Lekya James Napokoli v Mount Meru Millers Uganda Limited (Labour Dispute Reference No. 07 of 2022) [2025] UGIC 45 (16 June 2025)

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## THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA AT LIRA LABOUR DISPUTE REFERENCE NO. 07 OF 2022 (Arising from Labour Dispute Complaint No. LCC/LDC/10 of 2022)

# LEKYA JAMES NAPOKOLI:::::::::::::::::::::::::::::::::::

#### **VERSUS**

MOUNT MERU MILLERS (U) LTD::::::::::::::::::::::::::::::::::::

**BEFORE:** The Hon. Mr. Justice Anthony Wabwire Musana

THE PANELISTS: Hon. Adrine Namara, Hon. Emmanuel Bigirimana & Hon. Can Amos Lapenga.

#### *Representation*

1. Ms. Bridge Kusemererwa of Platform for Labour Action for the Claimant.

2. Dr. James Makmot-Kibwanga of Makomot-Kibwanga & CO Advocates for the Respondent.

## Case summary.

Mr. Lekya James Napokoli sued his former employer after being terminated seven months before his contract expired, despite being paid salary in lieu of notice. The court examined whether the termination was lawful and fair, ultimately ruling that while payment in lieu of notice could render a summary termination lawful, providing an unproven reason without a hearing made it unlawful and unfair. As a result, the court ordered the employer to pay general damages to Mr. Napokoli, but denied claims for severance allowance and overtime pay due to a lack of substantiation

## AWARD

#### **Introduction**

$[1]$ Mr. Lekya James Napokoli was employed as Head of Maintenance at the Respondent's station in Lira for a fixed term of 2 years, effective the 24th day of March 2020. On the 18th day of August 2021, his services were terminated with notice because his employment was no longer needed as the project for which he had been hired, the new refinery, was complete and commissioned. Aggrieved, he filed Labour Dispute No. LCC/LDC/10 of 2022 at the Lira District Local Government. On the 5th of April 2022, Mr. Tom Richard Okello, Labour Officer, Lira City, referred the matter to

this Court on the questions of failure to effect payment in lieu of notice and other remedies.

- [2] By a memorandum of claim dated 11th April 2022, the Claimant sought the sum of UGX 2,618,462/= (shillings two million six hundred eighteen thousand four hundred sixty two) being payment in lieu of notice, general damages for emotional distress and psychological torture and costs of the claim. He said he was unfairly terminated. - [3] The Respondent opposed the claim. In its memorandum in reply filed on 13 February 2023, the Respondent contended that the Claimant was terminated in accordance with the employment contract because his services were no longer needed. He was paid one-month's salary in lieu of notice and as such was fully settled. - [4] When the matter was called before us on the 14th of February 2023, the parties agreed that the facts were that the Claimant was employed by the Respondent and was terminated before the end of his two-year contract. The following issues were agreed upon for this Court's determination: - Whether the Claimant was unfairly and unlawfully terminated? **(i)** - What remedies are available to the parties? **(ii)**

# *The Evidence*

- [5] The Claimant's witness statement dated the 11th of February 2022 was adopted as his evidence in chief. He testified to having worked overtime, including public holidays and Sundays, but was not paid. He said he was unfairly terminated, suffered emotional and financial distress, especially during the COVID-19 pandemic, and he sought compensation. - [6] In cross-examination, he stated that as a Manager, he was required to work more than eight hours a day. He said that in February 2021, he received some overtime but did not file any complaints. He did not bring proof of overtime payments or payslips. He said that he was aware of the contractual term regarding termination with notice and acknowledged that he had been paid one month's salary in lieu of notice, as well as his pending leave days. He said his claim was for ten months of unpaid overtime. When pressed by Dr. Makmot-Kibwanga, he stated that he did not know which law his termination had violated. He also said that he had a list of days worked overtime between March 2020 and January 2021. - [7] In re-examination, he stated that he worked all public holidays from January 2020 to January 2021. He said his work was not restricted to the refinery. He informed us that the biometric machine was not operational every day and was controlled from India. He told us that his primary concern and dissatisfaction were with the extra unpaid days. He said that if his termination was about the project, then the Respondent did not need to employ another person. - [8] The Respondent called Dan Lyadda, its Human Resource Manager, who testified that the Claimant's termination was lawful because he had been paid one month's salary

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in lieu of notice and his services were no longer needed. His contract also required him to work extra hours and entitled him to a weekly bonus.

- [9] Under cross-examination, when shown CEX2, he said there was nothing in the appointment letter that confined the Claimant to the refinery project. He also stated that the forms tracking attendance were stored in a biometric machine, supervised by Human Resources, and controlled from Mumbai, India. A printout of the system data could only be obtained by Human Resources and the General Manager. He said that where workers are willing to work long hours, their welfare was taken care of. - [10] In re-examination, he stated that he had the biometric records and that the Claimant had not requested for them. - [11] After Dr. Kibwanga had closed the Respondent's case, we directed the parties to file written submissions, which the Court is grateful for and has summarised below in the resolution of the issues.

#### Determination

*(*

*Issue One: Whether the Claimant was unfairly and unlawfully terminated?*

#### *Claimant's submissions*

[12] services were no longer In opening, Ms. Kusemererwa cited Section 2 of the Employment Act Cap. 226 (from now EA) and *Florence Mufumba v Uganda Development Bank1* for the proposition there must be justifiable reasons for termination of contract such as expiry of the contract. Counsel made a distinction between termination and dismissal, arguing that the onus lay on the employer to justify a dismissal. She cited *Okello v Rift Valley Railways (U) Ltd2* where it was held that the right of an employer to terminate cannot be fettered, but that an employer could not unreasonably terminate an employee, it was suggested that the reason for termination, that his needed, was unfair and unjust.

#### *Respondent's submissions*

- [13] specifically prayed for a and the Court should be Dr. Kibwanga took the view that the Claimant had not determination that his termination was unlawful or unfair, cautious about stepping outside the pleadings. For this, Counsel relied on *Kitaka and 12 Others v Mohamood Thobani*3. - [14] On the substantive question, Counsel contended that the termination was lawful because the Claimant was paid in lieu of notice. It was his view that *Mufumba* was distinguishable because it dealt with exceptions to the definition of "termination of employment" under Section 2EA. He half-suggested that the determination was mutual, and the Claimant went through all the exit processes.

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# *Rejoinder*

[15] In her rejoinder, Ms. Kusemererwa contended that *Kitaka* permitted the Court to deal with a departure from pleadings that arises in the course of the trial. She reiterated the dicta in *Okello* on unreasonable termination.

# *Decision*

- [16] Regarding the preliminary question of whether a declaration of unfair and unlawful termination was sought, the memorandum of claim was not explicit in this regard. Both parties relied on *Kitaka* in support of and against the proposition that a court should resolve an unpleaded issue. In that case, Mr. Justice Henry I. Kawesa was clear and stated that where a departure from pleadings is revealed during the trial and both parties submit on unpleaded points, it is proper to address such an irregularity while dealing with one of the issues framed. Was the unpleaded question of unlawful and unfair termination an irregularity in the present context? - [17] We think not. Because, at the scheduling conference, it was common cause that the Claimant had been terminated; however, after reviewing the facts and documents, Counsel agreed to frame the question of whether the Claimant was unfairly or unlawfully terminated. That would be consistent with the provisions of Order 15 rule 1(5) of the Civil Procedure Rules S.l 71-1( from now CPR) which vests in the Court the power to frame the correct issues for determination after hearing the parties, examining the documents and considering the material propositions of law and fact at variance. The power to amend and strike out issues is also contained in Order 15, Rule 5(1) and (2) of the CPR. *(See dicta of Nyanzi J. in Jaber Twalib & Anor v Global Hardware Co. Ltd 4. See also Sserunjogi v Safeboda5.)* Therefore, having framed a question on the lawfulness and fairness of termination, we do not think it plausible and tenable for Dr. Kibwanga to raise the argument in his submission. This Court correctly framed the correct issue for determination and would be well within its powers not to prevaricate the issue as framed. - [18] Returning to the question of lawful or fair termination, under Section 64(1) (a)EA, and we are minded that the trial of this matter took place before the commencement of the Revised Edition of the laws of Uganda, 2023, a contract of service can be ended by the employer with notice. Therefore, insofar as the Respondent contends that it gave the Claimant notice, such a termination would be perfectly legal within a reading of Section 64(1) (a) EA above. But what are the uncontested facts in the present case? Both Counsel agree, on the evidence, that the Respondent terminated the Claimant's contract with notice because his services were no longer needed. There is some dispute as to whether the contract of employment confined the Claimant to the refinery project; however, what is common is that the Respondent felt it no longer needed the Claimant's services. This was made very clear in CEX2. It read:

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*Date: 18th August 2021*

*To: LEKYA JAMES NAPOKOLI Designation. HEAD OF MAINTENANCE Location: Lira-Uganda*

*RE: TERMINATION OF CONTRACT*

*As per the above reference, your contract with Mount Meru Millers Uganda Limited has been duly terminated effective 18th August 2021.*

As *you are already aware, the New refinery project for which your services were much critical is now complete and commissioned. Your technical input has been impressive from the very start of the project.*

*We appreciate your commitment, leadership and dedication during your valuable time of service to the company. We wish you the best of luck in your future endeavours.*

*All your entitlements & settlement shall be arranged in time as required.*

*Yours in Service*

*Human Resource Manager. IJ*

- [19] What is clear from this letter is that the Claimant's termination was instantaneous. The letter was dated 18th August 2021 for a termination effective 18th August 2021. Under Section 68(1) EA, this was a summary termination without notice. Under Section 68(2) EA, an employer does not have the right to terminate a contract of service without notice or with less notice than that to which any statutory provision or contractual term entitles an employee. Under Clause 8 of the contract of employment CEX1, the contract was terminable with one month's notice. No such notice was given. Therefore, to the extent that this was a summary termination without notice, we would find that the Claimant was unlawfully terminated. - [20] Dr. Kibwanga made the point that the claimant had been paid one month's salary in lieu of notice; therefore, the termination was lawful. The Claimant and Mr. Lyadda also acceded to this payment of salary in lieu of notice. It is quite true that the Court of Appeal now holds that a termination without notice is curable by payment in lieu of notice. In *Stanbic Bank (Uganda) Limited v Nassanqa* 6 Gashirabake JA held that it is satisfactory that the appellant complied with the requirement of the law by paying a three-month salary in lieu of notice before finding a summary termination to have been

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lawful. To this extent, Dr. Kibwanga would be correct in arguing that the termination was lawful because the claimant was paid in lieu of notice.

- [21] However, that is not all there is to this matter. The Respondent stated that it no longer needed the claimant's services. It gave reasons for the termination. And in *Nassanga,* the Court of Appeal was emphatic. Termination of an employment contract under section 65 (1)(a) of the Employment Act (now Section 64 (1)(a) EA) does not always need reasons for termination. Where no reason for termination is given, then there is no need for a hearing since no allegations are made against the employee. Here, it was stated that the Claimant's services were no longer required, and that is why he was terminated. It was his evidence that the Respondent brought in someone else to do the job, and the Respondent did not contest this point in cross-examination or contradict it in Mr. Lyadda's evidence. - [22] Were we to suggest this as a redundancy termination, the Respondent did not demonstrate that it had taken measures to mitigate the redundancy termination. In our view, services no longer needed suggests that the position has now become redundant, and in matters of redundancy terminations, this Court in *Ndaula and Another v PostBank Uganda Limited7* we cited *Appro v Mercy Corps Uganda8* we observed that redundancy in the employment sphere refers to a situation in which an employee is laid off from work because the employer no longer needs the employee, and there the Court's inquiry, therefore, focuses on the lawfulness of such termination and conclude that such termination must meet the threshold of Section 80EA. In the present case, no such threshold was met. There was no notice of one month and no consultations before the decision to terminate the Claimant's services was made, as the Respondent no longer needed their services. For this reason, we would consider the termination to be unlawful and unfair. - [23] Finally, considering the full circumstances of the case, the dicta of the Honourable Lady Justice Tumusiime Mugisha in *Ssempijia vs D-Light Design Limited\** come into sharp focus. Her Lordship holds that it is no longer fashionable for employers to dismiss employees without any justification, even if the employee is paid in lieu of notice. In the present context, we were not presented with evidence to prove that the Claimant's services were no longer needed. The Claimant was summarily terminated, and because a reason for termination was given without affording him a hearing as stipulated in *Nassanga,* we are unable to accept Dr. Kibwanga's hypothesis that someone put the idea of unjustifiable claims in the Claimant's mind. The evidence does not support such a conclusion. Instead, the termination was unlawful and unfair because the reason for which the Claimant was terminated was not shown to have been justified. - [24] As a result, issue one is answered in the affirmative.

*Issue II. What remedies are available to the parties?*

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## *Payment in lieu of Notice:*

[25] The Claimant sought payment in lieu of notice of UGX 2,618,462/= (shillings two million six hundred eighteen four hundred sixty two), but under cross-examination by Dr. Kibwanga, The Claimant conceded that he had been paid one month's salary in lieu of notice. Following this concession, we are not inclined to grant the Claimant any further payment in lieu of notice.

#### *General Damages*

- [26] Ms. Kusemererwa was contending for UGX 10,000,000/= (shillings ten million) in general damages on the authority of *Gullabhai Ushillingi V Kampala Pharmaceuticals Ltd10.* Dr. Kibwanga believed the Claimant was not entitled to any general damages. We disagree. Having found the termination unlawful, industrial jurisprudence holds that an employee who has been unlawfully and unfairly terminated or dismissed is qualified for an award of general damages. The Supreme Court of Uganda has now clarified the award of general damages in employment disputes. In *Uganda Post Limited v Mukadisi 11* general damages were held are awardable for breach of the employment contract and for the non-economic harm and distress caused by the wrongful dismissal, including compensation for emotional distress, mental anguish, damage to reputation, and any other non-monetary harm suffered due to the dismissal. We have found that the Claimant was unlawfully and terminated and therefore, he is entitled to general damages. - [27] In *Stanbic Bank (U) Ltd v Constant Okou,12* It was held that general damages are based on the common law principle of *restitutio in integrum,* which considers factors such as employability, prospects of employment, age, and manner of termination in determining the quantum of general damages. No such evidence was placed before us. In *Kamuli v DFCU Bank13* the Industrial Court considered the earnings of the Claimant, age, position of responsibility, and contract duration to determine the damages awardable. In the present case, the Claimant was earning a gross salary of UGX 2,618,462/= (shillings two million six hundred eighteen thousand four hundred sixty two) per month under a two-year contract due to expire on the 24th of March 2022. He was terminated seven months before the expiry of his contract of employment. In our estimation, he would be entitled to general damages, and we award him the sum of UGX 5,236,924/= (shillings five million two hundred thirty six thousand nine hundred twenty four) as general damages.

#### *Severance Allowance*

[28] Ms. Kusemerwa sought severance pay under Section 86EA. Section 86EA provides for payment of severance allowance to an employee who is unfairly dismissed, dies not by his or her serious and wilful misconduct while in the service of his employer, terminates his or her contract due to physical incapacity not by their serious or wilful misconduct, is terminated by reason of death or insolvency of the employer, the

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contract is terminated by the labour officer following inability or failure to pay wages and such other circumstances as the Minister may provide. This provision does not provide for the payment of a severance allowance in the event of unlawful and unfair termination. Donna Kamuli v DFCU Bank Ltd14 cited by Ms. Kusemererwa concerned unlawful dismissal, not unfair and unlawful termination. Therefore, we decline to grant the Claimant severance pay. Overtime payments

The Claimant made unsubstantiated claims for overtime. No sums were quantified as [29] being due, and no records were available to aid the Court in assessing any claim for overtime, Similarly to our approach in *Amolo and 20 Others v Makerere University* Business School15 where we declined to award unproven claims of overtime, the Claimant's claim for overtime is denied.

Orders of the Court

- In the final analysis, these are the orders of this Court: [30] - It is hereby declared that the Claimant was unfairly and unlawfully terminated $(i)$ from employment with the Respondent. - $(ii)$ The Respondent is ordered to pay to the Claimant the sum of $UGX$ 5,236,924/= (shillings five million two hundred thirty six thousand nine hundred twenty four) in general damages and: - Neither of the parties submitted for costs of the claim. In *Kalule v Deustche* $(iii)$ Gesellschaft Fuer Internationale Zuzammenarbeit (GIZ) GMBH16 we observed that while costs ordinarily follow the event, in labour disputes the award of costs is unlikely to follow the event on account of the nature of the employment relationship. There has to be some form of misconduct (including filing a frivolous and vexatious claim) on the part of a party for costs to be awarded against such offending party. We find no such misconduct on the part of the Respondent. As such, there shall be no order as to costs.

It is so ordered.

Delivered and dated at Gulu this 16th day of June 2025 Anthony Wabwire Musana, Judge, Inquistrial Court Ipo19] UGCA 2088 n [2624]. UGIC74 12023 UGIC 89 1. DRo7/2021 Lebya James Ni pokoli v Mount Meru Millers(UPLId Augrar Anthony Wabwire Musana J 13 th Jane 2025

| Agree The Panelists 1. Hon. Adrine Namara, | If | |--------------------------------------------------------|-----------------------------------------------------------------| | 2. Hon. Emmanuel Bigirimana & | | | 3. Hon. Can Amos Lapenga | | | 16th June 2025 2.31 p.m. | | | Appearances | | | For the Claimant: 1. | Openy H/B for Mr. Samuel Ms. Kusemererwa Bridge | | for None the Respondent: 2. | | | Court Clerk: | Mr. Samuel Mukiza. | | Mr. Openy | Matter for award. We are ready to receive it. | | Court: | Award delivered in open Court. |

Anthony Wat **Judge, Indu** 2.50 p.m ^/Ire Musana, **atrial Court of Uganda.**