Taking Institutions Act 2003, no person shall become a director of a microfinance institution without Bank of Uganda approval, and the appointment and the contract of service are so intertwined that they constitute one and the same thing, such that withdrawal of regulatory approval automatically terminates the employment relationship.
Contract Law — Frustration — Statutory Intervention — Employment Contracts
Section 40(2)(a) of the Employment Act 2006 relieves an employer of the duty to provide work where the contract is frustrated. Where a regulatory authority removes an employee from a statutorily regulated position, rendering performance of the employment contract impossible, the employer may lawfully discharge the employee on grounds of frustration without following disciplinary procedures.

Legislation cited (16)

Cases cited (5)

  • Bank of Uganda v Banaco Arab Espanol (Court of Appeal No. 23 of 2000)
  • Wakabi Fred v Bank of Uganda (Labour Dispute No. 0004 of 2015)
  • Florence Mufumba v UDB (Labour Dispute No. 138 of 2014)
  • Tarnesby v Kensington and Chelsea and Westminster Area Health Authority (Teaching) [1981] ICR 615
  • John Kizito v Bank of Uganda (Miscellaneous Cause No. 244 of 2016)

Full judgment

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

Kizito_v_Finca_(U)_Ltd_(Labour_Dispute_57_of_2017)_[2019]_UGIC_48_(25_September_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.