Wakilii

Omara v Roofings Company Limited (Labour Dispute Reference 77 of 2020)

Industrial Court · [2024] UGIC 32 · 2024 Claim Allowed in Part AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Labour dispute reference arising from Magistrate's Court claim for unfair termination
Decision
Claimant's claim succeeded in part. Awarded general damages, severance pay, refund of erroneous deductions, and partial payment in lieu of notice. Claims for accumulated leave, aggravated damages, prospective wages, and costs denied.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the claimant's termination on grounds of restructuring was both procedurally and substantively unlawful. The employer failed to comply with section 81 of the Employment Act by not notifying the claimant individually of the impending restructuring, not identifying the categories of workers affected, and summarily terminating the claimant without proper notice. The court found the restructuring was a cover-up for termination due to the claimant's demands for explanation of unauthorised salary deductions. Claimant awarded general damages, severance pay, and refund of erroneous deductions.

Outcome

Claimant's claim succeeded in part. Awarded general damages, severance pay, refund of erroneous deductions, and partial payment in lieu of notice. Claims for accumulated leave, aggravated damages, prospective wages, and costs denied.

Facts

The claimant was employed by the respondent as an exports officer on 30 January 2017, based at the head office in Lubowa, Kampala, with responsibility for export activities to South Sudan, DRC, Rwanda, Tanzania, Kenya, and Burundi. He periodically travelled to these countries for work. On 1 October 2019, he was terminated with immediate effect, with the termination letter citing internal reorganisation and restructuring due to persistent economic hardships. The claimant contended he was terminated because he repeatedly demanded explanations for unauthorised deductions from his salary account. The respondent claimed the termination resulted from restructuring due to civil war in South Sudan affecting operations at the Gulu office, where approximately 100 employees were affected. The respondent notified the Commissioner of Labour and the Uganda Building Workers Union on 29 August 2019 of the impending collective termination. The claimant denied knowledge of any restructuring and was not a member of the union. Evidence showed the claimant was based at the Lubowa head office, not Gulu, and that unauthorised deductions continued to be made from his account even after termination.

Issues

  1. Whether the Claimant was unfairly and unlawfully terminated?
  2. What is the quantum of damages and reliefs that the Claimant is entitled to?

Orders

  • Declaration that the claimant was unlawfully terminated.
  • Respondent to pay claimant 15 days' salary in lieu of notice (having already paid 1 month of the 45 days undertaken).
  • Claim for accumulated leave days denied.
  • Respondent to refund monies erroneously deducted: Voucher No. 100068014 (UGX 980,933), Voucher No. 10066156 (UGX 1,036,302), Voucher No. 10065516 (UGX 1,135,468), Voucher No. 10013848 (UGX 1,293,800), and UGX 193,000 deducted for alleged absence.
  • General damages of UGX 5,000,000 awarded to claimant.
  • Claim for aggravated damages denied.
  • Severance pay of UGX 3,000,000 awarded (2.5 years at UGX 1,200,000 per month).
  • Claim for wages from termination until award denied.
  • Interest at 10% per annum on awards 1, 2, 4, and 6 from date of filing until payment in full, and on award 5 from date of award until payment in full.
  • Costs of the claim denied.

Rules and key headnotes

Termination — Collective Termination — Procedural Requirements under Section 81 of the Employment Act
Where an employer contemplates collective termination of not less than 10 employees for economic, technological, or structural reasons, section 81 of the Employment Act mandates that the employer provide relevant information to employee representatives at least 4 weeks before termination takes effect, including the number and categories of workers likely to be affected, and notify the Commissioner of Labour in writing of the reasons, number, categories, and period over which terminations will occur.
Termination — Restructuring and Redundancy — Individual Notification Requirement
Even where an employer notifies a labour union of impending collective termination due to restructuring, the employer must directly and individually notify employees who are not represented by the labour union about the restructuring process and their contemplated termination. Notification to the union alone does not satisfy the procedural requirements where the affected employee is not a union member.
Termination — Restructuring — Substantive Justification and Transparency
For a termination based on restructuring or redundancy to be lawful, it must be both procedurally fair and substantively justifiable. The employer must identify the specific categories of workers to be affected and provide justifiable reasons for the restructuring. A notification that states a review of skills is ongoing without identifying affected categories fails to meet the mandatory requirements of section 81(1)(a)(b) of the Employment Act.
Termination — Burden of Proof — Section 68 of the Employment Act
In any claim arising out of termination, the employer bears the burden of proving the reason or reasons for dismissal under section 68 of the Employment Act. The reason must be a matter which the employer genuinely believed to exist at the time of dismissal and which caused the dismissal. Where the employer fails to discharge this burden, the dismissal shall be deemed unfair.
Leave — Entitlement to Payment in Lieu of Untaken Leave
Although leave is a right of an employee under section 54 of the Employment Act, it is not absolute and should be taken at a time agreeable to both parties. An employee is only entitled to payment in lieu of untaken leave where the employee applied for leave and it was refused by the employer. Verbal requests for leave without documentary evidence of refusal are insufficient to establish entitlement to payment in lieu.
Remedies — Severance Pay — Calculation Method
Under section 87(a) of the Employment Act, an employee in continuous service for at least 6 months who is found to have been unfairly dismissed or terminated is entitled to severance pay. Where no formula for calculating severance pay exists, the reasonable method is payment of one month's salary for every year the employee has served.
Remedies — Prospective Earnings — Speculative Claims
A claim for wages from the date of termination until the date of award (prospective earnings) is speculative and cannot be sustained. Section 40(2)(d) of the Employment Act provides that where a contract has been frustrated or its performance suspended, the employer is under no obligation to provide work or pay wages. There is no guarantee that an employee would have served the contract to completion due to intervening circumstances such as death, lawful termination, or restructuring beyond the parties' control.

Legislation cited (25)

Cases cited (11)

  • Ben Kimuli v Sanyu Fm 2000 Ltd (Labour Dispute Reference No. 126 of 2015)
  • Florence Mufumba v UDB (Labour Dispute No. 138 of 2014)
  • Hilda Musinguzi v Stanbic Bank (U) Ltd (Supreme Court Civil Appeal No. 5 of 2016)
  • Stanbic Bank v Kiyimba Mutate (Supreme Court Civil Appeal No. 2 of 2010)
  • Kasingye Tumuhirwe Genevieve v Housing Finance Bank (Labour Dispute Reference No. 115 of 2016)
  • Programme for Accessible Health Communication and Education (PACE) v Graham Nagasha (Labour Dispute Appeal No. 035 of 2018)
  • Dr Elizabeth Kiwalabye v Mutesa 1 Royal University (Labour Dispute Claim No. 0005 of 2017)
  • GN. Hale v Wellington (1991) 1 N.Z.L.R at 151
  • British Transport Commission v Gourley[1956J]AC 155
  • Kangaho Silver v Attorney General (Labour Dispute Claim No. 276 of 2014)
  • Donna Kamuli vs DFCU Bank Ltd LDR ...

Full judgment

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

Omara_v_Roofings_Company_Limited_(Labour_Dispute_Reference_77_of_2020)_[2024]_UGIC_32_(12_April_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.