Wakilii

Uganda Communications Employees Union and 2 Others v Uganda Telecom Limited and Another (Labour Claim 26 of 2015)

Industrial Court · [2024] UGIC 20 · 2024 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Ruling on preliminary objection concerning whether proceedings should be stayed due to 1st Respondent being in administration under the Insolvency Act 2011
Decision
Preliminary objection dismissed; matter to proceed to trial on the substantive issue of entitlement to remitted contributions

Observed later treatment

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Holding

The court held that claims for statutory contributions remitted by an employer to the National Social Security Fund are not caught by Section 164 of the Insolvency Act 2011 when the employer enters administration. The claimants are not creditors of the employer because the contributions, once remitted to the Fund, are held by the Fund for the benefit of employees and are not debts owed by the employer. No creditor-debtor relationship subsists between the claimants and the employer regarding remitted contributions. The proceedings may therefore continue without leave of court.

Outcome

Preliminary objection dismissed; matter to proceed to trial on the substantive issue of entitlement to remitted contributions

Facts

The Claimants were employees of Uganda Posts and Telecommunications Corporation or Uganda Telecom Limited (UTL). They filed a claim in 2015 seeking declarations of entitlement to retirement benefits secured in the Uganda Communications Employees Contributory Pensions Scheme and the National Social Security Fund, to which UTL had made contributions. On 22 May 2017, UTL entered administration under the Insolvency Act 2011 and an administration deed was executed. Before trial commenced in May 2024, counsel for UTL raised a preliminary objection that the proceedings were barred by Section 164(2) of the Insolvency Act, which prohibits creditors from continuing legal proceedings against a company in administration without leave of court. The parties agreed to restrict the issue to entitlement to contributions already remitted to and held by the National Social Security Fund.

Issues

  1. Whether the proceedings should be stayed under Section 164(2) of the Insolvency Act 2011 given that the 1st Respondent is in administration.
  2. Whether the Claimants' claim for entitlement to contributions remitted to the 2nd Respondent is caught by the administration deed.
  3. Whether the Claimants are creditors of the 1st Respondent with a provable and quantifiable debt.

Orders

  • The provisions of Section 164(2) of the Insolvency Act 2011 do not apply to the present case.
  • The question for determination is whether the Claimants are entitled to the contributions remitted by the 1st Respondent to the 2nd Respondent.
  • The trial of this question shall commence within the next fourteen days.

Rules and key headnotes

Employment & Labour — Retirement Benefits — Statutory Contributions — Effect of Employer's Administration
Statutory contributions remitted by an employer to the National Social Security Fund under Section 11 of the National Social Security Fund Act are not debts owed by the employer to employees once remitted, and employees claiming entitlement to such contributions are not creditors of the employer for purposes of Section 164 of the Insolvency Act 2011.
Administrative Law — Insolvency — Administration Deed — Scope of Section 164 Insolvency Act
For a claim to be caught by Section 164 of the Insolvency Act 2011 and thus require leave of court to continue, it must: (i) predate the administration deed; (ii) be brought by a creditor; and (iii) be provable and quantifiable.
Employment & Labour — National Social Security Fund — Nature of Remitted Contributions
Once an employer remits standard contributions to the National Social Security Fund under Section 11 of the National Social Security Fund Act, the contributions are credited to the accounts of employees held at the Fund and are payable by the Fund to the employees as benefits under Section 19, and are no longer in the control, custody or possession of the employer.
Statutory Interpretation — Insolvency Act — Definition of Creditor
A creditor under the Insolvency Act is one to whom a debt is owed or a person or entity having a claim against a debtor predating the order for relief concerning the debtor, and the Act presupposes a debt that has been quantified and ascertained.

Legislation cited (9)

Cases cited (4)

  • Uganda Telecom Ltd v Ondoma Samuel (H.C.M.A No. 0012 of 2018)
  • Brash Holdings Pty Ltd v Katile Pty Ltd (1994) 12 ACLC 472
  • BE Australia WD PTY Ltd v Sutton [2011] NSWCA 414
  • Mohammed Kisu Aata v Uganda Telecom Ltd (LDC No. 275 of 2014)

Full judgment

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

Uganda_Communications_Employees_Union_and_2_Others_v_Uganda_Telecom_Limited_and_Another_(Labour_Claim_26_of_2015)_[2024]_UGIC_20_(15_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.