EMPLOYMENT LAW

OBJECTIVES

By the end of this Unit, you should be able to:

a) Define the contract of employment

b) Identify the duties of the employee
c) Identify the laws applicable to the employment relationship
d) Define the obligations of the Employer
e) Identify the modes of termination of the employment contract
f) Explain the remedies available to the Employee in case of unfair terminations

PART 1: THE EMPLOYMENT CONTRACT

A contract of service or contract of employment is defined under S. 2 of the Employment Act as:
“Any contract, whether oral or in writing, whether express or implied, where a person agrees in
return for remuneration, to work for an employer and includes a contract of apprenticeship.”

The term employee is also defined under S. 2 of the Employment Act as:
“Any person who has entered into a contract of service or an apprenticeship contract, including,
without limitation, any person who is employed by or for the Government of Uganda, including
the Uganda Public Service, a local authority or a parastatal organization but excludes a
member of the Uganda Peoples’ Defence Forces.”
On the other hand, employer means,
“Any person or group of persons, including a company or corporation, a public, regional or
local authority, a governing body of an unincorporated association, a partnership, parastatal
organization or other institution or organization whatsoever, for whom an employee works or
has worked, or normally worked or sought to work, under a contract of service, and includes the

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heirs, successors, assignees and, transferors of any person or group of persons for whom an
employee works, has worked, or normally works.”

Formation of a contract of employment:

According to Section 25 of the Employment Act, a contract of service other than a contract
which is required by the Employment Act or any other Act to be in writing may be made orally.
Except where expressly provided for under the Employment Act, the Act shall apply equally to
oral and written contracts.

Section 4 of the Employment Act provides that any provision in an agreement or a contract of
service shall be void where such provision or term of the contract:
(i) Excludes or limits the operation of any provision of this Act to the detriment of the
employee;
(ii) Precludes any person from presenting a complaint under this Act to a labour officer;
(iii) Precludes initiating or enforcing any proceedings under the Act; or
(iv) Precludes the giving of evidence in connection with any employment complaints or
proceedings

It therefore follows that the terms of an employment contract should not be inconsistent with the
provisions of the Employment Act or preclude an aggrieved party from seeking redress in an
employment matter.

The terms, modification of terms, rights, obligations and termination of an employment

relationship are governed by the employment contract.

The test for determining whether or not an individual is an employee:

The purpose of employment law is to regulate the relationship between the employer and
employee. It is however important to establish whether there is an employment
relationship/contract (contract of service) or a contract for services (independent contractor).
This is because this determines issues such as:

a) The concept of vicarious liability:

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This is where the responsibility of the act of one person rests or falls on another person. The aim
of the law under vicarious liability is that where an employee commits a tort in the course of his
employment, the employer and employee are liable. The employer is vicariously liable for the
acts of the employee provided such acts or omissions are committed in the course of the
employee’s employment.

Vicarious liability of an employer exists (an employer is vicariously liable for the acts of an
employee done in the course of employment, whether the acts are wanton, accidental or
negligent- (Muwonge v. Attorney General).

b) Determines whether or not a person is entitled to statutory obligations or benefits in respect to

employment contracts.

Statutory obligations attach to an employer under a contract of employment such as requirements

regarding worker’s compensation, occupational health and safety, income tax and social
contributions like NSSF, benefits such as leave, among other.

The question of whether or not one is an employee (contract of service) or an independent

contractor (contract for services) is a question of fact and the courts have overtime developed
different tests for this determination: There is no single test that is decisive. It is a question of
mixed fact and law, depending on the circumstances of each case.

a) Control test: This is the traditional test. Using this test, an employee is any person subject to
the powers of the employer i.e. whether the employer determines when and how something
will be done e.g. whether the employer has the power to dismiss, discipline or determines the
method of work, provides the tools of works etc. One can discern the aspect of control from
the contract. It doesn’t matter how the power is exercised or if it is not exercised, it does not
matter provided the control exists from the terms of the contract. See: Mersey Docks &
Harbour Board v Coggins and Griffith (Liverpool) Ltd (1946) 2 All ER 345. Where the
person is subject to the powers of the employer, such person would be considered an
employee. On the other hand, if one is not subject to the employer’s powers, it would be an
independent contractor/ contract for services.

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b) Integration test/Economic reality test: Integration test or economic reality test determines the
aspect of whether the person is employed as part of the business or an accessory (business
would collapse without the person) to the business. In Re Sunday Tribune (1984) case- A case
of a journalist writing for a newspaper on a daily basis (as part of the business/integral) vs.
one employed to write an irregular column (not an integral part.)

c) Parties own characterization: Courts can characterize a contract by what the parties
characterize the contract to be or re-characterize the contract based on the conduct of the
parties to the relationship e.g. from an employment contract to an independent contractor.
However, where there is any ambiguity, the courts will characterize the contract according to
what the parties consider it to be.

d) Entrepreneurial test: This test is very closely related to the control test. Under this test, courts
will consider whether the person is engaging him or herself in performing the work e.g.
whether the person provides his or her own tools of trade, decides his or her methods of work
etc. (whether from the contract, there is a sufficient amount of control i.e. Whether the
workman is exercising discretion or simply obeying or discharging orders of the employer i.e.
If the employer determine only what needs to be done and not how it needs to be done, such a
person is deemed an independent contractor under a contract for services).

e) Multiple test: Courts may consider all the above tests to determine whether or not the
relationship is a contract of service of/for services.

Employer and employee’s duties and obligations under a contract of employment

The duties of master and servant (employer and employee) arise both under the contract and out
of the relationship from which that contract arises (employment relationship). The duties may be
implied from the nature of the relationship or by statute.

The Implied Duties of the Employee

(i) The duty of obedience

The fundamental duty of the employee is to carry out his duties in obedience to the reasonable
and lawful orders of his or her employer. Breach of this duty by an employee, usually, attracts
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the penalty of summary dismissal. E.g. an employee of a Bank can be dismissed summarily for
disregarding the Bank’s express instruction on loans and advances.

The orders which an employee is contractually bound to obey must be lawful and reasonable. It
is neither lawful to order a high ranking employee to do some manual job which is outside his
contractual job description or content, nor, reasonable to order an employee to remain in an area
though within his contractual service area, where his life or health is exposed to grave danger.
(See: Ottoman Bank V. Chakarian (1930) A.C. 277)- e.g. refusal by an employee to transfer to
an unsafe location.

Generally, an isolated act of disobedience may not automatically justify a dismissal unless the
act of disobedience amounts to a repudiation of the fundamental condition of the contract or the
nature of the act is of sufficient magnitude/ grave or serious misconduct. Furthermore, for a
single act of disobedience to justify a summary dismissal, it must be willful as was
held in Laws v London Chronicle Ltd (1959)2 ALL ER 386.

(ii) The duty to cooperate

This duty requires an employee to discharge his contractual duties in a manner that promotes the
objects of his or her employment. While this duty does not impose a positive obligation on an
employee to do more for his employer than his contract requires, it does, however, demand that
an employee should execute his contractual obligations so as not to willfully obstruct the
business of his employer. To act conversely will amount to a breach of contract. (See: Secretary
of State for Employment v ASLEF (No. 2) (1972) 2 All ER 949)

(iii) The duty of care

It has been recognized at common law that an employee owes his or her employer a contractual
duty to exercise reasonable care in the performance of his or her contractual obligations. Thus,
where an employee's negligence, in the course of his employment, has resulted in damage to
third party and his employer has been made vicariously liable for the resultant damage, the
employer, can recover the damages which he has so far paid from the employee, on account of
the employer's breach of his contractual duty of care. (See: Lister V. Romford Ice and Storage
Co Ltd (1957) A. C. 535)

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(iv) The duty of fidelity

While it is indisputable that a servant owes his or her employer an implied duty of fidelity or of
faithful service, the practical difficulty lies in giving a precise definition of this unclear duty.
Each case must be considered on its facts. However, it is unquestionable that this duty requires
an employee not to use the position which he holds by virtue of his employment, or the
knowledge which has come to him by virtue of that position, in such a way that his or her
personal
interests conflict with his duty to his or her employee. It is also an aspect in this duty that an
employee should not knowingly, deliberately and secretly set himself to do in his spare-time,
something which would inflict great harm on his employer's business. This duty is divided into
the following:
(i) Good faith or honesty
(ii) Appropriate use of spare time
(iii) Ex-Employees and duties imposed e.g. covenants in restraint of trade
(iv) Inventions in the course of employment etc.
(v) Duty not to misuse the employer's confidential information

An employer's confidential information is regarded as part of his or her property which, like any
other type of property is entitled to protection. It is for this reason that employers often insert a
clause in the contract of employment against disclosure of sensitive and confidential information.
In practice, such sensitive information often' includes marketing plans and business strategies,
financial plans, industrial relation strategy or production formulae. (See Eseza Catherine Byakika
V. NSSF (CA No. 93 of 2017)

Covenants in Restraint of Trade:

The contract of employment may contain a term which stipulates that an employee, on the
cessation of his or her present employment, will not set up on his own, or be employed by other
employers, in the same line of business as that of his or her employer. At common law, all
covenants in restraint of trade are prima facie unenforceable. They are enforceable only if they
are reasonable with reference to the interest of the parties concerned and the public. However, it
has been held that an employer who seeks to enforce a restrictive covenant must show:

(i) That he has some proprietary interest deserving of protection.

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(ii) That there is danger or mischief from which he seeks to protect that interest.
(iii) That the restrictive covenants he has put in place to safeguard that interest is reasonable.
i.e. reasonable with respect to the time and geographical area to which it is limited. See:
Koumolis V. Leventis Motors Ltd (1973) 8 N.S.C.C. 557.

The Implied Duties of the Employer

i. Duty to pay wages

It is generally accepted that the most significant consideration which an employer may give to an
employee in return for work performed or services rendered to the employer is the employee's
monetary remuneration in terms of salary or wages in legal tender such as cheques, cash or
postal orders. It will amount to a repudiating breach of contract, giving rise to an action for
damages or debt, for an employer to refuse of fail to pay agreed remuneration. See generally the
Employment Act, 2006. See also: the Nigerian case of Nigerian Airways Ltd V. Gbajumo (1992)
5 NWLR

However, the employer's obligation to pay remuneration may cease under the following
circumstances:

(i) Sickness –S. 55 of the Employment Act;

(ii) Lay off
(iii) Suspension
(iv)Industrial action – Ref to the Labour Disputes (Arbitration & Settlement) Act, 2006

ii. Duty to provide work

It is the employer’s duty to provide work. The contract of employment does not normally oblige
an employer to provide his or her employee with work to do, provided he or she pays him or
their wages or salary as and when due. Ref to the Employment Act, 2006 and the Labour
Disputes (Arbitration & Settlement) Act, 2006

iii. Duty to treat with respect

The employer's obligation to treat his employees with respect is the correlative of the employee's
obligation of co-operation, and obedience. This implied duty requires the employer to treat his or
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her employees with such consideration as would facilitate, and not obstruct or impede the
employee's performance of his contractual duties.

iv. Duty to provide adequate plant appliances and premises

The employer owes the employee the duty to provide adequate plant appliances equipment and
premises.

v. Duty to provide a safe system of work

The duty imposes on the employer an obligation to operate in a safe manner. It deals with
supervision and safety precautions which the employer uses in his or her operations. Ref: The
Occupational safety & Health Act, 2006; the employer is bound to provide and maintain safe
sanitary system for the servant, provided such facilities and arrangements comply with such
regulations as-may be specified by the minister in respect of labour health areas.

PART 2: EMPLOYMENT LAWS

The laws governing the employment relationship are numerous:

A. International Law:
International labour law includes international legal norms which regulate issues concerning
employment. It covers both the substantive rules of law established at the international level and
the procedural rules relating to their adoption and implementation at the national level.
Treaties adopted outside the ILO framework and certain rules of customary international
law also form part of international labour law. A number of United Nations Human
Rights Conventions create international labour law. UN Human Rights Declarations, Covenants
and Conventions that form part of international labour law include:
a) The Universal Declaration of Human Rights, 1948:
 Art 22: Right to social security.
 Article 23: Right to work, to equal and fair remuneration and the right to form and join trade
unions.
 Article 24:

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  Right to work, to free choice of employment, to just and favourable conditions of
work and to protection against unemployment.
 Freedom from discrimination and the right to equal pay for equal work.
 Right to just and favourable remuneration.
 Right to form and to join trade unions.

 Article 25: Right to rest and leisure, including reasonable limitation of working hours and
periodic holidays with pay.
 Article 26: Protection of motherhood and childhood.

b) The International Convention on the Elimination of All Forms of Racial Discrimination,

1965
 Article 2: Condemns racial discrimination in all forms.

c) The International Covenant on Civil and Political Rights, 1966

 Article 8: Freedom from slavery and servitude or compulsory labour.
 Article 22: Right to freedom of association with others, including the right to form and join
trade unions for the protection of his interests.

d) The International Covenant on Economic, Social and Cultural Rights, 1966:

 Article 3: Equal right of men and women to the enjoyment of all economic, social and cultural
rights.
 Article 6: Right to work, which includes the right of everyone to the opportunity to gain his
living by work which he freely chooses or accepts.
 Article 7: Right of everyone to the enjoyment of just and favourable conditions of work:

 Remuneration for all workers with fair wages and equal remuneration for work of equal
value without distinction of any kind
 Women being guaranteed conditions of work not inferior to those enjoyed by men
 Equal pay for equal work
 Safe and healthy working conditions
 Equal opportunity for everyone to be promoted in his employment to an appropriate higher
level

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  Rest, leisure and reasonable limitation of working hours and periodic holidays with pay, as
well as remuneration for public holidays.

 Article 8: Right to form trade unions and join the trade unions and the right to strike.
 Article 9: Right to social security, including social insurance.

e) The Convention on the Elimination of All Forms of Discrimination Against Women,

1979:
 Article 2: Protection of women from discrimination against in all forms and promote equality
of men and women.
 Article 4: Special measures aimed at accelerating de facto equality between men and women
(affirmative action) shall be promoted and protecting maternity.
 Article 5: Modification of the social and cultural patterns of conduct of men and women, to
achieve elimination of prejudices and customary and all other practices based on the idea of
the inferiority or the superiority of either of the sexes or on stereotyped roles for men and
women.
 Article 11: Elimination of discrimination against women in the field of employment to ensure,
on a basis of equality of men and women:
 In particular the right to work and the right to the same employment opportunities,
including the application of the same criteria for selection in matters of employment, the
right to free choice of profession and employment, the right to promotion, job security and
all benefits and conditions of service and the right to receive vocational training and
retraining, including apprenticeships, advanced vocational training and recurrent training,
the right to equal remuneration, including benefits, and to equal treatment in respect of
work of equal value, as well as equality of treatment in the evaluation of the quality of
work, the right to social security, particularly in cases of retirement, unemployment,
sickness, invalidity and old age and other incapacity to work, as well as the right to paid
leave, the right to protection of health and to safety in working conditions.
 Safeguarding the function of reproduction, prohibit, subject to the imposition of sanctions,
dismissal on the grounds of pregnancy or of maternity leave and discrimination in
dismissals on the basis of marital status, maternity leave with pay or with comparable
social benefits without loss of former employment, seniority or social allowances,
encourage the provision of the necessary supporting social services to enable parents to

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 combine family obligations with work responsibilities and participation in public life, in
particular through promoting the establishment and development of a network of child-care
facilities
 Special protection to women during pregnancy in types of work proved to be harmful to
them.
 Article 15: Accord women equality with men before the law, women, in civil matters, a legal
capacity identical to that of men and the same opportunities to exercise that capacity.
f) The Convention on the Rights of the Child, 1989:
 Article 1: A child means every human being below the age of eighteen years unless under the
law applicable to the child, majority is attained earlier.
 Article 32: Right of the child to be protected from economic exploitation and from performing
any work that is likely to be hazardous or to interfere with the child's education, or to be
harmful to the child's health or physical, mental, spiritual, moral or social development.
 Requirement for states to provide for a minimum age for admission to employment and for
appropriate regulation of the hours and conditions of employment.

g) The International Convention on the Protection of the Rights of All Migrant Workers and
Members of their Families 2003:
 Article 7: Nondiscrimination of all migrant workers and members of their families.
 Article 11. No migrant worker or member of his or her family shall be held in slavery or
servitude or required to perform forced or compulsory labour.

ILO Conventions: A number of ILO Conventions set out in more detail what the right entails,
what the protection is, who is entitled to the social security and under what circumstances as well
as the level of minimum benefits. The relevant ILO Conventions include:
 ILO 24 and ILO 25 concerning Sickness Insurance (1927 and 1933)
 ILO 37 and ILO 38 concerning Invalidity Insurance (1933)
 ILO 39 and ILO 40 concerning Compulsory Widow’s and Orphan’s Benefits (1933)
 ILO 42 concerning Workmen’s Compensation for Occupational Diseases (revised, 1934)
 ILO 102 concerning Minimum Standards of Social Security (1952)
 ILO 118 concerning Equality of Treatment of Nationals and Non-Nationals in Social Security
(1962)
 ILO 121 concerning Benefits in the Case of Employment Injury (1964)
 ILO 128 concerning Invalidity, Old-Age and Survivors’ Benefits (1967)
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 ILO 130 concerning Medical Care and Sickness Benefits (1969)
 ILO 157 concerning Maintenance of Social Security Rights (1982)
 The Employment Promotion and Protection Against Unemployment Convention (No.168)
(1988).

B. Domestic Law:

Uganda has enacted legislation to regulate employment relations and has also to domesticate
several international conventions it has ratified. The following regulatory framework applies to
employment relations in Uganda:

a) The 1995 Constitution of the Republic of Uganda: Is the supreme law of Uganda and all
laws made must conform to the constitution. The relevant provisions in the context of
labour or employment law include:

 Art 21: Equality and freedom from discrimination before and under the law and in all spheres
of political, economic, social and cultural life.
 Art. 24: Respect for human dignity and protection from inhuman treatment, torture or cruel,
inhuman or degrading treatment or punishment. This includes, sexual harassment, slavery
among other practices which may be relevant to the workplace.
 Art. 25: Protection from slavery, servitude and forced labour
 Art. 28: Right to a fair hearing in the determination of civil rights and obligations or any
criminal charge by any court or tribunal.
 Art. 29: Freedom of conscience, expression, movement, religion, assembly and association,
freedom to assemble and to demonstrate together with others peacefully and unarmed and to
petition e.g. to strike form and join associations or unions.
 Art. 32: Affirmative action in favour of marginalised groups on the basis of gender, age,
disability or any other reason created by history, tradition or custom, for the purpose of
redressing imbalances which exist against them.

Establishment of the Equal Opportunities Commission to address issues of discrimination.

 Art. 33: Women shall be accorded full and equal dignity of the person with men.

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  The State shall provide the facilities and opportunities necessary to enhance the welfare of
women to enable them to realise their full potential and advancement.
 The State shall protect women and their rights, taking into account their unique status and
natural maternal functions in society.
 Women shall have the right to equal treatment with men and that right shall include equal
opportunities in political, economic and social activities.
 Women shall have the right to affirmative action for the purpose of redressing the
imbalances created by history, tradition or custom.

 Art. 34: Children are entitled to be protected from social or economic exploitation and shall
not be employed in or required to perform work that is likely to be hazardous or to interfere
with their education or to be harmful to their health or physical, mental, spiritual, moral or
social development. For this purpose, children shall be persons under the age of sixteen years.
 Art. 35: Persons with disabilities have a right to respect and human dignity, and the State and
society shall take appropriate measures to ensure that they realise their full mental and
physical potential.
 Art. 40: Economic rights e.g. the right of persons to work under satisfactory, safe and healthy
conditions, to ensure equal payment for equal work without discrimination, and to ensure that
every worker is accorded rest and reasonable working hours and periods of holidays with pay,
as well as remuneration for public holidays.

 Right to practise a profession and to carry on any lawful occupation, trade or business.
 Right to form or join a trade union, to collective bargaining and representation and to
withdraw labour according to law.
 Employer of women workers to accord them protection during pregnancy and after birth.

 Art. 41: Right of access to information in the possession of the State or any other organ or
agency of the State except where the release of the information is likely to prejudice the
security or sovereignty of the State or interfere with the right to the privacy of any other
person.
 Art. 42: Right to just and fair treatment in administrative decisions for any person appearing
before any administrative official or body, a right to be treated justly and fairly and to apply to
a court of law in respect of any administrative decision taken against him or her.

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 Art. 44: Prohibition of derogation of the freedom from torture and cruel, inhuman or
degrading treatment or punishment, slavery or servitude and the right to fair hearing.
 Chapter 10 of the Constitution also provides for the public service, the creation of the public
service, the appointment and removal of public servants from office, the different service
commissions involved in the appointment, removal and discipline of public servants among
others.

In accordance with the Constitution, Parliament has enacted several laws to provide the legal
framework for employment law and these include:

a) The Employment Act, No. 6 of 2006: which applies to all employees employed by an
employer under a contract of service, except employers and their dependent relatives
when dependent relatives employed in a family undertaking as long as the total number
of dependent relatives does not exceed five and the Uganda Peoples’ Defence Forces,
other than their civilian employees.

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 The Act applies to employment within Uganda.
 Any provision in an agreement or a contract of service that excludes or limits the operation of
any provision of the Employment Act to the detriment of the employee is void.
 The Employment Act provides for the rights of persons employed under a contract of service, the
obligations of the employer towards the employee, terms of a contract of employment, termination and
disciplinary action among other aspects that may be central to the relationship or contract between the
employer and employee as follows:
 S. 6: Discrimination in employment.
 S. 7: Sexual harassment in employment
 S. 25: Oral and written contracts
 S. 29: Death of employer.
 S. 30: Insolvency of employer
 S. 31. Inability to pay wages
 S. 32. Employment of children
 S. 33. Medical examination.
 S. 39. Repatriation.
 Part 5: Wages and payment of wages
 Part 6: Rights and duties of the parties under an employment contract including: S. 51: Weekly
rest, S. 53: Length of working hours per week, S. 54: Annual leave and public holidays, S. 55:
Sick pay, S. 56: Maternity leave, S. 57: Paternity leave, S. 58: Notice periods, S. 61: Certificate of
service.
 Part 7 and 1st Schedule to the Act: Discipline and Termination including: S. 62: Disciplinary
penalties, S. 63: Suspension, S. 64: complaints by employees, S. 65: Termination, S. 66:
Notification and hearing before termination, S. 67: Probationary contracts, S. 68: Proof of reason
for termination, S. 69: Summary dismissal, S. 70: complaint to labour officer in case of summary
dismissal, S. 71,
 S. 83& 84: continuous service.
 Part IX: Severance allowance
a) The Labour Unions Act No. 7 of 2006 for regulation, establishment, registration and management
of labour unions.

 S. 3: Right of employees to organize in any labour union, assist in the running of the labour
union, bargain collectively and withdraw their labour or take industrial action.

 S. 4, 5 and 6: Employer not to interfere with right of association.

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 b) The Labour Disputes (Arbitrations and Settlement) Act No. 8 of 2006 which provides for
the resolution and settlement of Labour disputes (industrial actions).

 A labour dispute is any dispute or difference between an employer or employers and

an employee or employees, or a dispute between employees; or between labour unions,
connected with employment or non-employment, terms of employment, the conditions of
labour of any person or of the economic and social interests of a worker or workers. Part II of
the Act provides for dispute resolution and settlement:

 S. 3: Labour disputes may be referred to Labour Officer in writing.

 S. 4: Labour Officer shall to react to report of labour dispute within two weeks.
 S. 5: Labour Officer may refer dispute to the Industrial Court if, four weeks after receipt of
a labour dispute, the dispute has not been resolved or a conciliator appointed considers that
there is no likelihood of reaching any agreement.
 S. 7: establishes the Industrial Court.
 S. 16: An award or a decision of the Industrial Court shall be enforceable in the same way as a
decision in a civil matter in the High Court.

c) The Occupational and Safety and Health Act, No. 9 of 2006 provides for working conditions
at the work place with specific regard to occupational safety and health.

 The Act spells out the general duties, obligations and responsibilities of the employer. These
include the duty of employers to protect workers, to provide for safety and health measures of
employers and to provide safe premises provided for under S. 13, 14 and 26 of the Act and
detailed in various provisions under the Act.
 The Act provides for the establishment of Safety representatives at the Workplace (S. 15),
Safety committees (S. 17) and the requirement of the employer to consult with workers’
organisations in respect of health and safety issues. (S.18).

d) The Workers’ Compensation Act which regulates to compensation for workers injured in the
workplace and to or from work.

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 S. 3: Compensation to workers for injuries suffered and scheduled diseases incurred in the
course of their employment. The injured worker’s employer shall be liable to pay
compensation.

 S. 18: Every employer to take out insurance in respect to worker’s compensation.

e) The National Social Security Fund Act: Provide for the establishment of a National Social
Security Fund, the payment of contributions to and the payment of benefits out of the fund.
The Fund is applicable to persons that are not eligible to pension.

 S. 6 provides for the criteria for eligibility of employees to the fund (of or above the age of
sixteen and below the age of fifty-five years and not employed in excepted employment, not a
nonresident employee.

 S. 11 of the Act provides for the payment of standard contribution by employers. Employers
are obliged to deduct 5% of an employee’s salary and make a 10% contribution towards the
Employee’s savings with NSSF.

f) The Pensions Act: provides for the grant and regulating of pensions, gratuities and other
allowances in respect of the public service of officers under the Government of Uganda.

g) The Local Governments Act: Provides for the structure of local government employees, the
District Service Commissions and the roles of the District Service Commissions which
include appointment and disappointment of staff, disciplinary action and pension of civil
servants.

h) Public Service Act, No. 9 of 2008: Give effect to the Government’s Public Service Reform
Programme and does not apply to persons employed by the Government in an honorary
capacity or persons remunerated by fees, allowances or commission. The Act provides for the
obligations, rights and privileges of public officers to the Government.

 S. 13 of the Act provides for protection of public officers from victimization or

discrimination, dismissal or removal from office or reduction in rank or other punishment
without just cause.
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 Performance evaluation and disciplining of public officers. Evaluation of performance of
public officers shall be based on such objective, open and interactive performance appraisal
system as may be prescribed. Public officers shall be disciplined and removed from the public
service only in accordance with laid down regulations and procedures. A public officer
aggrieved by any administrative or other decision taken against him or her shall have a right
to appeal to the relevant authority, including a court of law. The service commissions shall put
in place a tribunal to handle appeals from public officers. Appeals shall be disposed of in a
period not exceeding 90 days.

 S. 15: Rights and privileges of public officers shall be in accordance with the applicable law,
including relevant statutory instruments, regulations and administrative instructions issued
from time to time.

 S. 16: Participation in labour union activities by public officers in accordance with the
provisions of the Constitution and the applicable legislation providing for public service
negotiating and disputes settlement.

h) The Public Service (Negotiating, Consultative and Disputes Settlement Machinery) Act,
2008: Provides for the establishment of a public service negotiating, consultative and disputes
settlement machinery, the creation of consultative committees to offer conciliation services in
labour disputes, the National Negotiating and Consultative Council to facilitate consultations,
dialogue and negotiations between the Government as employer and public service labour
unions and the Public Service Tribunal to arbitrate labour disputes and secure harmonious
labour relations in the public service.

i) The Public Standing Orders provide for the roles, obligations and conduct of a public officer,
disciplinary action against a public officer among others.

j) Whistle Blowers Protection Act, 2010: Provides for the procedures by which individuals in
both the private and public sector may in the public interest disclose information that relates
to irregular, illegal or corrupt practices; to provide for the protection against victimisation of
persons who make disclosures. There are also various regulations made under the above
highlighted laws.

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Human Resource Policies: Organisations have the obligation of developing human resource
policies that complies with the labour requirements. They should however be incorporated by
reference into the contracts of Employment.

Employment contracts: Form the basis for the terms and conditions of engagement between the
employer and employee.

Class Discussion:
1. With reference to the Employment Act, discuss the following:
(a)The definition of Employee & Employer
(b)Application of the Employment Act and administration of the Act
(c)The rights of the Employee under a contract of employment
(d)The obligations of the Employer under the Act
(e)Protections given under the Employment Act to employees e.g. provisions relating to HIV,
sexual harassment etc.
(f) Disciplinary proceedings
(g)Concept of termination of employment
(h)Distinguish between termination and dismissal from employment

2. With reference to the Labour Unions Act, 2006 discuss the following:
(a)The principles relating to the right to organize under the Act
(b)The legal requirements for registration of a Trade Union
(c)The rights and responsibilities of Labour Unions
(d)The offences provided for under the Act

3. Discuss:
(a)The Institutional framework for resolution of employment disputes
(b)Regulation of industrial action

4. Discuss the obligations of the Employer/Employer in respect to social security

5. Discuss the relevant provisions of the Act and the role of the Equal Opportunities
Commission in employment matters.

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 PART 3: TERMINATION OF EMPLOYMENT

Termination of employment means bringing to and end the employment relationship between
employee and employer. Since a contract of employment is like any other commercial contract, it
may come to an end.

According to S.65 of the Employment Act, termination of a contract of employment is deemed to

take place:
 where the contract of service is ended by the employer or employee with notice;
 where the contract of service, being a contract for 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 a period of one week from the date of expiry on the same terms or terms not less
favourable to the employee;
 where the contract of service is ended by the employer with or without notice, as a
consequence of unreasonable conduct on the part of the employee towards the employer;
and
 where the contract of service is ended by the employee, in circumstances where the
employee is discharged from an employment for justifiable reasons other than
misconduct, such as, expiry of contract, attainment of retirement age etc.

Distinction between termination and dismissal

Dismissal from employment is defined under S. 2 of the Employment Act to mean discharge of
an employee from employment at the initiative of his or her employer when the said employee
has committed verifiable misconduct.

The Employment Act in some provision uses the words termination and dismissal
interchangeably especially in provisions referring to dismissal under the Act. Nonetheless, the
Court in Uganda has distinguished the terms. In Bank of Uganda Vs Joseph Kibuuka & 4
Others (CACA No. 281 of 2016) Court has held that “termination” is distinct from “dismissal”
because there is no requirement for a reason to be given by an employer for termination of
services of an employee provided that the requisite notice is given or payment in lieu of notice
made. (See Barclays Bank vs Godfrey Mubiru (SCCA No. 1 of 1998), Stanbic Bank vs
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Kiyemba Mutale (SCCA No. 2 of 2010) and Hilda Musinguzi vs Stanbic Bank (U) Ltd (SCCA
No. 5 of 2016).
Termination in this context would therefore be exercised or used to refer to instances where the
contract is ended with notice as required under the law and the contract and for other reasons
other than misconduct which warrant dismissal and therefore reason to give reasons for
termination including summary dismissal (provided the employer has not given notice of
termination or has given less notice than is required). It therefore follows that in the case of
termination the employer need not give reasons but ought to give notice or payment in lieu of
notice.

On the other hand, dismissal is reserved for instances where the employee’s contract is ended for
reason of verifiable misconduct.

In Birch and Humper vs the University of Liverpool (1985) EWCA Civ 8, court held, that an
employee cannot be said to be dismissed by the employer if the contract of employment has been
terminated by consensus or mutual agreement of both parties, the employer and employee
jointly.

Modes of termination of employment contract

Dismissal: S.2 of the Employment Act defines dismissal as the discharge of an employee from
employment at the initiative of his or her employer when the said employee has committed
verifiable misconduct.

In Florence Mufumba Vs Uganda Development Bank court held that in dismissing an

employee, the employer must establish that there is verifiable misconduct on the part of the
employee. Verifiable misconduct includes but is not limited to abuse of office, negligence,
insubordination, and all those circumstances that impute fault on the part of the employee which
include incompetence. (however note that this decision is no longer good law in as far as the
decision states that an employer must give reasons in case of termination)
NB; Dismissal must be in accordance with the law and the contract of employment. Ref to the
procedure under the Employment Act S.66 and First Schedule to the Act.

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In Barclays Bank of Uganda Vs Godfrey Mubiru (SCCA No.1 of1998), court stated that where
a contract is governed by written agreement between the employer and employee, termination
will depend both on the terms of the agreement and the law applicable.

Summary Dismissal

Dismissal requires notice, however where there is no notice, it is referred to as summary

dismissal. S. 65(1)(c) of the Employment Act provides that an employment may be terminated
where the contract of service is ended by the employer with or without notice, as a consequence
of unreasonable conduct on the part of the employee towards the employer;

S. 69 and 70 of the Employment Act provides for summary dismissal.

S.69 of the Act provides that summary termination shall take place when an employer terminates
the service of an employee without notice or with less notice than that to which the employee is
entitled by any statutory provision or contractual term. An employer is entitled to dismiss
summarily and the dismissal shall be termed justified, where the employee has, by his or her
conduct indicated that he or she has fundamentally broken his or her obligations arising under
the contract of service.

In the case of Bank of Uganda Vs Betty Tinkamanyire, (SCCA No. 12 of 2007) and S. 69 of the
Employment Act 2006, an employer is entitled to dismiss summarily, and the dismissal shall be
termed justified, where the employee has by his or her conduct indicated that he or she has
fundamentally broken his or her obligations arising under the contract of service.

Barclays Bank v Godfrey Mubiru, in this case, the respondent had been employed by the
appellant from 1969 until 1990 when he was summarily dismissed after several warnings against
him for breach of duty, negligence and gross incompetence. He was in the habit of lending more
money to borrowers in excess of his powers, to the detriment of the bank. He sued for wrongful
dismissal and Court held that when an employee is in breach of a fundamental term of his
employment or guilty of sufficient misconduct, he or she may be dismissed summarily without
notice, and before the expiration of a fixed period of employment. Summary dismissal is without
notice and dismissal without notice also implies dismissal without a right to be heard first. (Note
however that this underlined part of the decision has been changes by the Employment Act, 2006
which requires a fair hearing to be conducted)
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The conduct of the employee here is viewed as sufficiently serious to justify immediate
termination of employment without notice. In this respect, if you are dismissed with disgrace,
you may not be entitled to pension. Ordinarily, summary dismissal may not suffice if the
employee has made a mistake once. However, one act of disobedience or misconduct can justify
dismissal only if it is of such a nature which goes to show in effect that the employee is
repudiating the contract or one of its essential terms.

In Ebiju James V Umeme Ltd, it was held that the phrase fundamentally broken as used in
Section 69 is not defined in the Act. However, under common law, summary dismissal is a
dismissal without notice and is reserved for serious misconduct. There is no exhaustive list of the
misconduct that justifies summary dismissal, but according to Laws Vs London Chronicle
[1959] 1 WLR 698 one isolated act of misconduct is sufficient to justify summary dismissal. The
test is whether the conduct complained of is such as to show the servant to have disregarded the
essential conditions of the contract of service. That to justify summary dismissal, the breach of
duty by an employee must be a very serious one.

In John Eletu v Uganda Airlines (1984) HCB, the judge gave examples of conduct that would
repudiate a contract or amount to a substantial breach i.e. disobedience of lawful orders,
misconduct, drunkenness, immorality, assaulting fellow workers, incompetence and neglect.
Such conduct would warrant a summary dismissal.

Constructive dismissal: This arises out of the implied term that an employer should not conduct
himself in a manner calculated or likely to destroy or seriously damage the relationship of trust
between him or her and the employee. If this relationship is damaged, this can amount to
constructive dismissal, irrespective of the fact that the employer had no intention of repudiating
the contract as held in Woods v WM Cur Services (Peterborough) Ltd. In this case, the employer
asked the employee to accept a pay cut and also work longer hours. She was told that failure to
comply would lead to dismissal. The employee resigned and sued the employer arguing that her
resignation amounted to constructive dismissal.

In Western Excavating (ECC) Ltd v Sharp (1978) QB 761, court considered the contract test as
the correct test for constructive dismissal. It states that:

The contract test: If the employer is guilty of conduct which is a significant breach going to the
root of the contract of employment, or which shows that the employer no longer intends to be
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bound by one or more of the essential terms of the contract, then the employee is entitled to treat
himself as discharged from any further performance. If he does so, then he terminates the
contract by reason of the employer’s conduct which amounts to constructive dismissal. The
employee is entitled in those circumstances to leave in the instant without giving any notice at all
or, alternatively, may give notice and leave at the end of the notice period. But the conduct must
in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up
his mind soon after the conduct of which he complains for, if he continues for any length of time
without leaving, he will lose his right to treat himself as discharged. He will be regarded as
having elected to affirm the contract. See: Nyakabwa J. Abwooki Vs Security – 2000 Ltd (LDC
108 of 2014)

Constructive dismissal may involve:

a) Progressive withdrawal of benefits from an employee’s office.

b) Hostility by the employer.
c) Reduction in pay.
d) A series of minor incidents of harassment over a period of time which cumulatively amount
to repudiation. This is what courts have progressively referred to as the ‘last straw’ doctrine.
e) Failure to respond to an employee’s complaint about lack of adequate safety equipment.
f) Undermining the authority of senior staff in front of subordinates.
g) Failing to protect an employee from harassment from fellow employees.
h) Imposing a disciplinary penalty that is out of proportion to the offence.

The conduct seen above amounts to constructive dismissal and can warrant a resignation from
the employee.

Under constructive dismissal, it suffices to say that the employee can terminate the contract
without notice by reason of the employer’s conduct such as hostility, etc. The employee may
treat words by an employer to constitute dismissal. In the same vein, the employer may construe
the resignation of the employee from the employee’s resultant conduct, either expressly or
impliedly.

Reasons for dismissal:

Despite the employer having the right of dismissal, it must not be exercised arbitrarily. S. 68 (1)
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of the Employment Act 2006, provides that:

“In any claim arising out of termination, the employer shall prove the reason or reasons for the
dismissal and where an employer fails to do so, the dismissal shall be deemed to have been
unfair within the meaning of S. 71.”

However, this position has been changed by case law to the effect that where an employer gives
notice or pays in lieu of notice, the employer need not give reasons for termination. See Bank of
Uganda Vs Joseph Kibuuka & 4 Others (CACA No. 281 Of 2016).

Reasons would therefore only need to be given in the case of dismissal.

Fair hearing:

An employer must comply with the principles of natural justice while dismissing an employee.

In Ridge Vs Baldwin & Others [1964] A.C 40, one of the leading authorities on termination of
employment relationships, it was held that even if the employer had power to dismiss, they were
bound to observe the principles of natural justice. A decision reached in violation of the
principles of natural justice, especially the right to be heard, is void and unlawful.

In Jabi Vs Mbale Municipal Council (1975) HCB 191, it was held that it is a fundamental
requirement of natural justice that a person properly employed is entitled to a fair hearing before
being dismissed on charges involving a breach of disciplinary regulations or misconduct. The
court further held that it was perhaps a different case if the employee was on temporary terms,
but an employee on permanent terms is entitled to know the charges against him and to be given
an opportunity to give any grounds on which he relied introduces new rules at his premises for a
legitimate purpose and which rules apply to all employees, the fact that the new rules affect one
employee as opposed to the rest of the employees, will not amount to repudiation of the contract
to exculpate himself. Where that was not done, it could properly be said that the dismissal was
wrongful.

In Eng. Pascal R. Gakyaro Vs Civil Aviation Authority (CACA No. 60/2006), Court held that
the principles of natural justice demand that an employee be given an opportunity to be heard in
his or her defense. That the overall effect of a denial of natural justice to an aggrieved party
renders the decision taken void and of no legal effect.
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In Ebiju James V Umeme Ltd It was held that an employer can dismiss an employee summarily
if the employee by conduct indicates that he or she has fundamentally broken his or her contract
of service (gross misconduct).

Be as it may, it is important to note that the S. 66 of the Employment Act, 2006 provides for a
mandatory right to be heard for every form of dismissal, which right was not previously available
in summary dismissals. (See Godfrey Mubiru Vs Barclays Bank). Therefore, even if the
employee’s conduct (or misconduct) is regarded as one that amounts to disregarding the essential
conditions of the contract of service therefore justifying summary dismissal, the employee has to
be accorded the right to a fair hearing.

The right to a hearing is guaranteed by the Constitution under Art. 28 and Art. 42. Art. 42
provides:

“Any person appearing before any administrative official or body has a right to be treated justly
and fairly and shall have a right to apply to a court of law in respect of any administrative
decision taken against him or her.”

Article 44 (c) of the Constitution also provides that the right to a fair hearing cannot be
derogated from.

Section 66 of the Employment Act, now provides for a mandatory right to be heard in dismissals
as follows:

 An employer shall, before 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 and the employee is entitled to have another person of his or her
choice present during this explanation.
 An employer shall, before reaching any 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 may make.
 The employer shall give the employee and the person, if any, chosen by the employee
reasonable time within which to prepare the representations.

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In Alex Methodius Bwayo V DFCU Bank Limited (HCCS NO.78/2012), court found that, the
basics of a right to be heard must necessarily include;

 Notice of allegations against the employee to be served within reasonable time to allow
the employee prepare a defence.
 The notice should clearly state what the allegations are and what the employee’s rights
are at the oral hearing. Such rights would include: the right to respond to the allegations
orally or in writing, the right to be accompanied at the hearing and the right to cross-
examine the employer’s witnesses or the employee to call his or her witnesses.
 The plaintiff should be given a chance to appear and present his or her case before an
impartial committee in charge of disciplinary issues t.

The supreme court of Uganda has held in Barclays Bank of Uganda Vs Godfrey Mubiru SCCA
NO. 1 of 1998 that where a service contract is governed by a written agreement between the
employer and the employee, termination of employment or service to be rendered will depend
both on the terms of the agreement and on the law applicable.

In Juma & Others Vs Attorney General [2003] EA 461, relied on in Isaac Nsereko Vs MTN
HCCS No. 156 of 2012, court held that;

“………. It is an elementary principle in our system of the administration of justice that a fair
hearing, within a reasonable time: is ordinarily a judicial investigation and listening to evidence
and arguments, conducted impartially in accordance with the fundamental principles of justice
and due process of law, of which a party has had reasonable notice as to the time, place, and
issues or charges, for which he has had a reasonable opportunity to prepare, at which he is
permitted to have the assistance of a lawyer of his choice as he may afford and during which he
has a right to present his witnesses and evidence in his favour, a right to cross-examine his
adversary’s witnesses, a right to be appraised of the evidence against him in the matter, so that
he will be fully aware of the basis of the adverse view of him for the judgment, a right to argue
that a decision be made in accordance with the law and evidence.

By repudiation: This means outright breach of a fundamental term in the contract. This breach
even extends to implied terms in the contract. However, where an employer introduces new rules
at his premises for a legitimate purpose and which rules apply to all employees, the fact that the

Page | 27
new rules affect one employee rather than the rest of the employees, will not amount to
repudiation of the contract since the employer has an implied term to provide a conducive
working environment for employees.

In Dryden v Greater Glasgow Health Board, 1992 IRLR, 469, the applicant smoked 30
cigarettes a day and her job was such that she could not leave the premises during the day to
partake of a cigarette. The employer had set aside a smoking zone but later withdrew it. Dryden
resigned, claiming constructive dismissal and arguing that the employer had repudiated the
contract. Court dismissed the case on grounds that introduction of new rules by the employer for
a legitimate purpose and which rules were applicable to all employees whether they affected one
employee rather than all other employees did not amount to repudiation of the contract.

By frustration: In this case, termination of the contract cannot be apportioned to either the
employer or employee. In Morgan v Manser [1948] I K.B 184, a music hall artiste was called up
for service in the army and his contract of employment was accordingly held to be frustrated. It
was held that, if there is an event, or change of circumstances, which is so fundamental as to be
regarded by the law as affecting the purpose or root of a contract as a whole and beyond what
was contemplated by the parties, such that to hold the parties to the contract would be to bind
them to something they would not have agreed had they contemplated the event or
circumstances, the contract is frustrated by the event.

In case of frustration, court will grant relief and pronounce that the contract has been frustrated.
The belief, knowledge and intention of the parties the basis on which the court can form its own
view of whether the changed circumstances were so fundamental as to strike at the root of the
contract and not to have been contemplated by the parties.

For frustration to suffice, courts have laid down principles upon which such can be construed. In
Williams v Watsons Luxury Coaches Ltd, 1990 IRLR, 164. Court held that: there must be some
external event or extraneous change of situation, not foreseen or provided for by the parties at
the time of contracting, which either makes it impossible for the contract to be performed at all,
or renders the performance something radically different from what the parties contemplated
when they entered into it. Secondly, the event or extraneous change of situation concerned, was
without fault of either party to the contract.

Generally, under the doctrine of frustration in employment law, some of the extraneous factors
Page | 28
have been found to be imprisonment and illness.

In Shepherd FC & Co. Ltd v Jerrom 1986 IRLR, 358, the employee entered into an
apprenticeship contract with the employer for four years. However, after only 21 months, the
employee was sentenced to 6 months in jail. When he was released, the employer refused to
rehire him and sued for unfair dismissal. Court held that a custodial sentence imposed upon cm
employee is capable of frustrating a contract of employment. It does not matter whether the
termination of the contract is labelled a frustrating event, repudiatory conduct, a breach going to
the very root of the contract, or impossibility to perform the contract. What matters is that the
contract of employment is brought to an end by strenuous factors, none of which can be blamed
on either party. However, the party alleging frustration should not be allowed to rely upon the
frustrating event if that event was caused by that party, or at least where it was caused by the
party’s fault.

In Poussard v Spiers (1876) 1 QBD, 410, Poussard entered a contract to perform as an opera
singer for three months. She became ill five days before the opening night of the opera and was
not able to perform on the first four nights of the opera. They then replaced her with another
opera singer. She sued for full payment. Court held that Poussard was in breach of a condition
hence the contract was lawfully terminated. She had missed the opening night which was the
most important performance as all the critics and publicity would be based on this night.

In Notcutt v Universal Equipment Co (London) Ltd [1986] ICR 414, the employee begun
working for the employer in ‘1957’ under a contract which permitted termination on one week’s
notice and provided no remuneration during periods of sickness. In 1983 he suffered an illness
and by July 1984 it was clear he would not be able to work again. Accordingly, he was given 12
weeks’ notice of termination. It was held that the agreed contract had ended due to frustration
prior to the notice period by reason of his illness.

Compulsory military service and such service as under a state of emergency will also lead to
frustration of the contract without blame on either party as this has been considered a frustrating
event.

Economic dismissal/Redundancy: Economic dismissal arises out of the idea that it is

unreasonable for an employer to keep an employee in service if they can no longer financially
sustain the employee. The employer reserves the right to restructure depending on the
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availability of resources. Economic dismissal consists of realigning or changing employment
structure, reduction of offices, staff, etc., to make the company more sustainable. The question
that normally arises here is how fair the process is to avoid issues of bias, victimization, etc.

What is the criteria? Generally, the employer has a right to re-size the scope of his business. In
some cases, the employer may be required to offer alternative employment. The most important
consideration is that the job is not less (i.e. reduction in amount of work), but rather the method
of doing the work has changed or the terms are different. In the former case (reduction of amount
of work), amounts to a redundancy situation and the employer will be liable to pay damages.
Court in Lesney Products Ltd v. Nolan [1977] ICR 235 held that, nothing should be done to
impair the ability of employers to re-organize their workforce and their terms and conditions of
work so as to improve efficiency. Therefore, change of work methods automatically leads to an
economic dismissal. This is because re-organization by the employer ordinarily amounts to a fair
dismissal under economic grounds e.g. in case of new technology.

In North Riding Garages Ltd v Butterwick (1967) QB 56, new methods of work which involved
less engineering and more paperwork were introduced by the new employers after a take-over of
the garage business. The workshop manager (Mr. Butterwick), was unable to adapt to the new
methods and standards required and a new workshop manager was engaged after the dismissal of
Mr. Butterwick. Court held that, where new technology is introduced and the old employee fails
to adapt, he or she can be dismissed on economic grounds. In this case, the new manager’s duties
were not identical to those of the dismissed manager and therefore the termination was not
wrongful. Court further held that an employee who remains in the same kind of work is expected
to adapt to new methods and techniques and cannot complain if the employer insists on higher
standards of efficiency than those previously required.

But if the new methods alter the nature of the work required to be done, it may follow that no
requirement remains for employees to do the work of the particular kind which has been
superseded and that they are truly redundant.

However, before dismissing an employee on economic grounds, the employer must show that the
demand for work done by the employee has reduced or stopped completely. In Murphy v.
Epsom College [1984] EWCA Civ 2, a plumber was tasked to maintain heating installations,
which were replaced and he was not qualified to maintain the replaced installations. The

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employer employed a new resident heating engineer and dismissed Murphy. Court held that the
dismissal was due to redundancy. The employment of a resident engineer reduced the demand
for plumbing work which Murphy was able to do.

The employer may as well offer the employee other work instead of making them redundant. The
employee has a choice to accept it or reject the new work. However, if the employee
unreasonably refuses the offer, the employer may avoid paying them redundancy pay. The
employer can offer the employee a job identical to their current job or a job with similar skills
and the job must have similar pay, conditions and skill requirements.

Economic dismissal triggers the obligation to compensate. It must be stipulated in the contract
and if not, then the employer must be reasonable. However, alternative employment if taken will
affect the amount of compensation that the employee is entitled to.

By notice: The general principle at common law is that either party to a contract can terminate it
by giving notice to the other party. Once notice is given, it cannot be withdrawn unilaterally. It
must be with knowledge and consent of the other party to whom it was directed. If a contract is
for a fixed period of time, the employment cannot be lawfully terminated before the end of that
period unless the employee is in breach of contract or the contract itself provides for prior
termination by notice. The length of notice to bring a contract to an end should be agreed to by
both parties. If no notice is expressly agreed then the law- requires that ‘reasonable notice’
should be given, with the length depending on factors such as the seniority and status of the
employee.

In Jabi vs Mbale Municipal Council [1975] HCB 191, it was held that it is generally accepted
that a dismissal is wrongful if it is made without justifiable cause and without reasonable notice.
The notice required might be determined from the contract of service itself or custom or any
written regulations governing the employment contract.

In Barclays Bank of Uganda v. Godfrey Mubiru, the employment contract had a provision
enabling either party to terminate the contract. The Court held that if the dismissal had not been
summary dismissal, which the circumstances of the case justified, the employee would have been
entitled to one month’s notice or one month’s payment in lieu of notice. It found that where any
contract of employment, stipulates that a party may terminate by giving notice of a specified
period, such contract can be terminated by giving the stipulated notice for the period. In default
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of such notice by the employer, the employee is entitled to receive payment in lieu of notice and
where no period for notice is stipulated, compensation will be awarded for reasonable notice
which should have been given, depending on the nature and duration of employment. (NB: This
case was determined before the coming into force of the Employment Act, 2006 which provided
for notice periods)

In Bank of Uganda Vs Betty Tinkamanyire (SCCA No.12 of 2007), court held that Payment in
lieu of notice can be viewed as an ordinary way of giving of notice. The right of the employer to
terminate the contract of service whether by giving notice or paying compensation in lieu of
notice for the duration stipulated or implied by the contract cannot be fettered by the court.

Apart from the contractual provision on notice under the contract, the Employment Act entitles
an employee to minimum notice periods, which takes precedence over any lesser notice provided
under the contract. S.58 (5) of the Act provides that notice should be in writing and in the
language the employee understands. According to S. 58, except for summary dismissal and
mandatory retirement by age, no employer shall terminate the contract without giving notice to
the employee. S. 58(3) (a) provides that notice should not be;

a) Less than two weeks, where the employee has been employed for a period of more than six
months but less than one year;
b) Less than one month, where the employee has been employed for a period of more than
twelve months, but less than five years;
c) Less than two months, where the employee has been employed for period of five but less than
ten years; and
d) Less than three months where the service is ten years or more.

In practice however, the best mode is for the employee to accept payment in lieu of notice. It is
not realistic for the employer to allow dismissed employees to work throughout their notice
period since such workers lack motivation and they may try to revenge against the employer for
the dismissal. Payment in lieu of notice is therefore the best alternative.

In Bank of Uganda vs. Betty Tinkamanyire (SCCA No. 12 of 2007) it was held that, an
unlawfully dismissed employee was entitled to damages to compensate for the period that was
necessary to give proper notice of termination (compensation in lieu of notice) in addition to
damages for breach of contract.
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Termination by death or insolvency: S.29 of the Employment Act provides that where the
employer’s personal or legal position formed the basis of the employment relationship with the
employee, death of an employer shall cause the contract of service to terminate within one month
from the employer’s death, unless it is otherwise legally terminated within the period.

S.30 of the Employment Act further provides that bankruptcy or winding up of the employer’s
business shall cause the contract of service to terminate one month from the date of the
bankruptcy or winding up order.

According to S.42 Employment Act 2006, upon an employee’s death his or her heirs or legal
representative shall be entitled to the wages and any other remuneration due to the employee at
the date of death.

Partnerships: In the case of a partnership where a partner dies and there is a consequent
dissolution of partnership the contract of employment will be discharged.

Termination by expiry of contract: Under S.65 (1) (b) of the Employment Act, termination
shall be deemed to take place where the contract of service, being a contract for 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 a period of 1 week from the date of expiry on the same terms or on better terms
to the employee.

Termination by the labour officer: Arises where the employer fails to pay wages or is
otherwise in breach of the contract of employment and the employee complains to the labour
officer. A Labour Officer can declare the contract terminated on application by the employee that
the employer has failed to pay wages under S.31(1) of the Employment Act.

Remedies for wrongful termination

Once the dismissal of an employee has been found to unlawful by court, the next question is
what remedies accrue thereto?

S. 66, 67, 69, and 70 of the Employment Act introduce a mechanism for complaints of unfair
termination. Generally, damages are the most likely remedies that court will grant. In Ahmed
Ibrahim Bholm v Car & General Ltd (SCCA No. 12 of 2002), it was held that courts can award
punitive and/or exemplary damages.
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However, in the case of Gullabali Ushillani v Kampala Pharmaceuticals Ltd (SCCA No. 6 of
1998), court held that an employee has the obligation to mitigate their loss especially where the
contract was a for fixed time. Here, termination is in the sense that such contracts come to an end
upon expiry.

The remedy for an employee who considers his/her tenure to have been prematurely terminated
is provided under S.71 of the Employment Act.

What amounts to unlawful dismissal was considered and determined in Jabi vs Mbale
Municipal Council [1975] HCB 191 where it was held that, it is generally accepted that a
dismissal is wrongful if it is made without justifiable cause and without reasonable notice. The
notice required might be determined from the contract of service itself or custom or any written
regulations governing the contract of employment.

In Bank of Uganda vs. Betty Tinkamanyire (SCCA No. 12 of 2007), it was held that a court of
law should not use its powers to force an employer to retake an employee it no longer wishes to
continue to engage (re-instatement). However, an employee who is unfairly or unlawfully
dismissed, should be compensated adequately in damages.

Furthermore, in Kengrow Industries Ltd. Vs C.C. Chandran (SCCA No. 7 of 2001), where a
contract of employment is repudiated by the employer through dismissal of an employee even in
a case of employment for a fixed period, the employee cannot insist on continuing to be provided
with work and payment (re-instatement). If the dismissal, be it express, implied or even
constructive, is unequivocal, then the only remedy available to the wronged employee is
damages and not re-instatement. The issue that remains to be decided therefore is the measure of
damages.

By way of definition, damages are the pecuniary compensation given by process of law to a
person for the actionable wrong occasioned by another person. In Hall Brothers Steamship Co.
Ltd V. Young (1938) 61 Ll.L.Rep. 157. KBD), damages are defined as the sums payable by
reason of some breach of duty or obligation, whether that duty or obligation is imposed by
contract, the general law, or legislation.

Except where statutory damages are stipulated, the rules and principles that govern the award of
damages in civil cases are entrenched in the common law and these principles owe their validity
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to the provisions of S. 14(2) of the Judicature Act, Cap 13.

The general principle is that an employee wrongfully dismissed is entitled to be compensated

fully for the financial loss that may be suffered as a result of the dismissal, subject to the duty of
the dismissed employee to mitigate loss. A person who is wrongfully dismissed should mitigate
his damages by obtaining alternative employment. Thus the damages awarded must thus take
into consideration the fact that the plaintiff has an obligation to mitigate the loss.

Certain factors have to be taken into consideration in the assessment of damages:

 Breach of contractual provision on notice. In Gullabhai Ushillingi v Kampala

Pharmaceutical Ltd (Civil Appeal No. 6 of 1999), the court established that the issue of
whether or not the contract provided for termination upon notice is a key consideration in
the assessment of damages. The Court made a distinction between a contract which
makes no provision for termination prior to expiry of the fixed period and one in which
there is a provision enabling either party to terminate the employment contract with
notice.
 Mitigation of loss: The innocent party should mitigate his loss e.g. by finding alternative
employment or else the party in breach is entitled to use this as a defence against an
award of damages.

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