[2023] UGIC 39

# **THE REPUBLIC OF UGANDA**

### **IN THE INDUSTRIAL COURT OF UGANDA AT KAMPALA**

## **LABOUR DISPUTE CLAIM NO.51 OF 2016**

## **ARISING FROM H. C. C. S NO.08 OF 2013**

**⁵ GYAVIIRA MUTAYOMBA CLAIMANT**

**VERSUS**

# **FOUR WAYS GROUP OF**

**COMPANIES RESPONDENT**

**BEFORE:**

#### **io THE HON. AG. HEAD JUDGE, LINDA LILLIAN TUMUSHME MUGISHA**

**PANELISTS**

- **1. MS. HARRIET NGANZI MUGAMBWA** - **2. MR. FIDEL EBYAU** - **15 3. MR. FX. MUBUUKE**

### **AWARD**

# BACKGROUND

On 1/08/2019, this claim was referred to this Court by the High Court. The **²⁰** Claimant then filed his pleadings in accordance with the procedures of the Court on 9/07/2018. It was cause listed for pre session hearing on 15/01/2019, but by this time, the Respondent had not filed her pleadings and it only complied on 14/05/2021.

#### **BRIEF FACTS**

**²⁵** On 8/05/1984, the Claimant was employed by the Respondent, Four Ways Group of Companies as a Mechanic Assistant and deployed at Bismex Ltd. His employment was governed by the **4** ways **Group of Companies staff regulations Terms and Conditions ofservices.** According to him, the 4 ways

*I*

Group of Companies meant any of the 12 Companies listed under regulation 2 ofthe Staffregulations(supra). He served under the different Companies of the group and by the time of his termination he was working for Katonga Farms Ltd. On 21/03/2012, he was dismissed on allegations of theft of Company property, felling trees, leasing Company land and misuse of Company property. He contended that, his dismissal was unlawful because he was dismissed while still on forced leave.

The Respondent on the other had claim that his dismissal was lawful because hhe was given audience and an investigation into the infractions leveled against h him established his guilt ofmisconduct which justified his dismissal. They also filed a counter claim for unpaid salary loan the claimant obtained while still in employment and for wrongful occupation of the house after termination.

On 5/03/2019, the Respondent raised a preliminary objection contesting the claim against the 4 ways Companies on the ground that it was not registered under the laws of Uganda u, therefore it could not be sued, therefore he had filed his claim against an nonexistent Company.

The Court issued a ruling to give interpretation to section 2 ofthe Employment act as follows, to the effect that as long as an employee worked for an institution under a contract of service whether registered or not, the lack of capacity to enter a usual contractual relationship would not be a defense for sch an institution to renege on its role as an employer.

The matter was then set down for hearing on the 16/03/2021.

### ISSUES

- **1. Whether the Claimant was lawfully dismissed?** - **2. Whether the Claimant wrongfully continued staying in the Respondent's house?**

**2**

**45**

**50**

**30**

**35**

**40**

- **3. Whether the Claimant still owed the Respondent money for the salary loan advanced to him** - **4. What remedies are available to the parties?**

# **RESOLUTION OF ISSUES**

# **⁶⁰ 1. Whether the Claimant was lawfully dismissed?**

Citing Florence Mufumbo vs UDB LDC No. 138 Of 2014, and section 66 of he employment Act which are to the effect that, when an employer contemplates the dismissal or termination of an employee, he or she must the give the employee reasons for the dismissal or termination and a hearing as was elucidated in **DFCU**

- **65 vs Donna Kamuli CA No.121 of 2016.** Counsel contended that in the instant case, this was not done because the Claimant was not given notice for the disciplinary meeting which took place on 8/03/2012 and contrary to the testimonies ofthe Respondent's witnesses no evidence was adduced to that effect. He refuted the contents ofthe letter which purportedly invited the Claimant for a - **70** hearing and the composition ofthe disciplinary committee which was chaired by Moses Kalanda who was the chiefmanager ofthe Respondent, who should have been a witness give the testimony of a one Paskal Kaggwa, because according to the Claimant it was Kalanda who authorized him to cut the trees, sell the tractor therefore he was a potential witness and therefor he had no moral authority to - **75** chair the hearing, which he did and even issued the dismissal letter, thereby tainting the process with partiality.

It was further his submission that on the said meeting of 8/03/2012, Gyaviira was forced to take leave on grounds that an investigation was going to be undertaken.

Therefore, the disciplinary process was not completed because the Claimant was

**80** not given an opportunity to know the contents ofthe investigation report and to respondent the findings, therefore his termination on 21/03/2012, before the completion of the process was unfair and unlawful. According to Counsel the

letter ofdismissal made reference to the findings on an independent and impartial team which found that he had received money from tenants but he refused to

85 attend a meeting with the residents which confirmed the allegations that were leveled against him. According to Counsel whereas the dismissal letter indicates that the Claimant did not attend the meeting, the witnesses of the Respondent actually testified that he attended the meeting which was a contradiction.

90 95 100 He further refuted the assertion that the allegations had been confirmed by the investigation report because the report made no finding with regard to the allegations made against the <Claimant.it> was also his submission that the letter also made refence to the fact his dismissal was based on paragraph ¹¹ of his employment contract which is the 4 ways Group of Companies staff regulations Terms **and** Conditions of services, to the effect that the Company would cease to employ staff who were above 55 years of age, and yet this reason was not part of the reasons initially given to him as a basis of his termination. Counsel insisted that the letter of dismissal was contrary to the findings of the investigation, therefore it would not be farfetched to make an inference that these allegations were maliciously orchestrated by the chair who was conspicuously implicate in the report.

**In** reply Counsel for the Respondent revisited the objection about the existence of an employment between the Claimant and the Four was Group of companies , which in our considered opinion was already resolved in the affirmative therefore it is resjudicata. In the circumstances, we shall not discuss it again.

105 Du Pless and Fouche in this book **A Practical Guide to labor Law(2006)** Defined a contract ofemployment as follows:

> *"A contract ofemployment is a reciprocal contract in terms ofwhich an employee places his services at the disposal of another person or organization, as employer, at a determined or determinable renumeration*

110 *in such a way that the employer is clothedwith authority over the employee and exercises supervision regarding the rendering of the employee's services. "*

The Employment Act 2006, defines an "employee" under section 2 as *"...any person who has entered into a contract ofservice or an apprenticeship contract,*

115 120 *including and without limitation, any person who is employed by or for the Government of Uganda, including the Uganda Police Service, a local authority or parastatal organization but excludes a member of the Uganda people's forces... ".* It therefore follows that, an employment relationship is governed by a contract of employment and by statute law as clearly provided under the Employment Act.

125 130 It is not in dispute that, the Claimant in the instant case was employed by the Four ways group of Companies under the 4 ways Group of Companies staff regulations Terms **and** Conditions of services. Therefore whether it is registered or not, the Claimant having placed his services at the disposal of the Respondent and he was renumerated for the services rendered, it cannot turn around now to deny that the said employer employee relationship. It is further not in dispute that, the Claimant's contract of employment was signed by a one Yiga Ssempogo, the ChiefGeneral Manager and F. X. N. Luyomya the Group Company Secretary and it was copied to the Chief Accountant, Fourways, which was confirmation that he was employed by the Respondent.

Therefore was his dismissal lawfill?

Counsel for the Respondent did not dispute the requirement for the employer to give an employee reasons and an opportunity to be heard before dismissal as provided under section 66 ofthe Employment Act, 2006. According to him it

135 is not in dispute that the Claimant participated in the meeting on 8/3/2012, in which the infractions leveled against him were put to him and that he was invited

140 145 150 155 for a subsequent meeting which took place on 9th to 12th March 2012. Although the claimant initially denied that he participated in these meetings, during cross examination he admitted that he was invited to hand over Company property to the investigation team, therefore he was aware about a team which moved to the farm to conduct further investigationsthereon. Counsel insisted that, the Claimant was in attendance in the meeting of9th to 12th March 2012, where he was required to hand over property. According to Counsel, in the process, the Claimant participated in the meeting in which the findings ofthe investigation were put to him and he admitted the infractions at the same meeting. He cited **Eseza Catherine Byakika** vs NSSF **LDC No.057/2015** for the legal proposition that a disciplinary hearing need not conform to a court procedure and Sections 103 and 106 which places the burden of proof on the person who wishes court to believe that the facts did exist in support of his argument that, the Claimant had the onus to prove his case. He insisted that the Claimant's dismissal was based on the findings of the investigation. He also relied on holding of the Court of Appeal in **Bank of Uganda vs Joseph Kibka and 4 Other CACA No.281 of 2016,** that, under section 65(l)(a), it was not always a requirement to give reasons before dismissing an employee and **Hilda Musinguzi Vs Stanbic bank (U) ltd SCCA 05/2016,** in which, the Supreme interpreted section 68 to the

- effect that, it did not impose a high standard of proof of the reasons for termination as would be required in a court oflaw. Therefore the Claimant having admitted that he attended the disciplinary meeting of8/3/2012, and in light ofthis Courts holding in **Kabojja International Vs Godfrey Oyesigire LDA No** - 160 **0003./2015,** that an admission was sufficient to entitle an employer to summarily dismiss an employee, the Claimants dismissal was lawful

### **DECISION OF COURT**

Section 2 of the Employment Act defines "dismissal" as the discharge of an employee from employment at the initiative of the employer when the said

165 employee has committed verifiable misconduct. Section 66 (1) and (2) of the same Act in particular, provide for the procedure to be followed before any person can be terminated on grounds of misconduct and or poor performance as follows:

### *"66. Notification and hearing before termination*

170 175 *(I) Notwithstanding any other provision of this part, an employer shall before* four emphasis) *reaching a decision to dismiss an employee, on the grounds ofmisconduct orpoorperformance 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 ofhis or her choice present during this explanation,*

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

Section 68 of the Act also requires the employer to prove the reasons for dismissal and where the employer fails to do so, the dismissal shall be deemed to be unfair. This section further provides that *"...the reason or reasons for dismissalshall be matters, which the employer, at the time ofdismissal, genuinely believed to exist and which caused him or her to dismiss the employee. "*

These principles of law are based on Article 4 of ILO Convention 158, which provides in part as follows: "... *no employee should be terminated unless there is a valid reason connected to the employee 's conduct or work based on operation*

190 *standards required ofhim under the contract... "*

It is a therefore a settled principle ofthe law that, an employer's right to terminate an employee cannot be fettered by the Courts of law, so long as the employer follows the correct procedure before exercising the right to terminate or dismiss as provided under the law. In **Hilda Musinguzi Vs Stanbic bank (U) ltd SCCA 05/2016, Justice Mangutsya JSC, as he then was, held that;**

"... *the right ofthe employer to terminate a contract cannot be fettered by the Court so long as the procedure for termination is followed to ensure that no employees contract is terminated at the whims ofthe employer and ifit were to happen the employee would be entitled to compensation..." (eniphasis ours).*

200 reason. Therefore, we respectfully do not agree with the assertion by Counsel for the Respondent that an employer can dismiss an employee at any time and for no

It is the position ofthis court that, what is required in a disciplinary procedure is for the employee in issue to be notified ofthe infractions leveled against him or

205 210 her, for the employer to verily the infractions by carrying out an investigation, giving the employee an opportunity to respond to the infractions leveled against him or her in writing or orally before an impartial disciplinary committee or tribunal .. ". (section n66 of the Employment Act) and as under section 68(2) (supra)*"...the reason or reasons for dismissal shall be matters, which the employer, at the time ofdismissal, genuinely believed to exist and which caused him or her to dismiss the employee*

After carefully analyzing the evidence on the record, we established that, whereas the Claimant participated in the meeting on 8/3/2012, in which he was placed on forced leave for 3 months to enable investigations to be conducted at the farm,

215 there is nothing on the record to indicate that, following the completion of the investigations, the findings ofthe investigation were shared with him to enable him prepare for a response or defence. The letter of dismissal is instructive on this, and it states in part as follows:

*"... There have been several complaints and allegations made against concerning theft ofcompanyproperty, felling trees, leasing company land and misuse ofcompanyproperty.*

²²⁵ *commence. In regard to the above, a disciplinary meeting which you attended was held on 8th March 2012 to discuss the above allegations. At the meeting it was resolved that you take forced leavefor 3 months to let investigations*

> *An independent and impartial team was sent to katonga to carry out investigations and it found that you received a lot of money from the tenants. You without reason refused to attend a meeting with the residents ofkatonga to discuss this matter . theirfindings confirm the allegations made. The Report to this effect confirms that the allegations made against you and this kind ofbehavior is tantamount to gross misconduct,*

*This is to inform you that management sat on Saturday 17th march 2012 and resolved to summarily dismiss you with immediate effect without notice vide paragraph ¹¹ ofyour employment contract and section 69 of the employment Act... "*

240 245 Given the contents ofthis letter it was clear that, whereas the Respondent leveled 4 allegations against the Claimant only ¹ was cited as the reason for his dismissal. Interestingly Paragraph 4 ofthe letter mentions that, he was invited to discuss yet another allegation oftaking too much money from tenants, but no evidence was adduced to prove that this particular infraction was brought to his attention at the time he was placed on forced leave or that he was actually invited for such a meeting. The reason for dismissal was stated as being based on paragraph ¹¹ of his contract which in our considered view was paragraph ¹¹ ofthe 4 ways **Group of Companies staff regulations Terms and Conditions of services** marked as C2 on the record. Paragraph 11 provides that: "... *The company shall not*

*employ officers above 55 years unless where the employee has specialized skill beneficial to the company... ".* There was no evidence adduced on this allegation nor was it a finding of the investigation. In any case, as already discussed, the Respondent was expected to provide the Claimant with an opportunity to respond to the findings ofthe investigations on which his dismissal was based, before the dismissal and this was not the case, because section 68(2) (supra). In the absence

255 of any evidence, we are satisfied that, the Respondent did not substantiate the allegations it leveled against the Claimant and this is probably the reason why his dismissal was based on paragraph ¹¹ of his contract instead and which had was not brought to his attention prior to his forced leave.

Section 63 of the Employment Act, provides for the suspension of an employee to enable an investigation into allegations of the employee's misconduct to be carried out. However, the suspension is not supposed to exceed 4 weeks. The claimant in the instant case was not only placed on forced leave but it was for a

260 265 period of 3 months. Further there was no evidence to indicate that, following the completion ofinvestigations, he was given a hearing. The submission by Counsel for the Respondent that, the claimant was invited to hand over the company's property cannot be construed as an invitation for a disciplinary hearing. Even if the hand over was done in the presence ofthe investigation team and members of management, in this case, the principles of natural justice as laid down under section66(l) and (2) were not complied with. The Claimant was only expected to hand over and not to respond to anything, because at his point the decision to

relieve him of his services had already been made.

270 We had an opportunity to look at the investigation report marked "C8" and found nothing in it that directly or indirectly implicated the Claimant with regard to the 4 infractions that were stated in his dismissal letter. In fact no evidence was lead to show that the infractions had been proved against him.

In the circumstances, it is our finding that, the Claimant's dismissal was both substantively and procedurally unlawful.

#### 275 **2. Whether the Claimant wrongfully continued staying in the Respondent's house?**

This issue arises out of a counter -claim of the mesne profits, for the house being occupied by the Claimant's daughter. RW1 testified that, he allowed the claimant's daughter to continue occupying the Respondent's house, therefore we

280 found no basis for this counter claim. It was therefore disregarded and denied.

# **3. Whether the Claimant still owed the Respondent money for the salary loan advanced to him**

It was submitted for the Claimant that, this claim cannot be sustained because the recovery of the loan was based on the payment of salary and following the unlawful dismissal ofthe claimant the Respondent could not claim.

**In Stanbic Bank (L) Limited vs Okou R Constant CA No. 60/2020,** the Court ofAppeal was to the effect that, there is no blanket conclusion that, all loans are payable by salary deductions, therefore the court must consider evidence from which an inference can be drawn as to whether the loan was to be repaid from the claimant's salary and nothing else. The Respondent in the instant case did not controvert the evidence that, the Claimant's loan was to be repaid from his salary. In Circumstances the counter claim for recovery of the loan is cannot hold it is denied.

295 Having unlawfully terminated the Claimant, the Liability for recovery ofthe loan shifts to the Respondent.

### **4. What remedies are available to the parties?**

Having found that the Claimant was unlawfully terminated, he is entitled to some remedies. He prayed for the following remedies.

# **1. Leave pay for the forced leave**

300 305 It is not in dispute that the claimant was sent on forced leave which was contrary to the law and in particular section 63(supra). Therefore, it was wrong. However, the Respondent was entitled to suspend the Claimant for 4 weeks pending investigation. And as already stated he was placed on forced leave from 8/03/2012, until his dismissal on 21/03/2012. This was within the prescribed period of 4 weeks provided for suspension, therefore, save for the term ''forced leave" that was used, the Claimant was not prejudiced in any way. In the circumstances this claim fails.

# **2. Severance allowance**

310 Section 87(a) of the Employment Act entitles an employee who has been in an employer's continuous service for a period of 6 months to severance pay if it is established that he or she was unfairly dismissed/terminated. Section 89 of the same Act, provides that, severance allowance should be negotiated between the employer and employee. However, where no formula for calculating severance pay exists, this court in **DONNA KAMULI VS DFCU BANK LDC 002 OF**

- 315 320 **2015,** held that, the reasonable method for calculating severance pay shall be payment of ¹ month's salary for every year the employee has served. This decision was upheld by the Court of Appeal in **African Field Epidemiology Network (AFNET) vs Peter Waswa Kityaba CA . No.0124/2017.** The claimant in this case claimed severance at Ugx.400,000/xl2 amounting to Ugx. **4,800,000/=.** It is hereby granted. - **3. Unpaid leave**

The Claimant adduced evidence to the effect that, he applied for leave and it was not granted. Counsel cited section 58(7) as applicable law for leave, however, the correct provision is section 54, which entitles an employee to take annual leave save, that the period in which it should be taken must be agreed to by the

employer. This is because it is the employer who provides the work, and who directs how it should be done a when it should be done. Therefore for a claim for unpaid leave to succeed the claimant must satisfy Court that, the he or she applied for leave and it was denied. The Claimant only adduced 2 application forms for leave for the period of 30 days for 2003 from3 /03/2003 to 4/04/2003 and 30 days for the year 2009 from 3/3/2009 to 3/4/2009 . Unfortunately no other evidence regarding leave untaken was adduced in court. Therefore in the absence

- of evidence of leave application for the other 26 years claimed, we had no basis to make an award for leave untaken for that period. - 335 340 In the circumstances, based on the 2 applications for 2003 and 2009, which were not controverted by the Respondent and the Respondent having not furnished reasons why, the Claimant was not granted leave for these 2 years, the Claimant is entitled to payment in lieu of leave, of 2 months' salary amounting to Ugx. 800,000 for the years 2003 and 2009, at an interest rate of 6% per annum from the date offiling this matter in the Industrial Court until payment in full.

# **4. Payment in lieu of notice**

Having been unlawfully terminated he is entitled to payment in lieu of notice. Having served for over 26 years, in accordance with section 58 of the Employment Act, he was entitled to 3 months' notice or payment in lieu of leave of400,000/- x ³ months totaling to Ugx. **1,200,000/-.**

### **5. General Damages**

It is a settled matter that any person who is unlawfully terminated or dismissed is entitled to an award of damages as a remedy, in addition to other remedies he or she may have prayed for under the Employment Act. General Damages are compensatory in nature and intended to compensate the aggrieved employee for the loss incurred as a consequence of wrongful dismissal. They are intended to return the aggrieved person to as near as possible in monetary terms to the

position he or she was before the injury occasioned by the Respondent. The Claimant was employed as the Respondent's for over 28 years until he was unceremoniously and unlawfully terminated. This Court has taken cognizance of the difficulty ofsecuring alternative employment especially following dismissal based on unsubstantiated allegations as was the case. We believe that an award of Ugx **10.000,000/-** is sufficient as general damages.

360 In conclusion the claim succeeds in the above terms. An interest rate of 10 % per annum will accrue on all pecuniary awards save awards for the award made in regard to unpaid leave, from date of filing in the industrial Court until payment in <full. No> order as to costs is made.

Delivered and signed by:

#### 365 **THE HON. AG. HEAD JUDGE, LINDA LILLIAN TUMUSHME MUGISHA**

# **PANELISTS**

**l. MS. HARRIET NGANZI MUGAMBWA**

**2. MR. FIDEL EBYAU**

**3. MR. FX. MUBUUKE**

370 **DATE: 12/05/2023**