Semanda v Micro Credit for development and Transformation Cooperative Savings and Credit (MCDT Saaco ) Limited (Labour Dispute Reference 122 of 2021) [2024] UGIC 56 (16 August 2024)


# THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA AT KAMPALA LABOUR DISPUTE REFERENCE No. 122/2021

(Arising from KCCA/RUB/LC/LC/260/2018)

#### **::::::::::::: CLAIMANT** SEMANDA EDWARD ::::::::::::::::::::::::

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MICRO CREDIT FOR DEVELOPMENT AND TRANSFORMATION **CO-OPERATIVE SAVINGS AND CREDIT (M CDT SACCO) LIMITED \*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\***

#### Before:

The Hon. Head Judge, Linda Lillian Tumusiime Mugisha

#### **Panelists:**

- 1. Mr. Ebyau Fidel, - 2. Ms. Harriet Mugambwa Nganzi & - 3. Mr. Fx Mubuuke.

#### **Representations:**

- 1. Mr. Emwogu Gerald of M/s. Kasiisa & Co. Advocates for the Cliamant. - 2. Ms. Daphine Atuhaire of M/s. Walusimbi & Co. Advocates for the Respondent.

#### **AWARD**

#### **Introduction**

The Claimant was employed by the Respondent from 1/01/2004, when it was a Micro $[1]$ Credit Development Trust. This was before it transformed into Micro Credit for

**1**

Development and Transformation Cooperative Savings & Credit Society Uganda Ltd(MCDT, Sacco). He was initially employed as an Assistant field officer earning Ugx. 400,000/= per month. He rose through the ranks to the position of Assistant Credit Officer of the Respondent Sacco, and in January 2014, he was appointed to the position of branch Manager Kampala branch "A", earning Ugx. 1,910,081/- per month. According to him, during his employment, he worked with diligence, and as a result, he was always promoted. However, on 3/3/2018, he was orally placed on investigative suspension for 2 months and later on 2/05/2018, he was summarily dismissed. Being dissatisfied with the dismissal he filed a complaint before the Labour Officer KCCA, Ms. Nabbumba, on grounds that he was not informed about the reasons for which he was terminated and he was not accorded a hearing. Therefore, the dismissal was wrongful, unlawful, and unfair because it was done in violation of the principles of natural justice.

[3] He sought the following orders:

- *a) A declaration that his dismissal and termination from employment by the Respondent was wrongful and unlawful.* - *b) A declaration that the Respondent unjustly and unlawfully refused to grant him leave for all the time he was employed by the Respondent.* - *c) A declaration that the Claimant is entitled to unpaid salary, allowances, and terminal benefits from the date of dismissal till the date of judgment/claimant's normal retirement age.* - *d) In the alternative but without prejudice to(c) above general damages for wrongful/ unlawful dismissal* - *e) Interest on either (c) or (d) whatever is granted by the Court from the date of dismissal at 40% per annum until payment in full* - *f) Unpaid salary of 3 months prior to termination/ dismissal* - *g) Severance allowance* - *h) Punitive/exemplary damages* - *i) Interest on (f), (g), (h) at a rate of 20% per annum from the date of judgement till payment in full.* - *j) The claimant's savings with MCDT SACCO savings with the Respondent* - *k) Costs of the suit* - *l) A certificate of service awarded to the claimant by the respondent.*

- *m) His claim for an award of special damages was as follows:* - *n) Unpaid basic salary (February, March, and April of Ugx. 5,700,000/-* - *o) Severance allowance of Ugx. 61,800,000/-* - *P) Termination in lieu of notice of Ugx. 5,700,000/-* - *q) Provident fund of Ugx. 7,000,000/=* - *r) NSSF contribution of Ugx. 8,000,000/-* - *s) General damages* - *t) Aggravated and punitive damages of Ugx. 60,000,000/-* - *U) Wrongful termination of Ugx. 50,000,000/=* - *V) Costs of the suit.* - *w) Interest on (f), (g), (h) at the rate of 20% per annum from the date of judgment till payment in full.* - Xj *The Claimant's savings MCDT SACCO savings with the Respondent.(sic)"* - [5] The Respondent does not dispute the fact that the Claimant was its employee. However, according to them, he worked for 9 years and 4 months and not for 13 years as claimed. They admitted that by the time of his dismissal, he was a Branch Manager from 2014 and at the time of his dismissal, he was earning Ugx. 1,910,081/- per month. He was summarily dismissed because of misconduct on his part and in particular, because he was grossly negligent in the performance of his managerial duties, which led to inter alia, forgery, negligence of duty, insubordination to superior orders, abuse of office, in contravention with the terms of his employment contract and the Respondent's Human Resource Management Policy Manual. - [6] He was notified about the infractions and given an opportunity to defend himself against them in a disciplinary meeting, therefore he was lawfully summarily dismissed in accordance with the law. He was paid all that was due to him and he was always given leave, therefore he was not entitled to the severance allowance, special damages and general damages claimed.

The issues for resolution before the Labour Officer were as follows:

- *1. Whether the Claimant was a permanent employee of the employee?* - *2. Whether the Respondent's dismissal of the Claimant was lawful and or wrongful?* - *3. Whether the Claimant is entitled to his two months' salary, savings and gratuity from the Respondent?*

- *4. Whether the Claimant liable for the unpaid debt from the staff savings scheme and development loan? (sic)* - 5. *Whether the Claimant is entitled to salary and allowance payments for the remaining years until retirement?* - 6. *Whether there are any other remedies available to the parties?"* - [7] The Labour officer Adjudicated the matter and found in favour of the Claimant. She declared that the Claimant was unlawfully and wrongfully dismissed and awarded him the following: - *a) Compensation for failure to give a hearing amounting to Ugx. 1,910,081/- one month's pay* - *b) Notice pay, in accordance with Section 58(3)(c) amounting to Ugx. 5,730, 243/- 3 months'salary* - *c) Leave accrued, 12 months accrued leave amounting to Ugx. 22,922,916/-* - *d) Severance allowance, 9 months' pay amounting to Ugx.17,190,729/=* - *e) Compensatory order, amounting to <sup>1</sup> month's pay-Ugx. 1,910,081/-* - *f) Additional compensatory Order, in accordance with section 78(2) of the EA of 3 months' pay- amounting to Ugx. 5,730,243/-* - *g) Provident fund and personal savings amounting to Ugx. 6,000,000/- and 7,512,128/-* - *h) Relief from repayment of outstanding loan obligations, in accordance with the holding in (Okello Nymlord v Rift Valley railways) cited in Uganda Development Bank v Florence Mufumbo CA No. 241 of 2005.*

She referred the matter for the award of and computation of General damages of **Ugx.150,000,000/-** and aggravated damages of **Ugx. 200,000,000/-** to this court for resolution, for lack of jurisdiction.

## **The Question for resolution is whether the Claimant is entitled to an award of Damages in addition to what the Labour Officer already awarded?**

#### **Submissions**

[7] It was submitted for the Claimant that Damages are the direct probable consequence of the wrongful Act complained of and include damages for pain, suffering, inconvenience, and anticipated future loss. He relied on the holding in *(Storms v* *Hutchinson* [1905] AC 515), which he cited as [1970] 17 EACA 60, where Lord Machnagthen stated that general damages for the same legal proposition. He also relied on *{Kanyonga Sarah v Lively Minds Uganda* LDR No. 16 of 2013) and *{Action Aid Uganda v David Mbarekye Tibekinga* LDA No.028/2016), for the proposition that where a Labour Officer considers that a complainant deserved more than the Labour Officer had jurisdiction to award, the claim for damages would be referred to the Industrial Court. He opined that the Claimant deserved an award of General damages whose computation should be made in consideration of the nature of his employment, its duration, the position he held, the salary earned, the circumstances leading to the termination, and the impact of the loss of employment on the employee's family.

- [9] He contended that the Claimant was serving the Respondent as Branch Manager with a permanent open-ended contract, for a period of 9 years and 3 months, earning Ugx, 1,910,000/- per month moreover with a clean record but he was unexpectedly, abruptly, and unlawfully terminated from his job which led to loss of the income with which he provided for his family and personal obligations. Therefore, he deserved an award of general damages. - [10] According to him, this Court in *{Blanche Byarugaba Kairav Africa Field Epidemiology Network* LDR No. 132 of 2018), awarded the Claimant Ugx. 150,000,000/- as general damages and given that General damages are awarded at the discretion of Court as was held in *{Bank of Uganda* v *Betty Tinkamanyire* SCCA No. 133 of 2012), the Claimant deserved an award of Ugx. 150,000,000/-to atone for the prolonged disruption, embarrassment, humiliation, pain, suffering, and inconvenience suffered as a result of his unlawful termination. - [11] In reply Counsel for the Respondent submitted that before general Damages can be awarded, court must be satisfied that the Respondent occasioned any damages at all. He contended that in this case, it was the Claimant who occasioned financial loss to the Respondent through his negligence as Branch Manager. This is evidenced on page 62 of the record of proceedings before the labour officer, the Respondent's witness statement on page 191 of the record, and paragraph 6 of the Claimant's witness statement. According to Counsel, the Claimant under paragraph 17 of his witness statement admitted that he left unpaid loans and he left the branch poorly

performing, therefore by awarding him general damages the Court would be condoning a wrong.

- [12] Counsel further contended that the labour officer faulted the Respondent for not following due process but given the nature of the Respondent's business being a women's Sacco, the losses occasioned by the Claimant justified his summary dismissal. In any case, the Claimant did not adduce any evidence to prove the inconvenience he suffered as a result of his dismissal, to warrant an award of General Damages, yet section 101 of the Evidence Act makes it mandatory for he who alleges to prove. She contested the claim for Ugx. 150,000,000/= as general damages on grounds that it was outrageous and would make this court a means of unjust gain. - [13] She distinguished this case with *Bank of Uganda v Betty Tinkamanyire* (supa) in which the Supreme Court declined to award General Damages even if it found that the Respondent's termination was unlawful and instead awarded her aggravated damages for the embarrassment she had suffered which is not the case in the instant case. She further argued that as was decided by this court in *Richard Kigoi v Equity Bank of Uganda Limited,* LDC No. 115 of 2014, the claim for general damages could not stand. She also refuted the Claimant's reliance on *Action Aid Uganda* v *David Mbarekye Tibekinga (supra)* on grounds that, in this case, the Labour Officer did not state that the Claimant deserved an award of damages but merely referred the claim to this Court for resolution because she lacked jurisdiction to award them. - [14] About the reliance on *Blanche(supra),* Counsel contended that in that case, the claimant earned USD 4000 equivalent to Ugx. 15,200,000/- per at an exchange rate of Ugx. 3,800/-, per month as opposed to the Claimant in the instant case who was earning Ugx. 1,910,081/- per month. In her view, based on that case the Claimant would not be entitled to more than Ugx. 18,750,000/- less statutory deductions and given that he testified that before 2017, he earned between Ugx.600,000/- to Ugx.700,000/- per month, if this court is inclined to award him general damages he would be entitled to about Ugx. 6,907,894/ only.

#### **Decision of Court.**

When considering a reference for a claim for damages arising out of a decision of a Labour Qfficer, the Industrial Court is placed in a unique position of having to evaluate the evidence

laid before the labour officer and to analyse his or her award, without interfering with his or her findings of fact and law. This is because in this case, the Court is not sitting as an appellate court which is expected to re-evaluate the evidence laid before the Labour officer in order to reverse or affirm his or her findings. The role of the court in determining a claim for damages is to evaluate the evidence that was placed before the labour officer and his or her award to determine whether, in addition to what the Labour officer awarded, an award for damages is warranted. However, the Court in exceptional circumstances may be moved or on its own volition it may call for additional evidence before making such a determination.

#### **Resolution of issues**

### **1. Whether the Claimant was entitled to an award of general damages in addition to what the Labour Officer already awarded him?**

[16]The Labour officer found that the Claimant was unlawfully dismissed because the allegations that led to his dismissal were not brought to his attention and proved against him before his dismissal. She found that he was not given an opportunity to prepare a defense as required under the principles of natural justice, therefore the dismissal was wrongful and unlawful.

We had an opportunity to analyse the record of proceedings and the evidence on the lower record and established that, whereas the letter of dismissal on page 196 of the trial bundle, listed several infractions against the Claimant, there was nothing to indicate that the Claimant was made aware of the said infractions, or that he was given an opportunity to respond them before he the dismissal. The letter which was titled Gross Negligence of Duty pointed to the Claimant's poor performance as a branch manager.

[17] Therefore in accordance with Section 65(1) and (2) of the Employment Act, the Respondent was expected to notify the Claimant about the infractions leveled against him and give him an opportunity to defend himself before making the decision to dismiss him. The section provides as follows:

65. *Notification and hearing before termination*

*(1) Notwithstanding any other provision of this part, an employer shall before* (our emphasis) *reaching a decision to dismiss an employee, on the grounds of misconduct or poor performance explain to the employee, in a language the employee may be reasonably*

 *expected to understand, the reason for which the employer is considering dismissal (emphasis ours) and the employee is entitled to have another person of his or her choice present during this explanation,*

*(2) Notwithstanding any other provision of this part, an employer shall before reaching a decision to dismiss an employee, hear and consider any representations which the employee on the grounds of misconduct or poor performance, and the person, if any chosen by the employee under subsection (1) may make.*

His dismissal letter reads in part as follows: [18]

*Dear Edward,*

#### *GROSS NEGLIGENCE OF DUTY*

*Following a fraud that occurred in Kampala branch "A" and thereafter investigations by both internal audit and external audit you are hereby informed that your employment with MCDT-SACCO has been terminated effective 02nd May 2018 for negligence ofduty and managing the Branch.*

*As Branch Manager you failed to supervise and monitor your branch effectively as illustrated in the following instances:*

*Despite repeated feedback from management about several instances when your branch was not performing well among others; a dropping loan portfolio by almost shs 200 million in a few months and you feigned ignorance, failure to work upon compliance reports issued to you, refusal to find time to sit at your desk to do managerial work and failure to adequately train new members of staff under your supervision.*

*You intentionally failed to close the session every evening thus giving room for one field officer, Fred Luutu to post in the system whenever he wanted including posting centres of the previous days! You kept on covering seemingly a few special staff members in your branch for example when the duo undertook a strike to stop mobilizing and training new members and when the Cashier (Fred Luutu) had a shortage ofShs. 313,500/-you suspiciously defended him and ended up giving differing statements with him about the matter.*

*As Branch Manager, you failed to monitorloan disbursements in yourbranch by refusing to reconcile physical*

*The above acts/omissions constitute gross negligence of duty on your side thereby warranting dismissal (HR manual 5.3.1 Misconduct)*

*Investigations in the matter will continue and you will be informed of our decision to institute criminal proceedings against you in the future...."*

[19] The Labour officer further found that, save for the minutes of an incomplete disciplinary meeting which was held on 28/04/2018, where it was stated that another meeting would be held to conclude, we found nothing on the record to indicate that such a conclusion was ever reached before making the decision to dismiss the Claimant. The letter of dismissal also indicated that at the time of the dismissal, investigations were still ongoing. The Supreme Court in *Stanbic Bank Uganda Limited v Deogratius Asiimwe CA No. 18 of 2018),* relied on *(Ridge v Baldwin* [1964] AC 40) where the appellant was dismissed of neglect of duty and it was stated thus:

> "... a *decision reached in violation of the principles of natural justice, especially the one relating to the right to be heard, is void and unlawful, that an officer cannot be dismissed without first telling him what is alleged against him and hearing his defense or explanation. It was stated that, even if the respondents had power to dismiss without complying with the regulations, they were bound to observe the principles of natural justice and give the appellant an opportunity of being heard. Thus, in this appeal, the fact that the respondent paid 3 months' salary in lieu of notice did not in any way atone the violation of the respondent's right to be heard in a situation where his dismissal was based on what the employer, the appellant called unsatisfactory performance..."*

[20] As already discussed the Labour Officer having found that the Respondent violated the principles of natural justice found in his favour and awarded him several remedies.

## **1. Would he be entitled to an award of General damages in the circumstances?**

[21] It is trite that general damages are the probable direct consequence of the wrong occasioned to a claimant by a Respondent. They include damages for pain, suffering inconvenience and loss. As stated in *Stanbic Bank (U) Limited v Okou CA No. 60/ 2020)* is to the effect that where an employee is unlawfully dismissed he or she is entitled to damages to be assessed based on the principle of *restituitio in integram.* However, the computation of general damages is at the discretion of the Court which must be exercised judiciously. The court of Appeal further stated that the Court is therefore expected to assess the natural or probable consequences of the wrongful act and payment in lieu of notice would not suffice if the employee did not consent to receive it. The Court went further to state the need to consider the employability of the Claimant when it stated thus:

> *"... where severance allowance was awarded the assessment ofgeneral damages should be based on the prospects of the respondent to get alternative employment....* IVas *he employable material in the circumstances?..."*

[22] The record indicates that at the time the Claimant rendered his testimony before the Labour Officer in November 2020, he was 42 years of age, therefore he was 40 years old when he was dismissed on 2/05/2018. He was dismissed without following due process as provided under section 65 of the EA. Although the Supreme Court in *Bank of Uganda v Betty Tinkamanyire* SCCA No. 12 of 2007, and *Barclays Bank v Godfrey Mubiru* SCCA No. <sup>1</sup> of 1998, were of the proposition that an employer can **terminate** the employee's employment for a reason and for no reason at all as long as it was in accordance with the terms of the contract, and that payment in lieu of notice was sufficient as compensation, in *Stanbic Bank v Kiyimba Mutale* SCCA No. 02 Of 2010 and *Stanbic Bank Uganda Limited* v *Deogratius Asiimwe* CA No. 18 of 2018), they are of the proposition that payment in lieu of notice is not sufficient compensation for an employee who was dismissed on grounds of misconduct, without being accorded a fair hearing.

In light of Kiyimba Mutale and Deogratius Asiimwe, it is clear that, whereas the employer's right to terminate for a reason or none cannot be fettered by the courts, where a reason has been assigned for the termination or dismissal and the employee is not notified about the reason and given an opportunity to defend him or herself, this amounts to wrongful and unlawful termination or dismissal for which payment in lieu of notice is insufficient as compensation. In *Stanbic Bank* v *Kiyimba Mutale* SCCA No. 02 Of 2010, where Katureebe (JSC) in agreement with Kitumba (JSC) stated that an employee would be entitled to substantial damages because of wrongful and unfair dismissal. His Lordship stated thus:

*"Having found that the Appellant was wrongfully terminated, the court should have proceeded to make an award of general damages which are always in the discretion of the court to determine. Indeed learned Justice cited Article 126(2) (c) which provides for the courts to ensure adequate compensation is awarded to victims of wrongs.* He emphasized however that when applying this principle,"... *the* courts must address itself to the principles of the law applicable and then within the law determine the measure of adequate compensation. It cannot be based on mere speculation...." He went further to state that in his view, adequate compensation would have been a payment in lieu of notice, a measure of general damages for wrongful dismissal, and payment for accrued pension. In the Circumstances, the Labour officer having found that the Claimant in the instant case was dismissed on grounds of misconduct without proof, and without being accorded a proper hearing.

[26] The record shows that the Claimant worked for the Respondent a Women's SACCO, as a Manager at one of the Respondent's Branches, for over 9 years. He was, responsible for managing members' money therefore as stated in *{Barclays Bank v Godfrey Mubiru(supra)),* that;"... *Managers in the banking business have to be particularly careful and exercise a duty of care more diligently than most businesses, this is because banks manage and control money belonging to other people and institutions perhaps in their thousands and therefore are in special fiduciary relationship with their customers whether actual or potential...,"* He was expected to exercise such diligence. The Respondent summarily dismissed him for failing to exercise due diligence and negligence, without any proof, moreover at the age of 40 years when he still had an opportunity to serve or to get alternative employment but for the unlawful summary dismissal.

[27] We strongly believe that the reasons stated in the letter of summary dismissal portrayed him as a person who misconducted himself, a negligent manager, and therefore as a non-performer thus ruined his reputation, was a great embarrassment and it greatly diminished his employability in an alternative financial institution. Considering the holding in *Stanbic bank v Kiyimba Mutale,* which emphasized that where an employee was wrongfully dismissed he or she was entitled to adequate compensation, therefore, he would be entitled to an award of substantial general damages.

- [28] However, the Labour officer already awarded the Claimant Severance pay amounting to Ugx.17,179,729/-, a compensatory order of <sup>1</sup> month's pay amounting to Ugx. 1,910,081/= and additional compensation of 3 months' pay amounting to Ugx, 5,730, 243/-, in the circumstances we find claim for Ugx. 150,000,000/- as general damages is excessive. We think that an award of **Ugx.35,000,000/-** is sufficient as general damages. It is so ordered. - [29] He also prayed for an award of Ugx. 200,000,000/- as aggravated damages. Aggravated damages are awarded as extra compensation for the injury a claimant has suffered to his feelings and dignity humiliation resulting from the actions of the Respondent. They include circumstances such as malice, ill will, and persistence in


falsehood exhibited by the Respondent to the detriment of the Claimant. (See Bank of Uganda v Betty Tinkamanyire, SCCA No. 12 of 2007).

[30] The evidence on the record indicated that the Claimant demonstrated to the labour officer that he was tainted in the person as a person who had failed to carry out his role as a manager because according to them, he had grossly misconducted himself, yet there was no proof of the commission of all the infractions against him. This, as already discussed greatly diminished his employability elsewhere and compromised his ability to seek alternative means of livelihood. In the circumstances, he deserves an award of aggravated damages. His claim for Ugx. 200,000,000/- is however excessive and untenable. In the circumstances, we think an award of **Ugx. 8,000,000/** is sufficient as aggravated damages.

# 2. Whether the Claimant is entitled to the legal costs and interest.

[31] It is the principle of this court that costs are granted in exceptional circumstances. This is because of the unequal contract between the employer and the employee. Whereas the employer is the holder of capital and therefore he or she can afford to incur the costs of litigation, the employee who has lost the means of earning is not in the position to do so. Therefore, to award costs against him or her would amount to condemning him to destitution. To ensure equality in justice the principle applies to the employer as well. In circumstances, no order as to costs is made.

## Orders of court:

- 1. The Respondent is ordered to pay **Ugx. 45,000,000/-** as General Damages. - 2. The Respondent is ordered to pay **Ugx. 8,000,000/-** as Aggravated Damages. - 3. An interest of 8% per annum shall accrue on <sup>1</sup> and 2. - 4. No orders as to costs is made.

Signed in Chambers at Kampala this **16th** day of **August** 2024.

Hon. Justice Linda Lillian Tumusiime Mugisha, **Ag. Head Judge**

## **The Panelists Agree:**

- **1.** Hon. Harriet Mugambwa - 2. Hon. Frankie Xavier Mubuuke & **o** - **3.** Hon. Ebyau Fidei

**16th August 2024 9:30 am**