[2023] UGIC 78


# THE REPUBLIC OF UGANDA THE INDUSTRIAL COURT OF UGANDA AT KAMPALA LABOUR DISPUTE REFERENCE NO. 123 OF 2020 **JARISING FROM KCCA/RUB/LC/543/2019**

BE WEEN

ESTHER MUTUTTA .................................

### **VERSUS**

$10$

$\mathsf{S}$

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POST BANK (U) LTD....................................

## BEFORE:

THE HON. AG. HEAD JUDGE LINDA LILLIAN TUMUSHME MUGISHA

#### PANELISTS: $20$

1. MS. HARRIEL MUGAMEWA NGANZI

2. MR. TX MUBUUKE

3. NR. EBYAU FIDEL


#### AWARD

#### BRIEF FAC 1S

30 On 11/04/2013, the Respondent employed the Claimant as a Cred!' Manager. She rose through the ranks to the position of Senior Manager Agent and Community Banking, earning a monthly salary ofUgx.l.3,433,532/=: per month. On 5/4/2019, she was suspended to pave way for investigations into alleged suspicious transactions she had made. The Suspension was extended to 5/06/2019 and subsequently to 5/07/2019. On 5/07/2019, she was invited for a disciplinary hearing scheduled for 11/07/2019, however, 2 days before the hearing, her suspension was extended again to 7/08/20 ⁱ 9. The grounds for the hearing were that, without the knowledge of her line Manager, Esther approved funds for marketing, and she failed to provide accountability. 'When she sought to know why the suspension was continuously extended she received no response, until she reported the matter to the Speaker of Parliament and shortly after that, on 23/08/2019, she received a termination letter. She contends that her termination was unlawful, hence this suit.

#### **ISSUES**

- 40 **1. Whether the claimant's** dismissal from the Resoondents employment was ^A ^R ^V **unfair and unlawful?** - **2. What remedies are available to her?**

#### **REPRESENTATION**

45 The Claimant was represented by Mr. Albert Collins Kyeyune with Ogomba Issa of Mukiibi & Kyeyune Advocates, Kampala and the Respondent by Isaac Bakayana an Omolo Juma Noah ofM/s. Arcadia Advocates.

# **RESOLUTION OF ISSUES**

- Whether the Claimant's dismissal form the Respondent's employment was unfair and unlayful? - It is a stilled principle of law that, an employer's right to terminate an employee cannot be 50 fettered by counts of low, so long as the employer follows the correct procedure for termination, before exercising the right to terminate or dismiss. In *Hilda Musinguzi Vs* Stamble Bank (U) Ltd SCCA 05/2016, Justice Manguísva JSC, as he then was, held that.

"....the right of the employer to terminate a contract cannot be fettered by the Court so long as the procedure for termination is followed to ensure that no employee's contract is remainated at the waims of the employer and if it were to happen the employee would be entitled to compensation..."(emphasis ours)

Section 66 of the Employment Act makes it mandatory for the employer to give his or her employee a reason or reasons for termination or dismissal and an opportunity to respond to the reason or reasons before, the termination or dismissal occurs. Therefore, 60 before an employer can terminate or dismiss an employee, he or she must follow the correct procedure for termination or dismissal as laid down under Section 58, 65, 66, 68, 69 and 70 (6) of the Employment Act.

After carefully analyzing the evidence on the record, the submissions of both Counsel and the evidence adduced during the hearing, we established that indeed the Claimant was 65 initially suspended on $5/04/2019$ , on half pay to pave way for investigations into allegations that, she was involved in suspicious transactions, involving the management of a grant to the Bank to enable Market activation in the Country. Her suspension was extended for another 4 months until 8/09/2019 but on this occasion she was paid her salary in full. According to the Respondent the extensions were done her complete the ongoing internal 70

investigations regarding the allegations which were leveled against her and to complete the disciplinary process.

She was eventually accorded a hearing on 11/07/2019, on grounds that she approved funds for marketing activities and accountability was not provided and that, she approved funds ⁷⁵ without the knowledge ofthe line Manager. She was subsequently dismissed, Her letter of termination stated in part as follows;

- *i. " That you were negligent while you carried out your duties by recommending money amounting to Ugx. 41,524,000/—forthe marketing officer (Tiirornuhebwa William) to carry' out field activities but failed to ensure the activities were* 80 *carried out and accountability provided.* - *ii. That you were negligent while you carried out your dudes v.nich resulted into financial loss to the Bank*

It was her testimony that her role in the project was to initiate requests for funds for project activities, but she had no power to approve payment, and this was because approval was ⁸⁵ the responsibility of the heads of department. She also stated that sometimes money for activities was released without her signature and in any case her signature did not impact disbursement of funds. The Respondent through its witness Mr. Geoffrey Kyakonye (RW1), on the other hand, testified that an audit was carried out tc verify the allegations leveled against the Claimant, but she was net shown the report.

90 We had an opportunity to analyze the audit report, marked REX 2 on the Respondent's trial bundle, and we established that, the Audit team interviewed Mr. Turyamuhebwa alleged that, he withdrew Ugx.21,650,000/= meant for Kihihi and Butogota and 19,744,000/= meant for Yumbe, from his account and gave it to the Claimant to enable her to complete a business deal. According to the report the Claimant had approved the monies

95 ¹ vw ⁷ activities as she had previously done for others, but the money was never given e offi mr w undertake the actual activities. The report also stated that the Claimant '• eged to have to; d Turyamuhebwa, that other officers including the CEO knew about the tu urged business deal, but the officers were not interviewed. We were not convinced by me reliance on a voice recording which was partly in a local language and English too without subjecting it to further verification by an expert was peculiar and the fact the CEO and the other officers who were supposed to be in the know about the requirement for the money to close a business deal were not interviewed rendered the credibility ofthe report waning. When we scrutinized the minutes ofthe disciplinary hearing and established that the same allegations had been put to the Claimant under Min 3/HRM/l 1/07/19, that she tow had recommended payments amounting to Ugx. 21,780,000/- for a one William Turyammebwa. a Marketing Officer under the business growth department to carry out activities under her docket anti another Ugx. 19,744,000/- to cany activities in Yumbe, but he did no: go to the fieiu and he did not go to the field and he did not go to the field and he did no: give any accountability. According to the same minutes Turamuhebwa alleged that, no he withdrew the money and gave it to the Claimant, instead. There was nothing on the record :o indicate that the Claimant's role included ensuring accountability for the money tor me activities she initiated on the project. Her testimony that, she was responsible for the activity plan for the project and her role was simply to initiate the activities and approval a or at mads was dome by the heads of department was confirmed by RW1 Geofrey 115 iCyakenye, when no testified that, according to design of the project, The system of approx'?.; provided thatwasthe line heads who were responsible for approving and in this case i: was a one Mr. fired V/asike, who was head of department. We also found nothing or. me record to indicate that the claimant was responsible for overseeing the implementation of me activities in the field or ensuring accountability of funds disbursed.


120 In fact RW1 testified that the project had a resident supervisor a one Daniel Mugabi Lumwna who did not feature at all in the audit report and the disciplinary meeting minutes.

It is trite law that termination based on grounds of poor performance or negligence of an employee in the performance on execution of his or her own duties or misconduct must be proved on a preponderance of evidence. (See Section 68 of the Ewfoymen\* Act 2006). Therefore, the employer must explicitly state/ provide the role or particulars ofthe duties to be undertaken by the employee as a basis of determining whetbev the employee said was negligent in executing the stated duties or he or she failed to perform the same. The employer is therefore expected to demonstrate negligence or failure to perform with credible evidence against the employee in issue.

- 130 135 140 In the circumstances, having not found any guidelines on how the project was being managed to enable us determine that the role of the Claimant involved approval of funds and given the testimony ofRW1, that the Heads of Department were the ones Responsible for approving the funds, it is our considered view that it was the responsibility of Heads of Department to approve the funds and ensure that they were accounted for and not that of the Claimant. As already discussed, the Audit report and the minutes of the disciplinary hearing, did not demonstrate or prove the allegations leveled against the claimant especially given that her role did not involve approving the funds disbursed and she had not role to play in the field. As we established, her role was limited to initiating field activities based on an activity plan and that of approving and therefore ensuring accountability was the preserve ofthe heads of department.

I was therefore unfair for the Respondent to penalize her Claimant for approving funds and without knowledge ofJackline Mwesigwa, Tukamuhebwa's immediate supervisor yet her role was limited to initiating the activity and that ofthe Head ofDepartment to approve the payment. tsence of any evidence to indicate that it was her role to approve and account for or activities in the field, which we established it was not, it is our finding that, the cent failed not demonstrate that, the Claimant was negligent in executing her role ;e project and that she had caused financial loss when she initiated the payment of ,650,000/= for activities in Kihihi and Butogota and 19,744,000/= for activities in district.

afforded a fair hearing?

■■ .-iseie 42 of the Constitution of the Republic of Uganda and Ebiju James **Vs** T!2, for the legal preposition that, an accused employee ^L e given sufficient time to prepare a defence prior to appearing before an impartial tee snows in this case the Claimant was not afforded a fair hearing and she was not .once in accordance with Section 58(1) of the Employment. Counsel further led mat the Claimant was not given time to prepare a defense and identify a person tom she should appear with at the hearing. Although he relied on Wakibi Fred **vs** f Uganda ILDC. No. 041 of 2014, that 6 days were insufficient, it is the position of ,:.'c that once me employee is given an opportunity to answer to the infractions against him or her and the employee appears and answers to the same infractions he cannot turn around and claim that he or she was not given sufficient time to

t'maat in the instant case testified that she attended the hearing, and she also c a written explanation about the allegations leveled against her. It is not in dispute ^e was made aware ofthe allegations when she was initially suspended on 5/04/2019, suspension was extended for 4 months more. She did not deny that she participated Audit investigation, and that she made responses to the questions put to her. The : rock place on 11/07/2019 and it was her submission that she did participate in it.


170 We are therefore, not convinced that, she was not aware of the ir.lfo ;s level fo ' st her and that she did not have sufficient time to prepare for the hearing as she clai: red.

We also do not associate ourselves with the assertion that, she was terminated for reasons she had no prior notice about or that she was faulted on aspects which did not fa!ⁱ under her contract. This is because, during the hearing in court, she admitted that, she was involved in initiating the activities under her department, allhounn ^L ^e app vofthe funds for the activities was the responsibility of the heads ofDcoa vwnt.

180 185 Although we agree with the contention that her suspension con .raven,ec sect'on 53:'2) of the Employment Act because it exceeded 4 weeks, havine been suspended for ¹ 55 davs consecutively. The letters which extended her suspension marked CLE4, CLE6. CLE7, CLE8 and her pay slips marked Bl, B2. B3 and B4 on her trial bundle, indicates hat, she was paid full salary after 4 weeks suspension, moreover when she was not working. Section 63 was intended to prevent an employer from subjecting an employee to survive on half pay for more than 4 weeks. Therefore, given that she was paid her full pay, moreover when she was not working, she cannot claim to have suffered any prejudice. The Respondent in this case would only be faulted ifshe kept the Ciaimant on half pay during extended suspension especially if at the end of the disciplinary process, she was found innocent. The Respondent will be required to reimburse her the amount withheld from her for the period she received half pay. She is therefore entitled to payment of half salary

190 In conclusion, having not proved that the claimant committed the infractions leveled against her, it is our finding that her termination was substantively unlawful.

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

which was withheld for the month of April 2019.

Having established that she was unlawfully terminated, she is entitled to some remedies.

She prayed for the following.

L Severance allowance

Citing section 87 and 89 ofthe Employment Act and **Blanche Byarngaba Kaira vs Africa** 200 Fiek ■■ ¹ lotwork LDR No. 131 of 2018, for the legal proposition that, an employee that teas unlawfully terminated from employment was entitled to payment of severance allowance amounting to ¹ month's salary foreveryyearworked. The Claimant was employed on the 11/04/2013 until her unlawful termination on 23/08/2019, therefore she a worked for ⁶ years earning Ugx. 13,433,532/- per month. She is therefore entitled to payment ²⁰⁵ ofUgx.80,601,192/= as severance pay. We have no reason to deny this claim. It is granted.

2. ' mmvy mi- not paying severance aEowance.

Accor;. • :g to Counsel for the Claimant, Section 91(1) provides that severance pay should be pai '. tenmno.tz.r and Section 92(2) entitles the employee to twice the amount of severance pay. According to Counsel she would be entitled to Ugx. 161, 202,384/=. In 210 Ketra AgtAi and Anor vs Crown Beverages Limited LDR **No. 215 of 2018,** this **Court** held that, although Section 9.(1) entitles an employee to payment ofseverance pay on the ... cessation of employment, an employee can only claim it after the circumstances stated under Section 8 ⁷ ofthe Employment Act have been proved to have occurred. Unlawful termination is one of the circumstances provided for, therefore, the severance pay can only be claimed 215 after me Arminadcn has been declared unlawful. We believe that, it is only in circumstances where severance is part ofthe contract of employment, that Section 91 and 92(2) would apply. This is net the case in the instant case, in the circumstances, this claim cannot stand.


3. Payment in iieu of Notice.

220 225 Counsel for the Claimant argued that, in accordance section 58. the Claimant was entitled to 2 months' pay in lieu of notice amounting to Ugx. 26,867.064/-. This is because she served the Respondent for over 5 years. It was not disputed that she for me Respondent from 11/04/2013 until 23/08/2019 when she was dismissed. She was earning Ugx.13, 433, 064/ per month, therefore she served for precisely 6 years and 4 months. Section 58/1 and (3) provides as follows:

"58. Notice periods.

*a) A contract ofservice shall not be terminated by an employer unless he or she gives notice to the employee, except-*

230 *3) The notice required to be given by an empioyei* w cv.pday *a:ic zr section shall be-*

> *(a) not less than 2 weeks, where the employee has been employedfar a p^rxa of more than six months but less than one year;*

*(b) not less than one month, where the employee has been entpfayedfin :: serioii of more than twelve months, but less thanfive years;*

*(c) not less than two months, where the employee hrs bee:: employedfbr period o( five, but less than ten years, ' and*

*d) not less than three months where the service is ten years or more. "*

9. - mi damages amounting to 200,000,000/=

- 285 Inaeec, L is a settled matter that any person who is unlawfully terminated or dismissed is en' \ . *;■ y* award of damages in addition to statutory remedies he or she may have prayed for. General Damages are compensatory in nature and 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 me Respondent. The Claimant was employed as the Respondent as 290 Senior //tanager Agent and Community Banking for 6 years 4 months. We have already established that she- was unlawfully dismissed from her employment after serving with a good record for 6 years and 4 months. At the time of her termination, she was earning Ugx 13,43.1, 064/- per month. We think that an award of Ugx 100,000,000/- is sufficient as genera, damages. - 295 30. Aggi a rated : amage a mounting to Ugx. 150,000,000/-

As already discussed, she was suspended for over 5 months, but she was paid her salary in fid! ib ^t .<■ " mr ■. ^m found nothing else to warrant an award of aggravated damages. It is therefore denied.

- 30^ Section ⁶¹ ofthe Employment Act provides that, ifso requested the employer shall issue an ■n: whose ;c ■-.met was terminated a certificate ofservice. Although there was nothing on the record to indicate that the Claimant requested for and was not granted the certificate of service, there is no reason it should not be granted to her. In the circumstances, the Respondent is ordered to issue her with a certificate ofservice. - 305


Interest of 15% per annum shall accrue on a" the pecuniar.' awards above, from rhe date of this award until payment in full.

This claim succeeds. No order as to costs is made.

Deli vered and signed by:

310 THE HON. AG. HEAD JUDGE, LINDA MUGISHA

PANELISTS

I. MS. HARRIET MUGAMBWA NGANZli

2. MR. FX MUBUUKE

315 3. MR. EBYAU FIDEL

DATE: 12/04/2023

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