Nakanwagi v Opportunity Bank Uganda Limited (Labour Dispute Reference 152 of 2021) [2024] UGIC 77 (20 December 2024)

Full Case Text

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# **THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA AT KAMPALA LABOUR DISPUTE REFERENCE NO. 152 OF 2021** *(Arising from Labour Complaint No. KCCA/GEN/LC/17/2017)*

# **NAKANWAGI SOLOME FIONA :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::CLAIMANT**

# **VERSUS**

# **OPPORTUNITY BANK UGANDA LTD:::::::::::::::::::::::::::::::::::::::::::::::::::::::::RESPONDENT**

# **Before:**

The Hon. Mr. Justice Anthony Wabwire Musana

# **Panelists:**

Hon. Adrine Namara, Hon. Susan Nabirye and Hon. Michael Matovu

### *Representation:*

*1. Mr. Abel Ggolooba of Naikoba and Ggolooba Advocates for the Claimant. 2. Mr. Phillip Kasimbi holding brief for Mr. Julius Ahumuza of the Respondent's Legal Department for the Respondent.*

#### *Case Summary*

**Introduction**

*Employment Law-Abandoned disciplinary proceedings-'disguised dismissal". The Claimant alleged that her termination from the Respondent was unlawful and unfair, and she sought various remedies, including damages, severance pay, and a certificate of service. The Respondent denied the claim, arguing that the termination was lawful and by the employment contract. The Court ruled in favour of the Claimant, finding that the termination was unlawful and unfair. The Court highlighted the procedural shortcomings in the disciplinary process leading to the termination, including insufficient notice given to the Claimant for her disciplinary hearing and the lack of communication regarding the outcome of the disciplinary proceedings. The Court characterised the Respondent's actions as a "disguised dismissal," treating a termination with notice as if it were a dismissal for misconduct. The Court awarded the Claimant general damages for her emotional distress and reputational harm and punitive damages to punish the Respondent for unfair labour practices. The Court also granted the Claimant severance pay calculated based on her length of service and salary and ordered the Respondent to issue a certificate ofservice. The Court further awarded interest on the monetary awards and granted costs to the Claimant due to the Respondent's misconduct in handling the termination.*

#### **AWARD**

fraudulent transaction violated deposit verification procedures by posting two deposit slips

# **[1]** On the 14th of August 2008, the Claimant entered employment with the Respondent, a financial institution, as a teller. She was promoted to satellite supervisor and ranch operations manager when, on the 22nd of February 2016, she was implicated in a fraudulent transaction involving the misappropriation of client cash deposits at the Gayaza Branch. The

bearing inconsistent amounts, figures, and words. On the 1st of August 2016, she was suspended with half pay pending investigations. On the 31st day of August 2016, she was summoned to attend a disciplinary meeting and was advised that the outcome would be communicated to her. On the 10th day of October 2016, the Claimant was terminated without reason.

- [2] Aggrieved, she filed a complaint with the Directorate of Gender Community Services and Production at the Kampala Labour Office, a regulatory body responsible for overseeing labour disputes and facilitating settlements. By letter dated the 13lh of January 2017, the Labour Officer(the LO) summoned the Respondent to settle the complaint. The LO sent a reminder on the 23rd of January 2017. - [3] By letter dated 27th January 2016[1](#page-1-0) The Respondent suggested that the Claimant's employment was terminated by notice. The Claimant was not satisfied with this explanation. - [4] The LO held a final mediation meeting on the 4th of April 2017. When no settlement was forthcoming, the LO referred the matter to this Court. In his report, he noted that the mediation failed because the Respondent was convinced that the Claimant had failed to do her duties, misposted entries and failed to declare excess amounts. On the 7th of June 2021, the matter was referred to this Court.

#### **The Claim**

[5] In her memorandum of claim filed in the Registry of this Court on the 9th of August 2021, the Claimant seeks a declaration that her termination was unlawful and unfair. She asked for general and punitive damages, a severance allowance, a certificate of service, and the interest and costs of the claim.

### **The reply**

[6] The Respondent denied the claim. It confirmed the Claimant's suspension, disciplinary hearing, and termination upon payment in lieu of notice by the employment contract. It contended that the claim was without merit, arguing that the Claimant had failed to perform her duties, misposted entries, and failed to declare excess amounts, which led to her termination.

## **Rejoinder**

[7] In rejoinder, the Claimant maintained that she was terminated without reason and that her dismissal was a clear violation of disciplinary procedures, policy and the employment law.

#### **The proceedings and evidence.**

[8] When the matter came before this Court on the 23rd of October 2024, Mr. Ggolooba, appearing for the Claimant, sought to proceed *exparte* because Mr. Kasimbi was in Court

1 This might have been a typographical error as all facts relate to filing the action in 2017.

on the 14th of April 2024 when the matter was fixed for hearing. Satisfied that the Respondent had ample notice, we granted leave to the Claimant to proceed *exparte.*

- **[9]** We adopted the joint scheduling memorandum filed in Court on the 4th of August 2023 with the following issues for determination: - (i) Whether the Claimant's dismissal from employment was unlawful, wrongful and unfair. - (ii) What remedies are available to the parties? - s z **[10]** We also adopted the documents in the Claimant's Trial Bundle filed in Court on the 23rd of December 2022 and marked them CEX1 to CEX10. The Claimant was sworn in, and her witness statement, made on the 23rd of November 2023 and filed on the record on the 24 of November 2024, was adopted as her evidence in chief. - **[11]** The Claimant testified that on the 1st of August 2016, she was suspended on half pay pending investigations concerning the misappropriation of client cash deposits at the Gayaza Branch. By an email dated 31st August 2016, she received an email to attend a disciplinary hearing to provide explanations about fraudulent activities as Branch Operations Manager. She attended the hearing on 2nd September 2016 and was told to expect an outcome communication. On the 10th of October 2016, she was terminated without any reason. She tried to appeal, but the Human Resource Officer refused to see her. She then filed a complaint with the Bank of Uganda, a regulatory body overseeing financial institutions. She said she had served diligently, and her termination had occasioned emotional and reputational damage and monetary loss of income. She asked for general damages. - **[12]** She also told us that she felt her dismissal was unlawful because she did not get a copy of the disciplinary hearing minutes and was given only two to three days to hand over. She also said that she had not been given a warning letter. She testified that the transaction she was dismissed for involved three people, one of whom paid back, and the other two were dismissed. - **[13]** At the close of her case, we invited the parties to file written submissions.

# **Analysis**

*ISSUE ONE: Whether the Claimant's dismissal from employment was unlawful, wrongful and unfair.*

### **Claimant's submissions**

**[14]** It was submitted for the Claimant that she was summoned to attend a disciplinary hearing, which she did, and was summarily terminated with payment in lieu of notice. She believed this did not amount to a fair hearing because she was not told the outcome of the disciplinary hearing. Mr. Ggolooba relied on *Milly K. Juuko v Opportunity Bank Uganda Ltd[2](#page-2-0)*

2 HCCS No. 327 of 2012

for the proposition that she was entitled to a fair hearing for summary termination. It was submitted that she was not given a reason for termination, and her summary termination was contrary to Section 68EA, which, in Counsel's view, makes it mandatory that she is given a reason for termination. Counsel cited *Mbonyi Julius vAppliance World Limited[3](#page-3-0)* and *Hilda Musinguzi v Stanbic Bank U Ltd[4](#page-3-1)* for the view that the Court cannot fetter an employer's right to terminate if the employer follows the procedure. Counsel relied on the Termination of Employment Convention No. 58, which stipulates that no employee should be terminated unless there is a valid reason. We were asked to find her termination unlawful.

### **Determination**

- **[15]** Under the Employment Act **Cap.226(from now EA),** the employment relationship can be ended in one of two ways: termination or dismissal. Under Section 64EA, a termination, which we have called a no-fault discharge, is by way of an employer discharging the employee on notice or without notice but with payment in lieu of notice[5](#page-3-2), because of the expiry of the contract term or completion of a fixed task, retirement, constructive dismissal or resignation by an employee serving notice. For termination, there is no fault attributable to the employee. - **[16]** At the other end of the discharge spectrum lies dismissal. Dismissal of an employee is the discharge of the employment contract by the employer for employee performance or underperformance and misconduct. - **[17]** The locus classicus case of *Musinguzi* established the important principle in our employment jurisprudence: the Court cannot fetter the employer's right to terminate an employment contract provided that the employer follows procedure. Or, as we put it in the case of *Akewa v Loving, one by one Ministries[6](#page-3-3)* **termination must follow procedure; otherwise, it is unlawful.** Therefore, a Court's inquiry into the lawfulness of termination or dismissal shall be concerned with the procedure and, in the cases of dismissal, the reason for termination in substantive fairness. The procedural safeguards are to ensure, as most eloquently observed by Mwangushya JSC in *Musinguzi,* that an employee is not terminated at the whims of the employer. - [18] This matter proceeded in the absence of the Respondent. The Claimant's evidence was unchallenged. In *exparte* proceedings, a party in the Court proceedings must prove their case.[7](#page-3-4) In *Geoffrey Brown v Ojijo Pascal* where evidence is unchallenged, the Court must evaluate it to give it quality and value.[8](#page-3-5) - **[19]** In the present case, the undisputed facts are that on the 1st day of August 2016, the Claimant was suspended from work over an investigation into misappropriation of client cash deposits at the Respondent's Gayaza Branch. On the 31st of August 2016, she was invited to attend a disciplinary hearing on the 2nd of September 2016, two days later. She attended the disciplinary hearing. On the 10th of October 2016, she received a letter of termination

3 [20211UGIC 10

4 SCCA 5 of 2016

5 Stanbic Bank (Uganda) Limited v Nassanga (Civil Appeal 182 of 2021) (20231 UGCZi 342 (15 November 2023)

612024] UGIC 54

7 See Ar'niro v Uganda Land Alliance 120241 UGIC 22

8 [2023] UGHCCD 173 Per Ssekaana J.

requiring her to hand over the office within five days. She was to be paid two month's salary in lieu of notice.

- [20] The question that confronts this Court is whether that termination was lawful. In our view, there are two limbs to this question: first, the disciplinary process and, secondly, the termination. First, the golden standard in disciplinary proceedings was set in *Ebiju v Umeme Ltd3.* In *Ebiju,* the principles of a fair hearing or the right to be heard consist of a notice of allegations against the plaintiff are served on him or her in sufficient time to prepare a defence, clearly stating what the accusations against the plaintiff are and his or her rights at the hearing, including the right to respond to the allegations against him or her orally and or in writing, the right to be accompanied to the hearing and the right to cross-examine the Respondent's witness or call witnesses of his or her own. Further, the plaintiff should be given a chance to appear and present his or her case before an impartial committee in charge of the disciplinary processes of the Respondent. - [21] In the matter before us, the invitation email laid out the charges against the Claimant and advised her of her right to attend with a person of her choice. It also provided the Claimant with explanations of her alleged involvement in the fraudulent activities. To this extent, the invitation complies with the *Ebiju* standard. - [22] Regarding sufficient time, the email was sent to the Respondent on the 31s1 of August 2016 at 15:42 so that she could attend a hearing on the 2nd of September 2016 at 2:00 pm. This was approximately 48 hours or two days' notice. Under Section 65(3)EA, the employer is required to give the employee reasonable time to prepare their defence. The Industrial Court has previously ruled that two days' notice is insufficient time to prepare a defence.[\\*](#page-4-0) 10 *(See also Kalika Abdul* v *Umeme Ltd LD No. 188 of 2015).* The Respondent would be faulted for this. The Claimant was not given sufficient time to defend herself, and to this extent, the disciplinary process was unlawful. - [23] However, there is an even more profound point about the disciplinary hearing. From the facts, it is indisputable that the Claimant was not given the disciplinary hearing outcome. Instead of completing the disciplinary process, the process was abandoned, and one month and nine days after the disciplinary hearing, the Respondent terminated the Claimant with notice. The Respondent did not communicate the outcome of the disciplinary hearing to the Claimant. While the EA is silent on the communication of the outcome, Article 8(3) of the International Labour Organisation Termination of Employment Convention, 1982 (No. 158) provides for waiver of the right of appeal if an employee does not exercise the right of appeal within a reasonable time. This means that an employer would be expected to communicate the outcome or decision of the disciplinary committee as soon as it is reached. The Learned Author Nelson Nerima in "Essentials of Uganda's Employment Law''11, surmises that an employee must be informed of the decision and the reason for the decision within a reasonable time after the conclusion of the hearing to mitigate the penalty and exercise the right of appeal. Mr. Nerima adds that the employee should be given the disciplinary hearing minutes. In the present case, the Claimant was neither given the - ' [2015] UGHCC015

" Uncle Books Kampala 2018 at page 61

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10 Sspjuriiani v Guinness Transporters United TA Safe Boda I2Q24] UGIC 49 f16 August 2Q24)

decision nor the meeting minutes. Instead, one month and nine days after the disciplinary hearing, she was terminated with notice.

- **[24]** Was it fair to the Claimant to carry out a disciplinary hearing and not communicate the outcome but terminate her instead? We think not. In our judgment, the Claimant was subjected to a disciplinary process, which appears to have been abandoned. Under Section 61(5)EA, an employer must impose a disciplinary penalty within fifteen days. Time is, therefore, of the essence in disciplinary proceedings. In our view, the Respondent's conduct warrants no other conclusion except that it amounted to an unfair labour practice. The procedural safeguards in the disciplinary process under the EA are intended to protect the employee from being terminated or dismissed at the employer's whims. In the present case, the termination with notice after a disciplinary hearing, whose outcome the employee knew nothing about, was unfair. It was, to all intents, a dismissal disguised as a termination. And there is precedent that supports the proposition that communication is key. In *Kamegero v Marie Stopes Uganda Limited'7 we* observed that paragraph l(ll)(b) of Schedule 1EA provides that the employer shall ensure that the employee is fully aware of the form the disciplinary proceedings shall take, including the possibility of appeals. We also observed that in paragraph 1(7) of Schedule 1EA, the employer is required to keep a record of the nature of any offences, the consequential actions taken, the reasons for taking action, the lodging of an appeal, and the outcome of any such appeal, and any other further developments. - **[25]** In the case before us, the Respondent did not adduce any evidence regarding the disciplinary process or its outcome, and we would find fault in that approach to disciplinary proceedings. The causal relationship between the disciplinary proceedings and the termination with notice is not fair. Fairness requires that an employee alleged to have committed some infractions and subjected to a disciplinary process would be entitled to know the outcome. In the present case, it would be impossible to detach the termination with notice from the disciplinary process. - **[26]** For the above reasons, we conclude that the Claimant's discharge from employment by way of termination was unlawful. It was a disguised dismissal. Issue one is answered in the affirmative.

*Issue II: Whether there are any other remedies available to the Parties?*

**[27]** It is trite that an unlawfully dismissed employee is entitled to remedies. We shall consider the remedies as laid out in the memorandum of claim.

# **Punitive and General Damages**

**[28]** In her submissions, the Claimant asked for general and punitive damages. Counsel cited *Juuko* and *Bank of Uganda vs Betty Tinkamanyire123* in which the Supreme Court of Uganda held that an employee is entitled to general damages but equated the same to the notice period that the employee would be entitled to. That position was improved in *Uganda Post*

12120231 IJGIC 52

&quot;[2008] UGSC 21

*Limited v Mukadisi14.* As it now stands, the law is that general damages are awardable in employment disputes for compensation for emotional distress, mental anguish, damage to reputation, and any other non-monetary harm suffered due to the dismissal and are not restricted to salary or pecuniary benefit under the employment contract. In the circumstances of the Claimant's unfair dismissal, we find that she is entitled to general damages.

- [29] In terms of the quantum of damages, in *Sserunjogi v Safeboda15* we held that the Court is guided by factors such as the value of the subject matter, the salary earned and foregone, the economic inconvenience that a party may have been put through and the manner of termination. In *Stanbic Bank (U) Limited v Okou16* the Court of Appeal observed that appropriate general damages should be assessed on the prospects of the employee getting alternative employment or employability, how the services were terminated, and the inconvenience and uncertainty of future employment prospects. Further, in *Donna Kamuli v DFCU* 17 the Industrial Court considered the earnings of the Claimant, age, position of responsibility, and contract duration to determine the damages awardable. - [30] In the matter before us, the Claimant sought UGX 381,216,000/= in general damages, having been permanent and pensionable. Given the authorities above, that would not be a consideration for an award of damages. The Claimant had worked for the Respondent for eight years. We have found the manner of termination to have been a disguised dismissal. In effect, the Respondent attempted to cloth an unlawful dismissal under the cover of a lawful termination. This is an unfair labour practice which this Court will not countenance. The Claimant was earning UGX 1,444,000/= per month. She is about 40 years old now. She led evidence of emotional and reputational damage. In our judgment, the sum of UGX 25,992,000/= will suffice as general damages, which we so award.

# **Punitive damages**

[31] The Claimant asked for punitive damages in the sum of UGX 50,000,000/= for failing to follow due process and for failing to give her a certificate of service. In *Kamegero* we cited *DFCU Bank Limited v Donna Kamuli'8* where the Court of Appeal held that punitive damages are awardable in employment disputes but with restraint as punishment is not for the civil and Contract law. We are persuaded that the act of the Respondent in starting a disciplinary process, abandoning it and terminating the Claimant warrants an award of punitive damages as an expression of this Court's outrage at a dismissal disguised as a termination. We award the sum of UGX 15,000,000/= in punitive damages.

## **Severance pay**

[32] Under Section 86EA, the Claimant sought UGX 8,664,000/= in severance pay. In *UMEME Limited v Harriet Neqesa ,9* the Industrial Court observed that the circumstances under which severance pay becomes payable were explicit under Section 86EA and that

&#x27;\* [2023] UGSC 58

15 [202410610 36

16 [2023] UGCA 100

&quot; LDC No. 002 of 2015

11 [20191 UGCA 2088

&#x27;\* 120191 UGIC 34

severance pay becomes payable from the date the court declares the termination unlawful. The Claimant joined the Respondent's employment in August 2008 and was terminated unlawfully on the 2nd of September 2016 after serving for 8 years. Following the formula in *Kamuli,* at a monthly salary of UGX 1,444,000/=, she is entitled to UGX 11,552,000/= in severance pay, which we hereby award.

# **Certificate of Service**

**[33]** The Claimant asked for her certificate of service. Section 60EA provides that on the termination of a contract of service, an employer shall provide the employee with a certificate if requested by the employee, including a request by way of a claim filed in Court.[20](#page-7-0) We, therefore, order the Respondent to issue the same within 30 days of this award.

### **Interest**

**[34]** The Claimant sought interest on the monetary awards. Section 26(2) of the Civil Procedure Act, Cap 282, gives the Court discretionary powers to grant interest. We think it is proper to award interest at 14% per annum from the date of this award until payment in full.

#### **Costs**

**[35]** Under Section 8(3)(d) LADASA, this Court may make orders as to costs as it deems fit. We have held that in employment disputes, the grant of costs to the successful party is an exception on account of the nature of the employment relationship except where it is established that the unsuccessful party has filed a frivolous action or is guilty of some form of misconduct.[21](#page-7-1) The Respondent filed a defence but did not appear in Court. Additionally, the Respondent disguised the dismissal as termination. In *Candiru v Amandua & 2 Ors2[2](#page-7-2)* Mubiru J. considered misconduct to be an exception to the rule that costs follow the event. We find that the Respondent has misconducted itself, especially by disguising an unfair and unlawful dismissal as a lawful termination. Therefore, the Respondent shall be burdened by the costs of this claim. The Claimant is awarded costs of the claim.

#### **Conclusion and final orders**

- **[36]** In the final analysis, the Respondent was procedurally and substantively unfair. We conclude that the Claimant was unfairly and unlawfully dismissed and is entitled to remedies. We make the following declarations and orders: - (i) It is hereby declared that the Claimant was unlawfully and unfairly dismissed from her employment with the Respondent. - (ii) We direct the Respondent to pay the Claimant the following sums: - (a) UGX 25,992,000/= as general damage;

22 [201<l UGliCCD 139

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20 See Lubf.qa v Iropical Bank Limited [2024] UGIC 39

21 Kalule v Deuslche Gesellschaft Fuer Internationale Zuzammenarbeit (GIZ) GMBH [2023] UGIC 89

- (b) UGX15,000,000/= as punitive damages; - (c) UGX11,552,000/= in severance pay - (iii) The sums above shall carry interest at 14% p.a. from the date of this award until payment in full. - (iv) The Respondent shall deliver the certificate of service to the Claimant within 30 days of this award. - (v) The Claimant shall have costs of the claim against the Respondent.

### **It is so ordered.**

**Dated** *and* **iklivered at Kampala this 20th day of December 2024.**

Anthony V **Judge, In** towire Musana, **rstrial Court**

# **The Panelist&Agree:**

1. Hon. Adrine Namara,

2. Hon. Susan Nabirye &

3. Hon. Michael Matovu.

**20th December 2024**

**10.13 a.m.**

**Appearances:**

**1. For the Claimant:** ( X/'

**2. For the Respondent:** Court Clerk:

Ms. Precious Ninsiima, Claimant in Court. None

Mr. Samuel Mukiza

Ms. Ninsiima: Matter for award, and I am ready to receive it