Supreme Court dismisses appeal of ex-UEB workers
Workers of the defunct Uganda Electricity Board fix a pole in Kampala in the 1990s.
What you need to know:
The longstanding litigation, which had been ongoing since 2008, revolved around a significant amount of terminal benefits.
On September 2, Justice Elizabeth Musoke of Uganda’s Supreme Court delivered a comprehensive ruling that pulled the plug on the appeal of 1,117 former employees of the defunct Uganda Electricity Board (UEB) who had contested the taxation of their terminal benefits.
The ruling addressed both procedural shortcomings and the legal merits of the case, solidifying the decision to reject the appeal. Justices Percy Night Tuhaise, Stephen Musota, Christopher Madrama, and Catherine Bamugemereire joined Justice Musoke in delivering a unanimous decision. The verdict delivered ended the claimants' hopes of recovering alleged overtaxed benefits when the liquidator paid them the compensation dues following their termination when UEB folded more than two decades ago.
Justice Musoke ruled that the appellants' claims had been previously adjudicated in the lower courts, with both the High Court and Court of Appeal ruling in favour of the Uganda Revenue Authority (URA). The appellants had failed to provide any new evidence or legal grounds to overturn these decisions. The disgruntled workers thought they could receive a refund of the taxes levied on their terminal benefits and thus sued the taxman and the liquidator.
Led by Julius Anyait, the appellants were dissatisfied and instructed their former advocates of Okurut, Okalebo, Outeke & Co. Advocates to appeal to the Supreme Court. The Uganda Registration Services Bureau (URSB) has also been sued in its capacity as the official liquidator of UEB. Court documents show that UEB is still in liquidation.
“We received all the sums of money that court granted to ex-UEB employees from the liquidator and I’m not aware of any case or lawyer with a divergent view,” said Mr Rogers Kiwanuka, who together with Mr Vincent Bagamunda first represented the appellants in court.
Mr Kiwanuka said all payments had been thoroughly documented after verifications at Buganda Road Library, where the records were filed. He also affirmed that the vast majority of the employees had been compensated as agreed.
Background
The longstanding litigation, which had been ongoing since 2008, revolved around a significant amount of terminal benefits—Shs979m—allegedly subjected to improper taxation. Patrick Nyabiryo and 1,117 of his former colleagues worked for the defunct UEB before they were retrenched between 1998 and 2001. Their terminal packages of Shs987m were subjected to Pay As You Earn (PAYE) tax, a sum of which was remitted to URA by UEB.
Dissatisfied with the tax decision, the former workers successfully challenged it in the High Court. The court ruled that taxing terminal benefits is illegal and not supported by the Income Tax Act. The High Court then ordered URA to refund Shs987m to the plaintiffs. On top of the refund, the taxman was also ordered to pay each plaintiff general damages of Shs1.2m.
In a judgment read on December 20, 2021, after URA appealed the High Court decision, the Court of Appeal agreed with the taxman. Two justices of the Court of Appeal, Justice Monica K Mugenyi and Justice Remmy Kasule, agreed with URA’s arguments, but Justice Geoffrey Kiryabwire dissented.
The two justices of the Court of Appeal noted that the issue of taxation of terminal benefits was already well decided on by the Supreme Court of Uganda in the renowned case of URA vs Siraje Hassan Kajura of 2015. Consequently, they maintained that the Court of Appeal was bound to follow the decision of the higher court under the doctrine of precedent, which binds the courts below it.
The case puts to rest the long-drawn legal battle between URA and former employees of UEB and many other parastatals who were affected by the Government Structural Adjustment Programme, popularly known as retrenchment. The Court of Appeal noted that the case was of public interest, and therefore did not award costs against the former employees of UEB.
URA was represented by counsel George Okello, the assistant commissioner for litigation, who welcomed the decision of the court, saying it settles the issues squarely and fairly and offers clarity on the taxability of retrenchment packages.
