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08 Aug 2022
BY Phillip Karugaba AND Emmanuel Ankunda

More confusion and inconsistency on whether employers must give reasons for terminating a contract of employment

Whether an employer must give reasons for terminating a contract of employment in Uganda remains uncertain. In its recent decision in Adam Kafumbe Mukasa v Uganda Breweries Limited, the Court of Appeal of Uganda ruled that an employer is required to give reasons.

This decision is in contrast with an earlier one of the same court in Bank of Uganda v Kibuuka Musoke, on which we commented that an employer is not required to give reasons. Prior to the Mukasa decision, the Industrial Court also passed an award where it refused to follow the Kibuuka Musoke decision even though that decision was passed by a superior court. We also commented on this decision.

So, should employers give reasons to terminate an employment contract or not?

In this case, Uganda Breweries Limited was sued for a declaration that the termination of the appellants’ contracts of employment was unfair and unlawful.

The Appellants had been declared redundant and laid off. Uganda Breweries Limited’s human resource manual provided that an employee would be made redundant if their job is declared superfluous by abolition of office or responsibility.

The court held that to abolish means “to do away wholly with, to dispense with or abrogate”. In the circumstances of the case, the court found that the Appellants’ jobs were not abolished as they were advertised shortly after, implying that the positions still existed.

The court found that the reason used to justify the termination was a “cover up”. According to the court,  the law requires an employer to prove the reason for termination and that if it fails to give reasons, the termination is deemed unfair and unlawful.

The inconsistency on the reasons question

The court did not mention the Kibuuka Musoke decision at all in its judgment, leaving employers and practitioners to wonder whether the presiding panel had considered the court’s that earlier decision at all. Given its position as the last appellate court in labour disputes, the Court of Appeal should have clarified whether this was its new position on the subject.

In the Ugandan common law system, courts are required to promote the evenhanded, predictable and consistent development of legal principles, fostering reliance on previous judicial decisions. This entails consistency in decision-making where there are similar cases with a similar set of facts and issues as highlighted in the case of Remo Richard -v- Midia Subcounty Local Government.

It is not clear what the overall effect of the Mukasa decision is. Has the court reversed its position in the Kibuuka Musoke decision? An inconsistent approach to decision-making may encourage litigation malpractice such as practitioners choosing courts that are most likely to support their motion.

It is also apparent that the confusion stems from the Employment Act 2006 (“Act”) which defines termination and dismissal differently but uses the terms interchangeably (see Okello Jane -v- Entebbe Handling Services Limited).

The interchangeable use of the words “dismissal” and “termination” in the Act suggests that the procedures applicable to the two modes of ending an employment contract are the same, although they are not.

In our previous commentary, we explained that the distinction between dismissal and termination is that the former relates to misconduct while the latter relates to discharge of an employee for reasons other than misconduct.

In the Mukasa decision, the appellants were terminated on the basis of restructuring. The termination did not arise from any misconduct on their part. However, in its decision, the court stated that “the law requires the employer to prove the reasons for dismissal” clearly showing that the court did not look into the distinction between dismissal and termination.

In 2019, the Employment Bill was tabled to amend the Act. However, in its present form, the Bill does not seek to rectify anomalies such as the confusion caused by the interchangeable use of  “dismissal” and “termination”.

There is a clear and obvious need for the Court of Appeal to resolve the ensuing confusion on whether employers are required to give reasons before terminating an employee’s contract of employment. Since the role of the courts is to apply the law passed by parliament, it is parliament’s responsibility to amend the Employment Act to introduce a clear distinction between termination and dismissal. Such an amendment would make it easier for courts to have a consistent approach when dealing with similar matters.

 

Phillip Karugaba

ENSafrica Advocates | Uganda | Partner

pkarugaba@ensafrica.com

 

Emmanuel Ankunda

ENSafrica Advocates | Uganda | Associate

eankunda@ensafrica.com