Court order to fire employees without reason sparks uproar

The labour industry has criticised a Court of Appeal ruling that an  employer did not have to give reason for termination of an employee’s contract. 

The landmark decision arose from a case where a former Stanbic Bank employee, Ms Saphinah Nassanga Kasule, sued the bank, alleging unfair termination in 2012.

Court documents show that Ms Nassanga was employed by the bank on February 15, 2001.

Under the Employment Contract Clause 18 that she was hired, it stipulated that either party could terminate the contract upon issuance of the requisite notice or payment in lieu of notice.

Based on the aforementioned clause, the bank on December 13, 2012, terminated Ms Nassanga’s employment contract. She was paid an equivalent of three months’ salary of Shs17m in lieu of notice and all other terminal benefits .

But being dissatisfied with the termination, Ms Nassanga petitioned the Industrial Court.

She stated that her employment was terminated because she had instituted a civil law suit against her employer after the institution allegedly invaded her privacy when it intercepted her e-mail she had sent to other banks over its investigation into a loan fraud.

Stanbic Bank in its defence before the Industrial Court, stated that the employment of Ms Nassanga was ended by way of “termination” as opposed to “dismissal”.

The bank argued that there was no wrongdoing since the law does not call for reasons for termination in order for the said termination to be lawful.

But the Industrial Court in its decision, ruled in favour of Ms Nassanga, holding that the bank unfairly terminated her employment. She was awarded Shs65m as general damages.

Being dissatisfied with the decision of the Industrial Court, Stanbic Bank appealed before the Court of Appeal.

The bank argued that the law does not require them to give any reasons for terminating the contract of their staff provided they give notice or pay three months’ salary in lieu of the notice.

The Court of Appeal in its decision it rendered on November 15, agreed with the bank’s reasoning.

“It is, therefore, very clear from the above authorities that the employer is not required to give reasons for termination of employment contract under section 65 (1) a, unless the employment contract states otherwise, the employer does not need to have a good reason or any reason to terminate the employment contract,” said Justice Christopher Gashirabake, who wrote the lead judgment.

Adding: “It is my view that this was not a dismissal but termination. For one to invoke the application of Section 66 of the Employment Act, it must be a dismissal on grounds of misconduct or poor performance. Since it is not the case in this matter, it is my view that there was no need for a hearing. The purpose of a hearing is to establish whether the allegations advanced against the employee are true.”

Ms Nassanga was also ordered to pay costs to Stanbic Bank both at the Court of Appeal and Industrial Court.

The judgment has not been received well in the labour industry.

Mr Wilson Usher Owere, the chairman general of the National Organisation of Trade Unions, described the ruling as “unfair”, reasoning that it contradicts Uganda’s Employment Act.

“It is very unfortunate and I have advised the Notu team to engage lawyers so that we ask for the review of that decision. It is a dangerous case that can put the country in turmoil. As a person who is interested in defending the rights of workers, I will ensure we don’t allow that law to remain in the books..., ’’ he said.

Likewise, Mr Sam Lyomoki, a former workers’ Member of Parliament and Secretary General for Central Organisation Free Trade Unions, said it is absurd that court has now clothed employers with powers to terminate the contracts of their employees at any given time.

“I need to look at the entire [ruling] but what I can say is that it is not right for an employer to terminate an employee’s contract without an explanation. I don’t think the court can make such a ruling because even in the recent Employment Act of 2006, they provided for what is called unfair termination,” he said.

Mr Charles Bakkabulindi, a Workers’ representative in Parliament, said the ruling is against the labour laws.

“That is against the labour laws because there are procedures to follow when terminating someone’s contract,” he said.

Mr Aston Arinaitwe Rwakajara, another Workers’ representative, said the ruling was very unfair and selfish.

“It is very unfortunate if the judges sat and denounced the workers without being sensitive forgetting that it can also affect them. They should know that they are also workers,” he said.

The other justices who handled the case were Deputy Chief Justice Richard Buteera and Catherine Bamugemereire.

By press time on Friday, it was not clear whether Ms Nassanga was to appeal before the Supreme Court, the last court of appeal in the land.

According to the Employment Act, termination marks the end of an employment contract for an employee. It may be ended by mutual agreement between the employer and employee or singly ended by either of them.

Until last week, the Industrial Court had stressed that an employer must provide reasons for termination to the affected employee.

Ms Grace Nabakooza, the head of employment relations and legal at the Federation of Uganda Employers, said they are aware of the said ruling which was premised on section  65(1)(a) Employment Act 2006.

“We believe a number of employers already have their policies and contracts drawn with clear reasons for which their termination shall be anchored. It is, therefore, only fair and equitable that employers provide their employees with reason why they’re terminating except in cases of a fixed term contract which is not going to be renewed,’’ she said.

EMPLOYMENT ACT

-According to the Employment Act, there is no notice of termination requirements for employees who have worked for less than six months.

-Two weeks’ notice for an employee who has worked for more than six months, but less than one year.

-One month notice where an employee has worked between one year and five years.

-Two months’ notice where an employee has worked between five years and 10 years.

-Three months’ notice where an employee has worked for 10 years or more.

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