Mutebe v Joint Medical Stores (Labour Dispute Reference 132 of 2020) [2024] UGIC 69 (22 November 2024)

Full Case Text

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# **THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA AT KAMPALA LABOUR DISPUTE REFERENCE NO. 132 OF 2020**

*(Arising from Labour Dispute No. KCCA/MAK/LC/111/2019)*

**PAUL MUTEBE :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::CLAIMANT**

### **VERSUS**

**JOINT MEDICAL STORE:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::RESPONDENT**

### **Before:**

Anthony Wabwire Musana. J

**Panelists:** Hon. Adrine Namara, Hon. Susan Nabirye & Hon. Michael Matovu

#### *Representation:*

- *1. Mr. Bright Natumanya of M/S TARA Advocates for the Claimant.* - 2. *Mr. James Bagonza of M/S Bagonza & Co Advocates for the Respondent.*

#### *Case Summary-*

*Employment law- non-renewal of a fixed term contract- whether non-renewal of FTC is unlawful and unfair termination- The employer declined to renew the Claimant's contract. It had redesignated him during the subsistence ofa three-year contract. The Claimant argued that redesignation amounted to a new contract ofemployment. The court ruled in favour ofthe employee, declaring the termination unlawful and unfair because ofthe employer's non-adherence to its own human resources policies. The Respondent was ordered to pay the Claimant three months' pay in lieu of notice, general damages for mental anguish and career disruption, and issue a certificate of service.*

*Employment Law-Redesignation-meaning ofredesignation in an employment relationship.*

#### **AWARD**

### **Introduction**

**[1]** On the 9th of September 2005, the Respondent, a private, not-for-profit organisation engaged in providing medical supplies in Uganda, employed the Claimant as a receiving officer. He was confirmed on the 19th of December 2005. He was promoted variously with changes to his employment contract. He served as Quality Assurance Officer from 1st July 2008, Warehouse Supervisor from 1st September 2011, and Procurement Officer from 28th

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September 2015, a portfolio he held until early 2019. On the 23rd of January 2019, he was re-designated as a Research and Development Officer. By letter dated 30th January 2019, he sought clarification he requested for clarification of his new role. By letter dated the 17th of July 2019, which the Claimant received on the 31sl of July 2019, the Respondent notified the Claimant that his contract would expire on 31st July 2019 and was not to be renewed. The Claimant was aggrieved because, in his view, upon redesignation, he had a two-year contract to lapse on the 1st of February 2022. He opposed the termination for being without contractual notice for three months, and he lodged a complaint with the Labour Office of Kampala Capital City Authority at Makindye. The Labour Officer held two mediation meetings, but the parties disagreed. On the 2nd March 2020, the Labour Officer referred the matter to this Court.

- **[2]** By his memorandum of claim dated the 26th of August 2020, the Claimant sought a declaration of wrongful and unlawful termination from employment because his termination was illegal, in bad faith and unjustified. He contended that his contract was still valid for two years at the time of termination, and his performance appraisals, the basis upon which contracts were renewed, were very good. The Human Resource Policy Manual(from **now HRPM)** stipulated his term as an officer, and the decision to terminate him was arbitrary and without notice. He asked for three months' notice pay of UGX 13,200,000/=, contractual salary for the remaining two years of his contract being UGX 132,000,000/=, severance pay of UGX 13,230,000/=, lost allowances of UGX 3,500,000/=, a certificate of service, UGX 250,000,000/= and general damages of UGX 250,000,000/= for inconvenience, mental anguish and career disruption. - **[3]** In its memorandum in reply, the Respondent admitted having redesignated the Claimant to the position of Research and Development Officer(R&D) in January 2019. It was contended that on the 18th of May 2017, the Claimant applied for his contract renewal. By letter dated 17th of July 2019, the Respondent declined to renew the contract and paid him his terminal benefits. It was denied that the Claimant had been offered a new contract as R&D. It was suggested that the Claimant only acknowledged receipt of the non-renewal on 31st July 2019.

#### **The issues and evidence**

- **[4]** The parties filed a joint scheduling memorandum, which was adopted with two issues for determination, namely: - (i) Whether the Respondent unlawfully and unfairly terminated the Claimant's employment? - (ii) Whether the Claimant's redesignation from Procurement Officer to Research and Development Officer amounted to a new contract? - (iii) What remedies are available to the parties?

**[5]** The documents in the Claimant's Trial Bundle dated the 10th of May 2021 were admitted and marked CEXH 1 to CEXH 28, while the documents in the Respondent trial bundle dated 20th May 2021 were admitted in evidence and REXH 1 to REXH 28. The parties called one witness each.

## **The Claimant's evidence**

- **[6]** The Claimant's witness statement, dated 10lh May 2021, was adopted as his evidence in Chief. He confirmed his employment with the Respondent in 2005 and told us he served diligently and grew through the ranks. He also told us about his good performance appraisals before the renewal of his contracts. He said that on 24th July 2017, the Respondent renewed his contract as Procurement Officer for two years. That contract was expected to lapse on the 1st of August 2019. He told us that before the contract expiry on 23rd January 2019, he was redesignated to R & D Officer. He requested the terms of reference, role, and scope of work for the new position given to him, and he was oriented. He told us that his reporting lines changed and that he had expressed misgivings about the new role. On the 1st of February 2019, he accepted the offer for R&D. He says the Respondent's Executive Director asked the Human Resources Manager to issue a contract. He said that he had ceased to do any work under his old contract. On the 20th of June 2019, he was appraised for his new role and given a rating of 80-95%. His supervisor recommended his confirmation. It was his evidence that as an officer, his contract should have lasted three years following a resolution by the Respondent's Board, and his contract as an R&D office would have lapsed on 1st February 2022. He said that the Respondent terminated him on the 31st of July 2019, when his contract as a procurement officer would have expired. It was his testimony that his contract had not expired, he was not given any reason or a hearing before his termination, and he was eligible for renewal given his good performance. He told us that his termination caused him trouble, given that he had served diligently for 15 years, dented his career, and was sent off like a criminal. He felt discriminated against and disturbed. He said he was unable to get alternative employment and had been affected financially, physically and emotionally by the abrupt termination. - [7] Under cross-examination, he said he was unfairly treated because the HRPM showed that he was supposed to be informed of the non-renewal of his contract earlier than the 31st of July 2019. He told us that he applied for renewal but did not get a response. He was shown CEXH 10 and said this was the last of his contract for two years. It was extended for two years in 2017 and was meant to expire on the 31st of July 2019. He was shown REX26(CEXH10) and said he received the letter on 31st July 2019. He also said that if he received it on 17th July 2019, it would be a different matter. He also said he was paid his accrued benefits. - **[8]** In re-examination, he told us that his claim was for unlawful termination because, in January 2019, he had been given a new contract as an R & D officer, which meant that his contract as Procurement officer had ceased. He said the terms of his new contract had changed, his salary had improved, and he accepted this new position. He said he worked without a

written contract between January and July 2019. He said he received only one notice of termination on 31st July 2019. He told us that the Respondents' ED had communicated the resolution of the Board to extend the officers' contracts by one year. He said that between January and July 2019, he had two contracts as Procurement Officer and R&D Officer. He said that before the expiry of his contract, he sought advice from HR, who advised him to apply for renewal. He also told us that his direct supervisor tipped him about his confirmation. He said his claim was because the Respondent had not been transparent, which confused him.

### **The Respondent's evidence.**

- **[9]** The Respondent called Michael Mawanda, its Manager of Human Resources and Administration (HRM/A). His witness statements dated 24th May 2021 and 31st May 2021 were adopted as his evidence in chief. He confirmed the renewal of the Claimant's last contract in August 2017. He also confirmed the Claimant's redesignation to R&D Officer in January 2019. He acknowledged having been instructed to issue a new contract but said there was no need to issue a new contract as redesignation was not a new contract in any way. He told us that the Claimant was aware of the redesignation, and the Respondent issued formal contracts of service when a new offer was made to an employee. He confirmed the appraisal in June 2019 and the Board resolution on the extension of contracts. He said the Claimant did not apply for renewal of his contract in 2019 but corrected this evidence in his witness statement of 31st May 2021. He also said that on 31st July 2019, he informed staff whose contracts were ending on that day and had not received communication of non-renewal to continue attending to their duties. He said the Claimant had notice of non-renewal. He confirmed the payment of accrued terminal benefits and issued a recommendation letter. He said the Claimant was not terminated. His contract was not renewed. He asked the Court to dismiss the claim. - **[10]** Under cross-examination, he admitted to a practice of reassignment by way of letters dated 1st and 14th April 2008. He confirmed that the Claimant was given a formal contract after the temporary assignment to the Quality Assurance Officer. He confirmed the practice of issuance of new contracts for each new offer that the Claimant got over the years. He said that under the HRM, any notice was supposed to be five days. He admitted that the ED instructed HR to process the Claimant's contract. He also confirmed the Claimant's appraisal as R& D in 2019 and that the language in the appraisal did not reflect a contract being brought to an end. He also confirmed that the Respondent's Board had resolved to improve all contracts of officers and managers. He said that the Claimant's contract was not renewed, and he was not paid any sum in lieu of notice. He confirmed that the notice period was three months for a ten-year service. He also said the Claimant received the termination letter on 31st July 2019. He said that the Respondent did not reply to the Claimant's application to renew his contract because the Respondent did not receive it.

- **[11]** In re-examination, he said redesignation did not amount to a new contract and that the last contract issued to the Claimant was on 1st August 2017 for two years. He said the Claimant sought a recommendation letter on 31st July 2019. - **[12]** At the closure of the Respondent's case, we directed the filing of submissions, which we have summarised and considered together with the evidence in rendering this award.

### **Determination.**

### **Issue I Whether the Respondent unlawfully and unfairly terminated the Claimant's employment?**

#### **Claimant's submissions**

**[13]** Citing Section 2 of the Employment Act Cap. 226, *Mbonyi Julius v Appliance World Limited[1](#page-4-0)* and *Hilda Musinguzi v Stanbic Bank, Uganda Limited[2](#page-4-1)* and clause 5.6.2.1.1 of the HRPM, it was submitted that the Claimant was terminated during the subsistence of a new contract and for no reason at all. At the time of his termination, the Claimant was serving as an R& D officer, and his contract was due to expire on the 1st of February 2022. He had performed well and on the authority of *Ojok and 87 Others v Torres Advanced Enterprises Solutions LLC[3](#page-4-2),* it was argued that notice periods did not constitute a reason for termination. We were asked to find that the termination was unlawful and unfair.

#### **Respondent's submissions**

**[14]** Counsel for the Respondent submitted that under Section 65(1) of the Employment Act 2006( which is not Section 64(1 )EA), the Claimant had a fixed-term contract expiring on 31st July 2019. In January 2019, he was redesignated. Then, on the 17th of July 2019, the Claimant was notified of the expiry of his contract. The Respondent's case was that the Claimant was lawfully terminated since his fixed-term contract expired.

#### **Rejoinder**

**[15]** It was argued that the Claimant ceased to be a Procurement Officer and was an R&D Officer at termination. The Respondent should have issued him with a new contract following his redesignation. That all staff contracts had been improved. It was contended that the Respondent should have advised the Claimant of the non-renewal of his contract two months before expiry per Clause 5.4.2.3 of the HRPM. The Claimant applied on 4th June 2019, contracts for all staff were extended on 16th June 2019, and his appraisal was conducted on 20th June 2019. It was suggested that the HRPM required appraisal as a basis for the renewal of contracts, and, therefore, the Respondent ought to have renewed the

**LDR 132 of 2020 Award Anthony Wabwire MusanVj**

**1F2Q211 UGIC 10**

**2SCCA05 of 2016**

**3 [2021] UGIC 18**

Claimant's contract. His termination without three months' notice was consequently illegal, unfair, and unlawful.

#### **Decision**

- **[16]** Both Counsel correctly cited Section 2EA for the definition of termination. For clarity and emphasis, termination means the discharge of an employee at the initiative of the employer for justifiable reasons other than misconduct, such as the expiry of the contract, attainment of retirement age, etc. Termination has the meaning given by section 64EA[4](#page-5-0). In the case of *Akewa v Loving One by One Ministries*[5](#page-5-1) in giving meaning and effect to the term termination as distinct from dismissal, this Court observed that termination is about a no-fault discharge. The employee's conduct does not cause the employer to discharge the contract. The interchangeable use of the terms termination and dismissal in the EA is a legislative accident responsible for misapplication. In short, for termination, the employee has not committed any employment offence. In *Akewa,* building on *Musinguzi, we* held that termination must follow procedure. Otherwise, it is unlawful. - **[17]** Counsel agree that the Claimant was terminated. The only question that would confront this Court is whether the Respondent followed procedure. However, there is also a finer point on the nature of the employment contract, which merits some comment before resolving this dispute. - **[18]** Except for the Claimant's contention that his redesignation amounted to a fresh contract of employment to which we shall return, the written contract of employment on the 17th of July 2019 was a contract first executed between the Claimant and the Respondent on the 5th of October 2015. It was admitted as REXH 13. Under clause one, it was provided;

*" 1. DURATION OF THE CONTRACT This contract will come into effect on 1st August 2015 and will last for a period of two years subject to provisions of Clause 11 below..."*

Clause 11 read;

*''Either party may terminate this contract at any time giving the party two months' written notice in advance ofthe date oftermination or the equivalent oftwo months' salary in lieu ofnotice. Save for any provision of this contract that expressly remains binding upon either party after expiration; other contact obligations shall cease upon termination. The Employee shall only be entitled to reasonable compensation as may be stipulated in the JMS Human Resources Manual unless such termination is the result of the Employee's improper conduct(Gross Misconduct) or violation of any terms*

**4 See Section 2EA**

**5 [2024] UGIC 54**

*of this contract, as provided for in the Human Resource Manual in which case the Employee will not be entitled to either a period of notice or compensation."*

- **[19]** The contract duration was two years starting on the 5th of October 2015 and expiring on the 5,h of October 2017. It was a fixed-term contract with a definite start and end date. The EA does not define a fixed-term contract(FTC), but in Section 64(1 )(b) EA, it is provided to the effect that a contract of service, being a contract for a fixed term, ends with the expiry of the specified term. Under Section 64(2)(b)EA, the date of termination of an FTC is the date of expiry of the fixed term. In *Elizabeth Nabatanzi Lugudde Katwe v Attorney General[6](#page-6-0),* the Court cited the persuasive case of *Greenboat Entertainment Ltd v City Council of Kampala[7](#page-6-1),which* held that a contract is automatically terminated upon expiry of the contract period. From the above, the essential feature of a FTC is its definite start and end date. It terminates on the end date. In other words, at the time of execution of the FTC, the expected termination date is at the fixed term's expiry. This is the closest that the EA gets to describing a FTC. - **[20]** In *Dixon v BBC[8](#page-6-2),* Lord Denning MR observed that the cryptic thinking in *British Broadcasting Corporation v. loannou[9](#page-6-3)* that1 a fixed term is one which cannot be unfixed by notice' was erroneous and added, helpfully, "the words "a fixed term must include a specified stated term even though the contract is determinable by notice within its term." In effect, a fixed-term contract either self-terminates at the expiry of the term or is terminated by notice. That would be the meaning of termination in Section 64(1)(b)EA. - **[21]** In the matter before us, on the 18th day of May 2017, the Claimant applied to have his contract renewed. This letter was admitted as CEXH17. By letter dated 24t July 2017(CEXH 18), the Claimant's contract was renewed for a duration of two years with effect from 1st August 2017. It was, therefore, set to expire on the 31st day of August 2019. Both the Claimant and Respondent were aware of an expiry date of the 31st of August 2019. Therefore, for the term of the contract, the contract was automatically terminable on the 31st of July 2019. - **[22]** According to the termination letter(CEXH26), on the 17th of July 2019, the Respondent notified the Claimant that his contract of service was expiring on the 31st of July 2019 and would not be renewed. For this reason, the Respondent suggests that the termination was lawful. On his part, the Claimant contests this termination because he was serving in a different contract as R & D Officer and that the Respondent had recently enhanced contracts of all staff and, therefore, his contract was set to expire in July 2022, not July 2019. In our view, it would be necessary to attend to this argument now as opposed to a separate resolution of issue two because that question of which contract was subsisting would affect

**LOR 132 of 2020 Award Anthony Wabwire Musan/J**

**6 CACA 53 of 2017 Court of Appeal of Uganda (19® July 2021)**

**7 [20071 UGCommC 21**

**8 [1979] QB 546**

**9 (1975) 1 QB 781**

the procedural requirement of termination in the sense that issue one relates to the lawfulness of non-renewal while issue two relates to the lawfulness of a termination under a redesignation.

# **Lawfulness of the redesignation**

- **[23]** The issue framed was **whether the Claimant's redesignation from Procurement Officer to Research and Development Officer amounted to a new contract?** Mr. Natumanya, submitting for the Claimant, took the view that the pertinent issue for determination was the lawfulness of the Claimant's termination. His learned opposite number, Mr. Bagonza, submitted that redesignation was simply a change in job role or position. In the present case, no new contract was executed because the redesignation was a movement of the Claimant from the procurement department to another department. It was submitted that the Claimant accepted this redesignation. Our attention was drawn to the decision *Kiwalabye & Ors v Posta Uganda'0* for the proposition that there is no need to consult employees when it is shown that a transfer or redesignation does not show any advantages or favours to the employee. - **[24]** In his rejoinder on the issue, Mr. Natumanya now took a broader approach, suggesting that the HRPM did not define re-designation and that recourse had to be taken to the parties' conduct. Counsel suggested, citing Section 2EA for a definition of a contract of service, that the redesignation amounted to a new contract. In his view, Kiwalabye was inapplicable. He cited the Contract Act for a definition of a contract being made with the free consent of the parties and suggested that the redesignation was made without the Claimant's consent. We were asked to find that this was a new contract. - **[25]** It is trite that it is not for the Courts to form contracts between parties. Redesignation is not explicitly provided for in the EA. The term redesignation has its root in the word designate, which, according to Chambers 21st Century Dictionary, means to name, choose, or specify someone or something for a particular purpose or duty. In the context of employment, in *Kiwalabye,* the Industrial Court considered the change of title of "bus drivers" to "post offices" a redesignation and suggested the applicability of Section 27(now 26EA) where the employee's consent was necessary because no advantage was shown to come from the redesignation. The case is critical because it qualifies the application of Section 26(2)EA, where an employer seeks to vary the employment contract to an employee's disadvantage. - **[26]** Flowing from the root word, designate, and following from Kiwalabye, this Court is invested in redesignation as a legal construct for the variation of the employment contract. It is a change to the terms and conditions of a service contract. In *Tibenkana v London Distillers(U) Limited",* Ntengye CJIC, with Tumusiime Mugisha J concurring, emphasised the employer's right to transfer an employee from one department to another. Their Lordships leant heavily on the persuasive decision of the Supreme of Philippines in *Albert*

**10 [2019] UGIC23 Mr. Bagonza citation listed it as LDC 018 of 2015**

**11 [2021] UGIC 8**

*Tinto v Smart Communication Inc (G. R. No. 171764)* and *Blue Dairy Corporation v National Labour Relations Commission* (G. R No. 129843, September 14 1999) before concluding that there is no doubt that an employer has a right to transfer an employee from one branch of the same organisation, with a transfer being a movement from one position to another which is of equivalent rank, level or salary without a break in service, a promotion being an advancement from one position to another with an increase in duties and responsibilities as authorized by law and usually accompanied by an increase in salary and a demotion to amount to constructive dismissal. This Court in *Lubega v Tropical Bank Limited'2* observed that where the element of consent was absent in a unilateral variation of an employment contract, then such variation was unlawful.

- **[27]** From the above dicta, the element of consent is therefore vital in a variation of an employment contract, especially where such variation has an effect of diminution of the employee's benefits, payments and rights. Mr. Natumanya argued, and rightly so, that consent was necessary for the Claimant's redesignation. We agree with Mr. Natumanya but not because he anchored his argument on consent under ordinary contract law because, as various Employment and Labour Relations courts have observed, the employment relationship does not enjoy equal bargaining power. - [28] Therefore, we must consider whether the redesignation meets two essential requirements: the Claimant's consent and non-dilution of his terms of employment. In our judgment, the answer to this question would be a resounding yes. The evidence demonstrates that on the 23rd of January 2019, the Claimant received an offer for redesignation from the position of Procurement Officer to the Research and Development Officer. His salary remained unchanged, and he was asked to confirm his acceptance. On the 30th of January 2019, he sought clarity on the job description, scope of work, responsibilities and deliverables in the R & D position. These were given to him, and on the 1st of February 2019, he accepted the redesignation without reservation. We are therefore persuaded that the Claimant's redesignation did not amount to a new contract and was compliant with the conditions of consent and non-diminution of the Claimant's benefits. We would find that redesignation was lawful.

### **Lawfulness or Fairness of Non-renewal of the Contract**

**[29]** In our attempt at defining a FTC, we suggested that it is self-terminating under Section 64(1 )(b) EA. Read together with Section 64(2)(b)EA, Section 64(1 (b)EA provides that termination is deemed to take place where a contract of service, being a fixed term or task, ends with the expiry of the specified term or the completion of the specified task and is not renewed within one week from the date of expiry on the same terms or terms not less favourable to the employee. This is the bare minimum standard set by the EA. A FTC shall be taken as terminated if it is not renewed within one week from the date of expiry. This position was confirmed by this Court in *Mt. Elgon Hospital v Nangosya[12](#page-8-0)3* where a fixed-term

**LDR 132 of 2020 Award MusankJ**

**12 [20241UGIC 39**

**13 [20201 UGIC 18** contract without the option of renewal was found to have lapsed on its expiry date. The fact that the employee continued to work after the lapse date did not render the termination unlawful.

- **[30]** The Court of Appeal of Kenya was elaborate on the mode of termination of a fixed term contract in *Transparency International - Kenya* v *Omondi14* where the Court, considering the application of the doctrine of legitimate expectation of renewal of contract, concluded that non-renewal of a fixed term contract cannot constitute unfair termination or dismissal. The Court cited *Francis Chire Chachi vAmatsi Water Services Company Limited[15](#page-9-0)* where it was stated that employers are not under any obligation to give employees reasons for nonrenewal of fixed-term contracts unless such an obligation is created in the expiring contract. - **[31]** To this Court's mind and from the authorities above, therefore, in an action on a fixed-term contract, such as the present one, it is not open for the employee to seek sanction for unlawful termination or dismissal if the contract is not renewed because the employee was fully aware of the expiry date. The exception is if the contract has created obligations as per the *Omondi* and *Chachi* cases, which cases we find quite persuasive. As it stands, the EA sets a bare minimum or what has been called "irreducible minimums" below which a contract of employment is not expected to fall. In the case of non-renewal, the contract will provide for renewal with or without conditions. If the Court is required to look at the contract of employment for a determination but absent of such a clause, the statutory minimum is that a fixed-term contract of employment would be renewed within seven days from its expiry date. - **[32]** In the case before us, the Claimant executed a contract of employment as a procurement officer on the 20lh of October 2015. It was a two-year contract, terminable with two months' notice. There was no provision for renewal of the contract. However, the contract was subject to the Respondent's Human Resources Policies Manual. - **[33]** The HRPM was admitted in evidence as CEXH 33. Under Clause 5.4.2.3, it was provided as follows:

### *"Contract renewal*

i) *Management shall consider an employee's application for contract renewal in writing to the appointing authority not later than three months before the expiry date of the contract for ED, Directors and Managers. Two months before the expiry date of the contract for the officers and one month for all other staff.*

**»[20231 KECA 174 (KLR)**

**15 [2012] eKLR**

- ii) *The supervisor shall carry out end of contract appraisal discussion, compile a report proposing contract renewal or otherwise, have it endorsed by the relevant Director and submit it to the Manager Human Resources and Administration for on-ward transmission and processing.* - iii) *Where it is not possible for the Supervisor to carry out an end of contract appraisal discussion before the employee's contract expires, Management shall at its discretion approve a special contract for a period not exceeding six months to allow time for appraisal interview to be done. Unless specifically resolved by Management, such special contract shall not accrue gratuity."* - **[34]** The indisputable facts are that on the 18th of July 2015, the Claimant applied for renewal of a running contract. On the 27th day of July 2015, his contract was terminated, and he was offered a new contract, which he accepted. On the 28th of September 2015, he was appointed a procurement officer for two years, effective from 1st August 2015. The formal contract was dated 5th October 2015 and was admitted as CEXH 13. On the 22nd of January 2016, the Claimant was confirmed as Procurement Officer. On the 18,h of May 2017, he applied for this contract renewal. On the 24th of July 2017, after considering his performance evaluation, the Respondent agreed to renew the Claimant's contract for two years from 1st August 2017. We were not presented with any other written contract at his termination. Therefore, according to the CEX13, there was no provision for renewal, but the contract was subject to HRPM. - **[35]** The contract renewal procedure has been laid out in paragraph [33] above. In the present case, the Respondent submits that it did not renew the Claimant's contract because he did not apply for renewal. In his case, the Claimant testified that he applied for renewal on the 4th of June 2019. The letter was attached to the supplementary witness statement of Mr. Mawanda, the Claimant's HRM. When Mr. Natumanya sought to tender in the letter during the trial, Mr. Bangonza objected to its admission. It was the Court's view that the letter was essential, and thus, it was admitted. In his letter dated the 31st of July 2019, on the same day that the Claimant told us that he received the termination notice, he sought his appraisal form from 2016 to 2019. The Respondent's witness produced both these letters, so we do not think the Respondent makes a believable case that it did not renew the Claimant's contract because he did not apply. Further, the appraisal forms dated the 21s1 of June 2019 indicated that the Claimant had adapted well to his redesignated position and was considered for confirmation. In his oral testimony, Mr. Mawanda conceded that the language of the appraisal did not seem to be for an employer considering non-renewal. The Claimant testified that even after his redesignation, he was in contact with the HRM, who advised him to apply for renewal. On the balance of probabilities, we find that it is more likely than not that the Claimant applied for renewal on the 4th of June 2019. - **[36]** Having so found, the next question is, did the Respondent follow its procedure in the HRPM? The appraisal form signed by Kenneth Rubango, the Director of Biomedical

Engineering, was the first step according to Clause 5.4.2.3(ii)HRPM. In our view, a coincidental explanation as to why an appraisal took place in June 2019, about one month before the expiry of the Claimant's contract, would not gain much purchase. The comments on the Claimant's confirmation do not cement the view that the Respondent did not wish to renew the contract. The only reasonable explanation was that a contract renewal was forthcoming.

- **[37]** There were other procedural provisions were concerning timelines. The HRPM provided for a renewal application to be lodged and considered three months before the expiry of the contract. This means that the renewal process should have started by May 2019. It did not. That would also be another procedural requirement under the HRPM. Under Clause 5.6.2.1.1 (i)(d), the Respondent adopted the notice periods under EA, providing three months' notice for an employee who had served ten years or more. The Claimant joined the Respondent in 2005. He was terminated in July 2019, and that would be fourteen years. He would, therefore, have been entitled to three months' notice. The notice of the nonrenewal letter, which is, in effect, a termination letter, was dated the 17th of July 2019, and the non-renewal was effective on the 31st of July 2019. The Claimant was to be paid payment in lieu of outstanding leave days and provident fund savings. There was no notice of three months or payment in lieu thereof. It is quite correct that this was a notice of non-renewal. On the provisions of Section 64(1 )(b) EA, the contract for a fixed term expired on 31st July 2019. Still, by its HRPM, the Respondent had introduced a procedure for renewal of contracts, which stipulated timelines. Those timelines and procedures needed to be complied with. In the employment and labour sphere, where an employer does not comply with their internal procedures, the Courts will find a termination unlawful. We are fortified in this view by the persuasive decision of the Court of Appeal of Kenya in *Registered Trustees ofthe Presbyterian Church ofEastAfrica & another v Ruth Gathoni Ngotho- Kariuki* 1B where the Court must enforce the contract between the parties. - **[38]** The employment relationship is anchored on the principles of confidence and trust. These principles underpin the requirement for fairness in all processes, including exit from employment. This is why the *Musinguzi* dicta demands procedural stricture to avoid termination at the employer's whims. It is quite true that the Respondent, in the present matter, reserved the right not to renew the Claimant's employment contract. Still, in our judgment, it did not follow its procedure, communicate within its own HRPM timelines, and pay notice for termination as mandated under its own HRPM. For these reasons, we would hold that the Respondent did not follow its procedure for the non-renewal of an employment contract as set out in the HRPM. That would be procedurally unfair and unlawful. - **[39]** We are minded of the decisions of this Court in *Tindyebwa andAnother vKabale University [\\*](#page-11-0)17* and other cases. In *Tindeybwa,* there was no evidence that the Respondent flouted any contract renewal procedure to hold it culpable. The distinction in the present case is that

•il

*&#x27;\*[2017]eKLR*

**17 [2022] UGIC 37**

where an employer sets out its own procedure, over and above the statutory irreducible minimums under the EA, then when that employer is in breach of its procedure, such breach would be irreconcilable with a lawful and fair termination. It would be impossible to say such a breach would be a fair labour practice.

**[40]** Issue one will be answered in the affirmative, while issue two is resolved in the negative.

# **Issue III. What remedies are available to the parties?**

# **Declaratory relief**

**[41]** Having found as we have on Issue One, it is hereby declared that the Claimant was unlawfully and unfairly terminated from employment by the Respondent.

# **Payment in lieu of notice**

**[42]** According to Mr. Bagonza, the Claimant was paid all his benefits. Counsel referred us to REX 28 to 32. REX 28 was a letter Mr. Mawanda wrote to Alexander Forbes Financial Services Ltd indicating the Claimant's eligibility to full provident fund savings with interest calculated. REX 31 was a final paycheck acknowledgement for UGX 31,077,994/=, and REX 32 were two cheques made out to the Claimant in the sums of UGX 20,000,000/= and UGX 11,077,944/= the same amount as the Claimant's provident fund. Under Clause 7.10.1 of the HRPM, the Respondent set up a provident fund to cover terminal benefits for retiring employees and those who leave for other reasons. In *Kamuli v DFCU Bank18* , the Court described a provident fund as a retirement benefits scheme into which the employee's personal savings are paid. We are not persuaded that in the present case, the provident fund included the payment in lieu of notice as provided under Clause 5.6.2.1.1 (i)(d) of the HRPM, which provided for payment in lieu of notice of three months where the service was in excess of ten years. That would be consistent with Section 57(3)(d)EA. At a monthly salary of UGX 4,410,000/=, we award the Claimant the sum of UGX 13,230,000/= as payment in lieu of notice.

## **Salary for the remaining term of the contract UGX 136,710,000/=**

**[43]** The dicta of this Court is that salary for the remaining term of the contract is speculative and will not be awardable19. In the circumstances that that is the prevailing position of the law, that claim is denied.

**Severance pay**

**LDR 132 of 2020 Award Anthony Wabwire Musanif J**

**18 [2015] UGIC10**

**19 See Eqimu v Henly Distributors Uganda Limited [2024] UGIC 52**

- **[44]** Counsel for the Claimant sought severance pay for UGX 13,230,000/= but did not anchor this claim on any provision of law. Under 86EA, severance pay is payable where an employee is unfairly dismissed, dies in service by an act not occasioned by his own serious and wilful misconduct, is terminated for physical incapacity not occasioned by his own serious and wilful misconduct, is terminated because of death or insolvency of the employer or the contract is terminated by a labour officer for failure to pay wages or such other circumstances as the Minister may, by regulations provide. In our view, unlawful or unfair termination is not one such circumstance where severance pay is by statute payable. - [45] Our review of the HRPM did not demonstrate a provision for severance pay on termination. In the circumstances, we decline to grant the claim for severance pay.

# **Lost Allowances, including leave and travel allowances** q

- **[46]** The Claimant sought leave and travel allowances in the sum of UGX 3,500,000/=. Under Clause 7.6 HRPM, work-related allowances were provided to facilitate employees in the course of duty, reimburse an employee for monies that may be used during official duty, or compensate for extra responsibility or effort. - [47] Clause 7.6.1 HRPM provided leave allowance, which would be calculated as part of terminal benefits upon termination. The Claimant did not tell us if he had taken leave in the year of termination. Given that he was terminated in July 2019, it is to be assumed that he had accumulated half his leave for the calendar year 2019. As the Respondent's Board of Directors determines the rate of leave, it is the direction of this Court that the Claimant is entitled to leave allowance for January to July 2019. Pursuant to Section 8(3)(d) of the Labour Disputes( Arbitration and Settlement) Act Cap. 227, which gives this Court discretion to offer relief that the Court deems fit, the Respondent is directed to compute the leave allowance at the Board rate set for 2019 and pay the same to the Claimant. A report of such payment shall be made to the Registrar of this Court within 45 days from the date of this Q award.

#### **General Damages**

**[48]** Counsel for the Claimant sought UGX 250,000,000/= as general damages for inconvenience, mental anguish and career disruption. The Respondent took the view that the grant of general damages was baseless. We disagree. The Supreme Court has settled the debate on general damages in employment disputes in *Uganda Post Limited v Mukadisi20.* The Honourable Lady Justice Professor Lillian Ekirikubinza Tibatemwa held that general damages 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. It was the dicta of the apex Court that general damages can be awarded

**20 [2023] UGSC 58**

in addition to the payment in lieu of notice given to an employee who has been unlawfully dismissed from employment.

- **[49]** In *Kamuli* v *DFCU Bank[21](#page-14-0)* the factors determining an appropriate quantum of damages in an employment dispute are the Claimant's earnings, age, position of responsibility, and contract duration. Having found that the Respondent unlawfully terminated the Claimant, he would ordinarily be entitled to general damages. The only question is the quantum of general damages. - **[50]** In *Stanbic Bank (U) Limited v Okou [22](#page-14-1)* Madrama, JAfas *he then was)* held that general damages should be assessed based on the prospect of the employee getting alternative employment or employability, how the services were terminated, and the inconvenience and uncertainty of future employment prospects. The Claimant did not demonstrate evidence of his employability. In unlawful termination cases, this Court has granted anywhere between the equivalent of one month's salary to twelve months' salary as the quantum of general damages. In *Sserunjogi v Guinness Transporters Limited Ta Safe Boda[23](#page-14-2)* the Claimant, who was unfairly terminated and had worked for his employer for six years while earning UGX 1,300,000/= per month was awarded UGX 15,600,000/=. In the present case, the manner of termination was a procedural misstep in a no-fault termination of a contract that was terminable at the end of the fixed term or by notice. As the employment contract would terminate by an effluxion of time by the 31s1 of July 2019, based on his earnings of UGX 4,400,000/= per month, we consider that UGX 4,400,000/= will suffice as general damages and we so award it.

#### **Issuance of a certificate of service**

- **[51]** The Claimant sought a certificate of service. The Respondent argued that it was offered to him. REX 30 was a "To Whom It May Concern" letter by which the Respondent confirmed the Claimant's service at the expiry of his contract. Under Section 60EA, an employee who is unlawfully terminated is entitled to a certificate of service if they so request. Section 60(1 )(a) to (f) provides for the contents of such certificate, including the name and addresses of the employer and employee, the nature of the employer's business, the length and capacity of the employee's service, wages, and reason for termination if the employee so requests. The Employment Regulations 2011 do not provide a prescribed form. - **[52]** REX 30 contained the Claimant's name and the Respondent's name and address. It also described the Respondent's business, the length of the Claimant's service and positions and his reason for exit. It did not contain his wages. Therefore, the " To whom it may concern" letter substantially complies with the EA. But that the law requires the disclosures in Section 60, we direct the Respondent to issue a certificate of service, titled "Certificate

**LDR 132 of 2020 Award Anthony Wabwire Musana J**

**21 [20151UGIC 10**

**22 120231 UGCA 100**

**23 [2024] UGIC 49**

of Service", containing the last wages of the Claimant. The Respondent is directed to issue a certificate of service within 15 days of the date of this award.

# **Costs**

**[53]** The Claimant sought costs of the claim. The standing dicta is that costs in employment disputes are the exception on account of the employment relationship except where the losing party has been guilty of some misconduct.24 We have not been directed to the Respondent's misconduct that we should depart from this dicta. There is to be no order as to costs.

## **Final Orders**

- **[54]** In the final analysis, we make the following declarations and orders - **(i)** It is hereby declared that the Claimant was unlawfully and unfairly terminated from employment by the Respondent. - **(ii)** The Respondent is directed to issue a certificate of service within 15 days from the date of this award. - **(iii)** The Respondent is also directed to compute and pay the Claimant his leave entitlement from January to July 2019. The Respondent shall report to the Registrar of this Court the payment of this leave entitlement within 45 days of this award. - **(iv)** The Respondent is ordered to pay the Claimant the following sums: - (a) **IIGX 13,230,000/=** as payment in lieu of notice - (b) **UGX 4,400,000/=** in general damages. - (c) There is to be no order as to costs.

It is so ordered.

**Signed, dated and delivered at Kampala this 22nd day of November 2024.**

**Anthony Wabwire Musana,** Judge, Industrial Court

**24 See Kalule v Deustche Gesellschaft Fuer Internationale Zuzammenarbeit (GIZ) GMBH (2023) UGIC 89**

![](0__page_16_Picture_1.jpeg)

- 1. Hon. Adrine Namara, - 2. Hon. Susan Nabirye & - 3. Hon. Michael Matovu

22nd of November 2024

9:53 am

## **Appearances**

- 1. For the Respondent: - Mr. James Bagonza Ms. Jane Carol Nakiganda, the Respondent's Manager Sustainability and Corporate Affairs in Court. - 2. Claimant is absent

Anthony Wabwire Musana, **Judge, Industrial Court of Uganda**

Court Clerk: Ms. Matilda Nakibinge

Mr. Bagonza Matter is for award, and we are ready to receive it.

Award handed down in open court.

**LDR 132 of 2020 Award Musans'J**