Wakilii

Makumbi v Essuubiryo -Zambogo Co-operative Savings and Credit Society Limited (Labour Dispute Reference 74 of 2022)

Industrial Court · [2024] UGIC 13 · 2024 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Labour dispute reference arising from lower labour committee proceedings concerning alleged unlawful termination of employment
Decision
Claimant awarded monetary compensation for unlawful termination with employer's salary loan offset against the awards

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Industrial Court held that the claimant's employment was unlawfully terminated. The court found that the final employment contract commenced on 1 February 2019 and expired on 1 February 2022, not 31 December 2021 as the employer contended. The employer's notice of non-renewal dated 6 December 2021 constituted premature termination without the required three months' notice under the contract. The court awarded payment in lieu of notice, unpaid salary, untaken leave, and general damages, but declined severance allowance and punitive damages. The employer's outstanding salary loan was offset against the monetary awards.

Outcome

Claimant awarded monetary compensation for unlawful termination with employer's salary loan offset against the awards

Facts

On 17 January 2019, the claimant was employed as Manager by the respondent SACCO under a three-year fixed-term contract with a monthly salary of UGX 1,800,000. In October 2021, the respondent asked the claimant to take accumulated untaken leave. On 6 December 2021, the respondent issued a notice of non-renewal stating the contract would end on 31 December 2021 and requiring handover by 30 December 2021. The claimant contended his contract commenced on 1 February 2019 and expired on 1 February 2022. A dispute arose over which of two signed contracts was operative: REX1 dated to commence 1 January 2019, or CEX2 dated to commence 1 February 2019. The claimant had an outstanding salary loan of UGX 5,760,000 at the time of exit, and the respondent withheld his December 2021 salary.

Issues

  1. Whether the Claimant's termination from employment was lawful?
  2. What remedies are available to the parties?

Orders

  • Declaration that the Claimant was unfairly and unlawfully terminated.
  • Respondent to pay UGX 5,400,000 as payment in lieu of notice.
  • Respondent to pay UGX 1,800,000 as salary arrears for December 2021.
  • Respondent to pay UGX 1,380,000 for untaken leave.
  • Respondent to pay UGX 3,600,000 as general damages.
  • Declaration that the Respondent is responsible for the salary loan of UGX 5,760,000 but it is to be offset from the monetary awards to the Claimant.
  • No order as to costs.

Rules and key headnotes

Fixed-Term Contracts — Identification of Operative Contract — Burden on Employer
Where an employer and employee have executed multiple versions of an employment contract, the burden of preparing and proving the operative contract rests on the employer because it is the employer who sets the terms and conditions of employment. Where the employer's witness concedes signing the later contract, that contract represents the parties' final agreement.
Fixed-Term Contracts — Premature Termination — Notice Requirements
A fixed-term contract can only be terminated on the date agreed upon by both parties unless there is material breach or repudiation. Where an employer issues a notice of non-renewal before the expiry date of a fixed-term contract and requires the employee to cease work before that date, this constitutes premature termination. Where the contract provides for termination with notice, the employer must give the stipulated notice period even if the remaining contract term is shorter than the notice period.
Termination — Distinction Between Termination and Dismissal
Under the Employment Act, termination means discharge from employment at the initiative of the employer for justifiable reasons other than misconduct, such as expiry of contract or attainment of retirement age. Dismissal implies discharge of an employee from employment at the initiative of the employer when the employee has committed verifiable misconduct. Severance allowance is payable for dismissal but not for termination.
Annual Leave — Employer's Duty to Grant Leave — Proof of Entitlement
Where an employer has written to an employee acknowledging that the employee has not taken leave for multiple years, the employee is not required to prove that leave was requested and denied. The employer's acknowledgment establishes the employee's entitlement to payment in lieu of untaken leave calculated at the statutory minimum of 21 days per annum under Section 54(1)(a) of the Employment Act.
General Damages — Unlawful Termination — Assessment Factors
General damages for unlawful termination are assessed on the common law principle of restitutio in integrum. Relevant factors include the employee's prospects of obtaining alternative employment, how the services were terminated, the inconvenience and uncertainty of future employment prospects, the employee's earnings, age, position of responsibility, and duration of the contract. The measure of damages for wrongful termination should be the amount the plaintiff would have earned had employment continued.
Punitive Damages — Employment Disputes — Restraint in Award
Punitive damages are awardable in employment disputes but with restraint, as punishment is not the purpose of civil and contract law. Punitive damages should only be awarded where there are exceptional circumstances warranting such an award.
Salary Loans — Unfair Termination — Employer Liability and Set-Off
Where an employee has been unfairly terminated and there is an outstanding salary loan entirely dependent on salary for repayment, the employer shall be responsible for the loan. However, the outstanding loan amount may be offset against monetary awards made to the employee for the unfair termination.

Legislation cited (5)

Cases cited (17)

  • Tommy Otto v Uganda Wildlife Authority (2008) HCB 69
  • Bank of Uganda v Betty Tinkamanyire (2008) HCB 25
  • Greenboat Entertainment Ltd v City Council of Kampala (H.C.C.S 0580 of 2003)
  • Kirunda Faisal v Juuko James (H.C.C.S 747 of 2005)
  • Joseph Tindyebwa and Another v Kabale University (LDR 156 of 2018)
  • Ochuru Henry v Ace Global(U) Ltd (LDR 164 of 2017)
  • Akonye David v Libya Oil (LDC No. 82 of 2014)
  • Angella Birungi v NLS Waste Services (C.A.C.A. No. 281 of 2016)
  • Bank of Uganda v Joseph Kibuuka and Others
  • Kyazze Tucker v Busoga College Mwiri (LD No. 143 of 2016)
  • Tumusiime Richard & 5 Ors v Mukwano Personal Care Products Ltd (LDR 22 of 2014)
  • Stroms v Hutchinson [1950] A.C 515
  • Stanbic Bank (U) Ltd v Constant Okou (Civil Appeal No. 60 of 2020)
  • Donna Kamuli v DFCU Bank Ltd (LDC No. 002 of 2015)
  • Addis v. Gramophone Company Ltd. [1909] A.C. 488
  • DFCU Bank Ltd v Donna Kamuli (C.A.C.A 121 of 2016)
  • Joseph Kalule v GIZ (LDR 109 of 2020)

Full judgment

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

Makumbi_v_Essuubiryo_-Zambogo_Co-operative_Savings_and_Credit_Society_Limited_(Labour_Dispute_Reference_74_of_2022)_[2024]_UGIC_13_(17_May_2024)
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.