[2024] UGIC 65


# **THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA AT KAMPALA LABOUR DISPUTE REFERENCE NO. 74 OF 2023**

*(Arising from Labour Dispute No. 059 o 2022)*

# **MAWANDA GERALD :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::CLAIMANT**

### **VERSUS**

**LITESPEED JOB HUB LTD:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::RESPONDENT**

### **Before:**

Anthony Wabwire Musana. J

**Panelists:** Hon. Jimmy Musimbi, Hon. Emmanuel Bigirimana & Hon. Can Amos Lapenga

### *Representation:*

*1. Ms. Bernadette Ninsima and Ms. Eunice Kebirungi ofAKN Advocates for the Claimant.*

*2. Mr. Moses Mbuga Kiggundu, Respondent's Chief Executive Officer, appeared in Court.*

*Case Summary-*

*Employment law- Constructive dismissal- The Claimant resigned due to conflicting instructions. Salary was unpaid for three months. The court found that the failure to pay salary constituted unreasonable and illegal conduct. The Claimant was constructively dismissed and awarded unpaid salary, general damages and interest thereon.*

*Statutory deductions—the computation of PAYE after social security fund contributions—are mandatory deductions from the Claimant's salary as per the relevant laws.*

### **AWARD**

#### **Introduction**

- **[1]** On the 3rd of June 2022, the Respondent employed the Claimant as its Managing Director on ^a one-year contract at a monthly salary of UGX 3,000,000/=. On the 2nd day of August 2022, the Claimant resigned because he found it difficult to take conflicting instructions. He lodged a complaint for an unpaid salary of UGX 6,728,000/=with the Directorate of Gender Community Services and Production at Kampala Capital City Authority, Lubaga Division. - **[2]** By letter dated the 26th of September 2022, the labour officer notified the Respondent of the complaint. This was followed by ^a reminder dated the 14th of October 2022. V

- **[3]** In a letter dated the 25lh of October 2022, the Respondent acknowledged the Claimant's employment with it and acknowledged an outstanding salary of UGX 3,284,000/=, National Social Security Fund(NSSF) Contribution of UGX 690,000/= and Pay As You Earn(PAYE) of UGX 1,084,000/=. The Respondent said it had not settled this salary due to suspending all its contracts and expected to pay the Claimant in the first quarter of 2023. - **[4]** On the 19,h day of April 2023, Ms. Irene Nabbumba referred the matter to this Court, having failed to resolve it within the statutory time limit. - **[5]** In his memorandum of claim filed in Court on 26lh of April 2023, the claimant sought a declaration that his resignation was the result of the Respondent's unreasonable conduct. He sought an order for an unpaid salary of UGX 6,728,000/= general damages, interest and costs of the claim. - **[6]** When the matter was called before us on the 28th of September 2023, the Respondent sent Mr. Mohammed Bageya, an office Assistant. When it was noted that the Respondent had not filed any pleadings under Rule 6 of the Industrial Court Procedure Rules 2019, we extended time to the 6th of October 2019 for the Respondent to file pleadings. - **[7]** The Respondent's pleading remained unfiled, and on the 11th of October 2023, when the matter came up for mention, Mr. Moses Mbuga Kiggundu, the Respondent's Chief Executive Officer told us that Mr. Bageya had not informed him of the filing directive. Ms. Ninsiima, appearing for the Claimant, felt that Mr. Mbuga was being untruthful because she had been engaging with him. We extended the time until the 1st of November 2023. - **[8]** In its memorandum in reply filed in the registry of this Court on the 3rd of November 2023, which we validated, the Respondent denied the claim and contended that the Claimant had paid all his dues and had resigned without giving notice. - **[9]** By rejoinder, the Claimant noted the admission, reiterated his claim and contended that the Respondent had acknowledged receipt of his resignation. - **[10]** On the 18th of March 2024, the matter came for mention. Satisfied that the Respondent had been served, we set the matter for hearing on the 27th of August 2024. On this date, Ms. Ninsiima applied to proceed *exparte* under Order 9 Rule 20(1 )(a) of the Civil Procedure Rules S.l 71-1 **(the CPR).** Upon perusal of Mr. Brian Mutebi's affidavit of service dated the 10th of June 2024 detailing a screenshot of his conversation with the Respondent's CEO, we granted leave to proceed exparte. - **[11]** The Claimant's scheduling notes were adopted with two issues for determination: - (i) Whether the Claimant was constructively dismissed? - (ii) What remedies are available to the Claimant?

**LDR 74 of 2023 Ruling Anthony WabwirotnsSnaJ**

**[12]** The Claimant's witness statement dated 5th June 2022 was adopted as his evidence in Chief. Therefore, we issued filing directions for final submissions. We have summarised and considered the evidence and submissions in rendering this award.

# **Analysis and Decision of the Court.**

# **Issue 1.** *Whether the Claimant's was constructively dismissed?*

# **Submissions of the Claimant**

**[13]** Relying on Section 64(1 )(c) of the Employment Act cap **226(the EA)** and the case of *George Wimpey v Cooper1, Edotun v Okra Beverages Limited[2](#page-2-0), Nyakabwa J Abwooli v Security 2000 Ltd,[3](#page-2-1)* and *Mbiika v Centenary Bank[4](#page-2-2),* it was argued that the Respondent's failure to pay salary amounted to unreasonable, forceful, unfair and unlawful conduct on the Respondent's part. Counsel also cited Section 40EA and *Kandimaite v Centenary Bank[5](#page-2-3) 6. We* were asked to find that the Claimant had been constructively dismissed.

### **Determination**

- **[14]** Constructive dismissal occurs under Section 64(1)(c)EA, where an employee terminates a contract of employment because of the employer's unreasonable behaviour. A wealth of authorities define constructive dismissal, such as those cited by Counsel for the Claimant, each of which anchored and enriched our conclusions in *Lubeqa v Tropical Bank Limited[3](#page-2-1) . We* concluded three essential elements of constructive dismissal; - (i) The employer must conduct himself to show that he does not wish to be bound further or that there is a fundamental or significant breach of the employ - (ii) ment contract, - (iii) It must be shown that the employer does not wish to be bound by the employment contract, and; - (iv) The employee must be entitled to treat himself as discharged.

In *Wimpey,* unreasonable behaviour is defined as conduct that no employee could reasonably be expected to accept, according to good industrial relations practice.

**LDR 74 of 2023 Ruling Anthony WabwireMusSnaJ**

**1977(IRLR] 205**

<span id="page-2-0"></span>**² (20231 UGIC 48**

<span id="page-2-1"></span>**³ LOC 108 012014**

<span id="page-2-2"></span>**⁴ (20181 UGIC 11**

<span id="page-2-3"></span>**⁵ (20181 UGIC 5**

**⁶ [2024] UGIC 39 For a definition of Constructive Dismissal see** *Western Excavations (ECC) Ltd v Sharp[W78]* **QB 761 or [1978] IRLR 27 CA Per Denning M. R. His Lordship considered an employer's fundamental breach leading to an employee's election to treat himself as discharged.**

#### Page 4 of 8

- **[15]** What is the threshold for constructive dismissal? In *Achiro v Uganda Land Alliance,[7](#page-3-0)* we relied on *Susan Njeri Warui v Postal Corporation of Kenya,*[8](#page-3-1) where the Court set two tests, the unreasonable and the contractual test. In the **unreasonable** test, the Court held that the employer's behaviour must be so unreasonable that the employee could not be expected to stay. In the **contractual** test, the employer's conduct must be grave enough to constitute a repudiatory breach of the employment contract. The case of *Coca-Cola East & Central Africa v Maria Kagai Ligaga[9](#page-3-2)* sums up the contractual test by asking what the fundamental or essential terms of the contract of employment are, whether there is a repudiatory breach, whether there is a fundamental breach, establishing a causal link between termination and the employers conduct, the employee not conducting himself in a manner that estops him from asserting the breach and places the burden of proof on the employee, *inter alia.* It is against these thresholds that we test the Claimant's hypothesis that he was constructively dismissed. - **[16]** Starting with the contractual test, the appointment letter indicated the Claimant's salary as UGX 3,000,000/=. In his memorandum of claim and witness statement, where he now founded his action on the failure of the Respondent to pay his wages. To the Claimant's credit, the Respondent admitted to unpaid salary at the time of the Claimant's resignation. The Claimant's evidence was that he was unpaid for three months of service. The law of admissions[10](#page-3-3) permits the Court to dispense with the proof of any fact and enter judgment on the admission. The Respondent did not dispute the unpaid salary or come to court to explain it. Clause 2 of the appointment letter provided a consolidated salary of UGX 3,000,000/=. Paying wages under Section 39(1 )EA is also a statutory obligation. As a result, we would find the Respondent in breach of his contractual obligation to pay salary. In *Betty Wenene v Ana Maria Day and Boarding Primary School[11](#page-3-4) 12we* found a failure to pay wages to be unreasonable conduct by an employer. In the present case, we would find the Respondent's failure to pay salary to be a fundamental breach of the contract. It would be illegal. We find that the Claimant's case meets the contractual threshold of constructive dismissal. - **[17]** On the unreasonableness test, the Court must ask whether the failure to pay wages is unreasonable and injurious to the Claimant. The Claimant's evidence is that he was unpaid for three months. The Respondent's explanation in its letter to the labour officer of October 2022(CEX6), four months after the Claimant resigned, suggested that its contracts were tied down, which is why it could not pay salary. There was no evidence that the Claimant had been offered any explanation before he resigned. He was in a management position. In *Warui,* the reasonableness test was held to be objective. In the present case, reasonableness would mean that the Claimant was offered some explanation and would have been treated fairly as demanded by the principles of mutuality, trust and confidence underpinning the employment relationship. In the Kenyan case of *Jane Acheing and Anor v University of Nairobi™* Ndolo J., an employer's failure to explain its decisions was found to be unfair. Therefore, on the evidence before us and the thread of authorities, we would find that the Respondent's failure to pay salary was unreasonable conduct. To compound this difficulty, the Respondent reneged on its promise

<span id="page-3-2"></span>**9 [2015]eKLR**

<span id="page-3-0"></span>**⁷ [2024] UGIC 22**

<span id="page-3-1"></span>**⁸ [2022]eKLR**

<span id="page-3-3"></span>**¹⁰ See Bwambale & 1016 Orsv Attorney General [2012] UGHC 89**

<span id="page-3-4"></span>**¹¹ LDR120 of 2015( Industrial Court of Uganda) (18ln October 2022)**

**¹² Cause No. 2144 of 2012**

to pay the Claimant in the first quarter of 2023 after the labour officer had summoned it to settle the employment dispute. And we would be fortified in this conclusion by the decision of this Court, in *Olanqo v Hands of Love SSS Kabaqa,[13](#page-4-0) 145*where we found ^a failure to pay salaries for eight months amounted to unreasonable conduct on the part of the employee, entitling him to a declaration of constructive dismissal.

**[18]** Therefore, we must come to a conclusion, as we hereby do, that the Respondent's act of failing to pay salary was a fundamental breach of the Claimant's contract of employment; it was in violation of the EA and, therefore illegal, was unreasonable and injurious to the Claimant and caused him to resign his job. The Claimant was constructively dismissed from his employment with the Respondent. Issue one is answered in the affirmative.

### **Issue II. What remedies are available to the parties?**

### **Declaratory relief**

**[19]** Counsel for the Claimant submitted that he was entitled to a declaration that he was constructively dismissed from his employment with the Respondent. Having found as we have on Issue One, we agree with Counsel for the Claimant, and accordingly, it is hereby declared that the Claimant was constructively dismissed from employment by the Respondent.

### **Salary Arrears**

- **[20]** Counsel for the Claimant sought salary arrears of UGX 6,728,800/=, arguing that the Claimant was entitled to a salary of UGX 3,000,000 monthly. It was argued that the Respondent had not remitted NSSF and PAYE statutory deductions. The Respondent, in CEX6, argued that what was due to the Claimant was a net salary of UGX 3,284,000/= with statutory contributions of UGX 690,000/=(NSSF) and PAYE of 1,084,000/=. - **[21]** According to CEX1, the Claimant was entitled to a monthly gross salary of UGX 3,000,000/=. Under Section 19(3) of the Income Tax Act Cap **338(the ITA),** an employee with a gross earning of UGX 3,000,000/= would have a taxable income of UGX 2,841,066.67 and a take-home pay of UGX 2,087,167/=after a tax of UGX 754,500/=. The Respondent's computation of UGX 3,284,000/= does not appear supported under ITA. Therefore, going by the Claimant's claim of UGX 6,728,800/=, we are inclined to the view that he is entitled to UGX 6,261,501/= over the three months. This would account for PAYE, NSSF and Local Service Tax deductions. Therefore, we award the Claimant UGX 6,261,501/= as unpaid salary from June 2022 to September 2022.

### **General Damages**

**[22]** Counsel for the Claimant cited *Kampala District Land Board and Anor v Vanansio Babweyaka and Ors™* and *El Termewy v Awdi & Ors'⁵* for the proposition that general damages are the direct probable consequence of the act complained of. It was submitted that the failure to pay

**LDR 74 of 2023 Ruling Anthony WabwiirMusSnaJ**

<span id="page-4-0"></span>**¹³ [2023] UGIC 71**

**¹⁴ [2003] UGSC 41**

**¹⁵ [2015] UGHCCD 4**

salary caused an inconvenience to the Claimant. Counsel did not propose a quantum of general damages.

- **[23]** In *Uganda Post Limited* v *Mukadisi [16](#page-5-0)* the Supreme Court of Uganda set the principle considerations regarding general damages in employment disputes to be awardable for breach of the employment contract and for the non-economic harm and distress caused by the wrongful dismissal, including compensation for emotional distress, mental anguish, damage to reputation, and any other non-monetary harm suffered due to the dismissal. - **[24]** On the authority of *Mukadisi,* having found the Respondent in breach of the employment contract for which the Claimant was constructively dismissed, the Claimant would be entitled to general damages. This would be for the inconvenience suffered by loss of job and income. - **[25]** We observed in paragraph[22] above that Counsel for the Claimant did not propose a quantum of damages. In *Stanbic Bank (U) Limited* v *Okou* [17](#page-5-1) Madrama, JA(as *he then was)* held that general damages should be assessed based on the prospect of the employee getting alternative employment or employability, how the services were terminated, and the inconvenience and uncertainty of future employment prospects. In *Dr. Omona Kizito v Marie Stopes Uganda18,* the Court held that general damages are assessed depending on the circumstances of a given case and at the Court's discretion.[19](#page-5-2) In *Kabaqambe v Post Bank Uganda Limited²⁰ we* adopted the dicta in *Kamuli v DFCU Bank²¹* The factors that determine an appropriate quantum of damages in an employment dispute are the Claimant's earnings, age, position of responsibility, and contract duration.²² - **[26]** In the case before us, the Claimant was earning UGX 3,000,000/= per month at the time of his resignation. He had worked for the Respondent for just three months. Considering all the circumstances, we determine that based on his monthly salary, the sum of UGX 3,000,000/= as general damages will suffice, and we so award it.

### **Interest**

**[27]** Citing section 26(2) of the Civil Procedure Act, Cap 282, Counsel for the Claimant invoked the discretionary powers of the Court to grant interest. That is the holding in *Mukankusi v Uganda Revenue Authority²³* where the Court observed that interest rates are set at the discretion of the trial Court. In *Musimenta v United Bank for Africa ²⁴, we* awarded the Claimant interest at 14% per annum from the award date until payment in full. The case of *Surgipharm Uganda Ltd v Anatoli Batabane²⁵* supports a distinction between interest on special damages and general damages. In the present case, the salary was due on the 16th of August 2022. On unpaid salary,

- **¹⁶ LDC 13 of 2015** - <span id="page-5-2"></span>**¹⁹ LDC No.33 of 2015** - **⁷⁹ [2023] UGIC 50 ⁷¹ [2015] UGIC 10** - **⁷⁷ [20151 UGIC 10** - **⁷³ [2019] UGCA 2027** - **⁷¹ [20241 UGIC 53**

<span id="page-5-0"></span>**¹⁶ [2023] UGSC 58**

<span id="page-5-1"></span>**¹⁷ [2023] UGCA 100**

**⁷⁵SCCANO. 11 of 2020**

we award the Claimant interest from the 16lh of August 2022 at 12% per annum until payment in full. Regarding the award of general damages, we think it is proper to award interest at 12% per annum from the date of this award until payment in full.

### **Costs**

**[28]** This Court has held that costs in employment disputes are the exception on account of the employment relationship except where the losing party has been guilty of some misconduct.[26](#page-6-0) In the present case, we are not persuaded that the Respondent misconducted itself in a manner that costs should follow the event as Counsel for the Claimant has argued. There is, therefore, no order as to costs.

### **Final Orders**

- **[29]** In the final analysis, we make the following declarations and orders - **(i)** It is hereby declared that the Claimant was constructively dismissed from employment by the Respondent. - **(ii)** The Respondent is ordered to pay the Claimant the following sums: - (a) **UGX 6,261,501/=** as unpaid salary from June 2022 to September 2022. - (b) **UGX 3,000,000/=** in general damages. - (c) The sum in (ii)(a) above shall attract interest at 12% per annum from the 16th August 2022 until payment in full and the sum (ii)(c) above shall attract interest at 12% per annum from the date of this award until payment in full. - **(iii)** There is to be no order as to costs.

It is so ordered.

**Signed, dated and delivered at Kampala this 1st day of November 2024.**

Judge, Indu **e Musana,** LCourt **Anthony Wa** Indus

**LOR 74 of 2023 Ruling Anthony WabwirelvtasJnaJ**

<span id="page-6-0"></span>**²⁶ See Kalule v Deustche Gesellschaft Fuer Internationale Zuzammenarbeit (GIZ) GMBH [2023] UGIC 89**

# **THE PANELISTS AGREE:**

- 1. Hon. Jimmy Musimbi, - 2. Hon. Emmanuel Bigirimana & - 3. Hon. Can Amos Lapenga

1st of November 2024

9:50 am

#### **Appearances**

- 1. For the Claimant: - 2. Respondent absent.

Court clerk:

**Ms. Ninsiima:**

Ms. Bernadette Ninsiima Claimant in Court.

Mr. Samuel Mukiza

Matter is for award, and we are ready to receive it.