[2025] UGIC 2


# **THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA AT KAMPALA LABOUR DISPUTE REFERENCE NO. 161 OF 2022** *(Arising from Labour Dispute MGSLD/834/2022)*

## **1. NDAULA ABUBAKER::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::CLAIMANTS 2. KAKUBA KENNETH KEITH**

## **VERSUS**

## **POSTBANK UGANDA LIMITED ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT**

## **Before:**

The Hon. Mr. Justice Anthony Wabwire Musana:

**Panelists:** Hon. Adrine Namara, Hon. Susan Nabirye & Hon. Michael Matovu.

### *Representation:*

- *1. Mr. Frederick Ssemwanga of M/S Ssemwanga, Muwazi & Co Advocates for the Claimant.* - *2. Ms. Martina Musumba of the Respondent's Legal Department for the Respondent.*

#### *Case Summary*

*Employment law- termination ofemployment- where an employer terminates on the grounds ofredundancy; Procedure for termination: The Claimants alleged unfair and unlawful dismissal due to redundancy following a company restructure. The question was whether the employer followed proper procedure in notifying the claimants and the labour commissioner about the redundancy. The Court found the terminations unlawful due to procedural flaws. The Court found that the Respondent had mitigated the prejudice ofredundancy terminations by paying terminal benefits. The Court awarded the Claimants general damages but did not award additional severance pay or costs.*

#### **AWARD**

#### **Introduction**

**[1]** On the 6th of December 2017, the Respondent, a financial institution established under and regulated by the Financial Institutions Act Cap.57 appointed the 1st Claimant as a risk analyst at an annual salary of UGX 21,143,412/=. He was confirmed in the Respondent's employment on the 31st of August 2018. During his tenure, he was allocated various responsibilities including the preparation of Management Assets and Liabilities committee reports, conducting monthly stress testing for market risk, training in market risk and preparing regulatory reports. Following an unsuccessful application for the position of Manager Integrated Risk, on the 24th of August 2021, the Respondent issued the 1st Claimant with a redundancy notice. The Respondent undertook to pay the 1sl Claimant severance pay, three months' salary in lieu of notice, leave arrears, and his pensions and issued a certificate of service.

- [2] Similarly, on the 14lh of April 2016, the Respondent appointed the 2nd Claimant as its operational risk analyst at an annual salary of UGX 45,600,000/=. He was confirmed in the Respondent's employment on the 13lh of March 2017. On the 4th of August 2018, the 2nd Claimant was promoted to Manager Risk and then served as Acting Senior Manager Strategy until 21s1 January 2020. On 23rd April 2020, he was appointed Senior Manager of Strategy and Partnership, a position he served until he was appointed Manager of Operational Risk and Financial Crime on 21s1 October 2020. He served in this position until the 8th of December 2020 when he was appointed Acting Head of Risk. On the 10th of May 2021, following interviews for the position of Manager Operational Risk and Financial Crimes, the Respondent declared the Claimant redundant effective the 31s1 of May 2021. As with the 1st Claimant, The Respondent undertook to pay the 2nd Claimant severance pay, three months' salary in lieu of notice, leave arrears, and his pensions and issued a certificate of service. - [3] The Claimants were aggrieved by the decision to render them redundant and on the 22nd of November 2021, they lodged a complaint of unlawful and unfair termination with the Labour Officer at Kampala Capital City Authority. Mediation was unsuccessful. On the 27"¹ of June 2022, Hilda Nakagga, Labour Officer referred the dispute to this Court. - [4] By memoranda of claim filed in this Court on the 20th of July 2022, the 1st and 2nd Claimants sought declarations of unfair and unlawful dismissal, declarations that the Respondent breached his constitutional right to a fair hearing, and orders for unpaid severance pay, penalties for delay in settling severance pay, salary arrears until the date of termination, unpaid acting allowances, repatriation to Rakai and Jinja respectively, salary arrears, unpaid bonuses and allowances, three months' salary as additional compensation, a declaration for breach of contract, general and punitive damages for the breach, general damages for unfair and unlawful dismissal, breach of the statutory duty and constitutional rights, interest on monetary awards, costs of the claim and any other relief. • - [5] The claim did not go unopposed. In its memoranda in reply dated the 11lh of August 2022, the Respondent denied the claim and contended that in 2020 it underwent an institutional review which resulted in a realignment of functions and roles, change of name of some functions, job grading methodology and role re-profiling, creation of some new roles and removal of some roles. All staff were notified of the review process. The 1s' Claimant's role was reprofiled to operational risk officer and advertised. The 1st Claimant did not apply for the reprofiled role but applied for two new roles of Manager Integrated Risk and Manager Reconciliation and Support. He was unsuccessful and therefore rendered redundant. He was paid all his benefits and the Respondent contended that his termination was lawful. - [6] Concerning the 2nd Claimant, the Respondent contended that following the institutional review, he was appointed to the role of Manager of Operational Risk and Financial Crimes in an acting capacity. The position was advertised, and the 2nd Claimant was unsuccessful and therefore rendered redundant. He was paid all his dues and, therefore, validly terminated.

**L0R16I/ wdrftiitfiliijy Wabw'n Misaia ^J** Irl

## **The proceedings and evidence**

- [7] On the 10th of November 2022, the joint scheduling memorandum dated 10th November 2022 was adopted with three issues framed for determination *viz\* - (i) Whether the Claimants' termination was lawful? - (ii) Whether the Claimants are entitled to ^a bonus for 2020? - (iii) What other remedies are available to the parties? - **[8]** The documents in the Claimants' trial bundle dated 4th November 2022 were admitted in evidence and marked "CEX1" to "CEX60". The documents in the Respondent'^s trial bundle dated 20th April 2023 were admitted in evidence and marked "REX1" to "REX31".

## **The Claimants' evidence.**

- **[9]** By his witness statement made on the 3rd of November 2022, the 1st Claimant testified that he performed his roles and on 24lh August 2021, he was surprised to receive a letter rendering him redundant effective 31st August 2021. He told us that he was not given the requisite one month's notice. He applied for the positions of Manager Integrated Risk and Manager Reconciliation and Support, whose duties he was familiar with and had previously executed. He told this Court that he did not receive any feedback on his performance in the interviews. He testified that he was not paid his performance bonus for 2020, his severance was not properly computed, UGX 2,472,249/= was deducted without authorisation from his terminal benefits and that he suffered damages due to the termination. - **[10]** Under cross-examination, the 1st Claimant told this Court that he was aware of the restructuring process and applied for vacancies in the positions of Manager Reconciliation and Support and Manager Integrated Risk, but he was not given any feedback on his applications. He also told this Court that after he handed over his portfolio of operations risk officer, he did not have any other portfolio or work. He confirmed that he had worked for the Respondent for 5 years and was paid three months' salary in lieu of notice. He said he claimed severance pay for 8 months. He also confirmed that he had no outstanding loan with the Respondent. - **[11]** In re-examination, he said he did not get any communication about the changes in the Respondent's structure. He referred to ^a "Town Hall" meeting at which the new Managing Director had remarks about institutional review and a new strategic direction to turn the Respondent into a commercial bank. He said there was no mention of his role or the department in terms of the institutional review. He said he was paid severance for 3.7 years as opposed to 3.8 years. He said he did not apply for the position of Operational Risk Officer but trained the new officer until he received his redundancy letter. In terms of deductions on his account, he said that he was required to authorise any deductions, and the Bank debited two sums of UGX 830,226/= and UGX 1,641,983.93 from his benefits without his authorisation. - **[12]** The 2nd Claimant was called next. He testified to joining the Respondent as an Operational Risk Analyst in April 2016 and working in various positions. He said that while he was Acting as Manager of Operational Risk and Financial Crimes, he received a redundancy notice on the 10th of May 2021 rendering him redundant effective the 31st of May 2021. He said that he had worked diligently, performed well in all his responsibilities and served in sensitive positions such as

**LOR IGI/M22Awa<'drArilhjjily Wabwira Musana J**

Contracts Committee Chairperson, Senior Manager Strategy and Partnerships, Acting Head of Risk, and represented the Risk Department in the Finacle 10 Upgrade project. He said he was not paid acting allowances and did not receive any feedback from his applications to the Head of Strategy and Planning and Head of Risk positions. He told this Court that there was a shortfall in his severance pay for 15 days and that his termination was wrong, unfair, illegal and done with malicious intent. That he had suffered inconvenience, injury to feeling, anxiety, loss of selfesteem, humiliation, mental anguish, embarrassment and grave loss for which he was entitled to damages.

**[13]** In cross-examination, he told this Court that there had been no discussion on the restructuring exercise and that he was not notified in person of the institutional restructure. He said he was not given sufficient notice of termination and confirmed that the Bank had paid him three months' salary in lieu of notice. In re-examination, he said he did not see the external consultant's report on the organizational restructure. X

## **The Respondent's evidence**

- **[14]** Olive ldaan(RW1) testified in the capacity of Human Resources Business Partner. She said she had served the Respondent for 22 years and 11 months at the time she made her statement and was conversant with the Claimants' cases. She told us that the 1st Claimant had declared his permanent home at Sir Apollo Kaggwa Road in Makerere. She also said the Respondent communicated its institutional review in an email to all staff. She said that the consultant had recommended changes to the structure of the risk department and all bank staff were notified. The 1st Claimant unsuccessfully applied for the position of Manager Integrated Risk and Manager Reconciliation and Support and was therefore rendered redundant as he had not applied for any other role. He was paid one month's severance pay, three months in lieu of notice and issued a certificate of service. She told us that the deductions of the 1st Claimant's benefits were lawful, and he did not owe the Respondent any sum. - **[15]** Under cross-examination, RW1 said she did not supervise the 1S| Claimant and did not participate in the restructuring exercise but that it was sanctioned by the Respondent's management and communicated in the Managing Director's memo. She conceded that there was no evidence that the 1S| Claimant received this memo. She also said the *"town hall"* meeting was virtual, and she did not have minutes of it. She also conceded that she was not sure that the Respondent's Board had approved the new structure or that the 1st Claimant received feedback from his application. She did not know why he was not shortlisted for the position of Manager of Reconciliation and - Support. She said she did not know how his severance pay was computed or whether the deductions were lawful. She conceded that he was given 7 days of redundancy notice and he was not given any opportunity to respond. She said she did not have a copy of the notice given to the Commissioner for Labour and could not remember or estimate the number of staff affected by the restructuring. She also did not have minutes of the Board meeting authorizing the restructure. - **[16]** In re-examination, she said the memo(REXH4) was shared via email as it was not possible to communicate to all individuals. She told us that loan recoveries are from the borrower's account and severance pay is one month for each year worked. She said that the Managing Director and Head of Human Resources were responsible for receiving the consultant's report and approved

**LOR IBI/2O22JLva^Anliiti'tiy Wabwira Musana J IM**

structure. She also told us that the head of Human Resources was in charge of all communication regarding employees.

- [17] Brenda Nakyanzi(RW2) testified next. She told this Court that she had served the Respondent for 10 years and was now charged with Human Resource Operations. She was conversant with the 2nd Claimant's case. She told us that the 2nd Claimant was appointed acting Senior Manager of Strategy and Partnerships following some staff exits and during this tenure, he had been advised that he would revert to his position if the role was substantively filled. She told us that the Respondent embarked on an institutional review in 2020 and communicated this to staff in an email. As a result of the review, the 2nd Claimant's role of Senior Manager Risk was removed from the Respondent's Structure. He was appointed to Manager Operational Risk and Financial Crimes in an acting capacity. When this position was advertised, the 2nd Claimant's application was not successful. Left with no substantive position, the 2nd Claimant was rendered redundant, notified of his redundancy and paid one month's severance pay, three months in lieu of notice, untaken leave and issued a certificate of service. He was paid UGX 90,001,120/= as his terminal benefits. He was also paid all his acting allowances. - [18] Under cross-examination, RW2 said she did not have any qualifications in Human Resources. She said she did not supervise the 2nd Claimant, and he was at a higher level. She confirmed his service in various positions. She confirmed payment of his acting allowances for the position of Acting Senior Manager of Strategic Planning and Projects. She told this Court that she was not aware of any evaluation of the 2™ Claimant at the end of his service in an acting capacity. She also confirmed that the 2nd Claimant received the letter (CEX12) advising him of an extension of his acting appointment. Like RW1, she said she did not participate in the restructuring exercise but that it was sanctioned by the Respondent's Management. She told us that she did not have the minutes of the board meeting, and she was not privy to the meeting. She also did not interact with the consultant. She said the communication about restructuring was addressed to all staff. She also confirmed that there were no meetings between management and staff regarding the restructuring. She said that the role of Senior Manager Risk was removed in the restructuring process, and she was not sure what role the 2nd Claimant would have in the new structure. She said she did not know if any performance evaluation of the 1S1 Claimant. She told us that the position of Senior Manager Risk was not replaced in the new structure. She also told us she did not participate in the interview process for Manager Operational Risk and Financial Crime. She did not know who was shortlisted for the position. She said the 2nd Claimant was given redundancy notice on the 10lh May 2021 making him redundant on 31s' May 2021. She said she was not sure if the Commissioner for Labour was notified of the impending restructuring. She was not sure of the number but estimated between 20-30 persons. She was not sure if a list was submitted to the Commissioner. She said she did not participate in the restructuring exercise. - [19] In re-examination, she said the 2nd Claimant was paid his acting allowance per REXH 20 and REXH22. She clarified that he did not get an acting allowance for the position of Senior Manager of Strategy and Partnerships because this was the same as his substantive position per REX60. And that he did not qualify for acting allowances for the position of Acting Manager of Operational Risk and Financial Crimes because that was a lower position. She told us that the memo(REXH4) was addressed to all staff. She told us that she was not in charge of recruitment. She also told us that the 2nd Claimant was paid three month's salary in lieu of notice. Finally, RW2 told this Court that at the time of restructuring, she had not joined the HR department.

if x-— **LDR161/2022^^^^/ Wabwire Musana ^J**

**[20]** At the close of the Respondent's case, we invited the Counsel to file written submissions for which the Court is grateful and has summarised and considered in rendering this award.

### **Determination**

#### **Issue 1: Whether the Claimant's termination was lawful.**

#### **Claimants' submissions**

[21] Counsel for the Claimant submitted that the reason for rendering the Claimants' redundant was a restructuring. Citing Section 81 of the Employment Act 2006(Now Section 80 of the Employment Act Cap. 226) Counsel submitted that an employer who intends to terminate one employee for reasons of an economic, technological, structural or similar nature is obliged to follow the procedure in Section 81. Counsel relied on *Abiqaba* v *Bank of Uganda1, PACE v Graham Nagasha[2](#page-5-0), Nankabirwa v The Board of Governors St. Kizito Technical Institute Kitovu* [3](#page-5-1) and *Kakande Charles ^v Motorcare Uganda Limited[4](#page-5-2)* in support of the propositions that the Respondent Q did not follow procedure and there was no evidence of service of notice of impending restructure or redundancy. It was argued that there were no minutes of any interaction with the Claimants and there was no evidence of the Respondent's Board authorisation and as such the termination did not comply with Section 81EA.

### **Respondent's submissions**

- **[22]** It was submitted that the Claimants were lawfully terminated for redundancy following ^a restructuring. They unsuccessfully applied for new positions. Counsel relied on *Ochuru v Ace Global (U) Limited[5](#page-5-3)* and Section 81 EA submitting that the institutional review process was not contested. The Claimants attended a town hall and unsuccessfully applied for new roles in the Respondent's new structure. Since their former positions were non-existent, they were rendered redundant and informed of their redundancy. Counsel relied on *Nankanbirwa* for the proposition . that the terminations were lawful. The Claimants were each paid 3 months' salary in lieu of notice and based on the decision in *Ochuru,* it was argued that the termination was lawful. - **[23]** On notification of the Commissioner, the Respondent attached ^a letter dated the ¹⁹lh of October O 2020 to its written submissions and submitted that the allegation of non-notification of the Commissioner was false. Citing *Abigaba,* Counsel for the Respondent maintained compliance with Section 81 EA.

#### **Rejoinder**

**[24]** It was submitted that the Respondent did not comply with Section 81 EA and did not provide proof of notification of the Commissioner. That the Claimants were not individually notified of their impending redundancies. Counsel for the Claimant asked the Court to reject REX32, the 1st

**'[2017] UGIC24**

<span id="page-5-1"></span><span id="page-5-0"></span>**2 LDA 035/2018 3 [2016] UGIC 15**

<span id="page-5-2"></span>**⁴ [2023] UGIC 37**

<span id="page-5-3"></span>**5 [2021] UGIC 73**

Claimant's talent profile and cited *Ayella v Kalokwera* ⁶in support. It was also submitted that the letters of termination did not amount to notice.

[25] Mr. Semwanga also submitted that the advertised positions did not mean that the Claimants had lost their previous positions. He suggested that in-house offers were not meant to trick the Claimants into termination. Finally, it was argued that the approximation of the number of employees to be affected by termination was a very important step and by not taking it, the Respondent was procedurally wrong.

## **Decision**

- [26] It was common cause that the Respondent terminated the Claimants on the grounds of redundancy. It is now a settled position of employment and labour law jurisprudence in Uganda that an employer has the right to terminate the employment relationship on the grounds of redundancy. In *Okumu and 2 Others v Shreeji Stationers 2009 Uganda Limited⁷ we* cited *Dr. Elizabeth Kiwalabye vs Mutesa ¹ Royal University⁸,* where it was held that the employer reserves the right to determine the requirements of his or her business to improve its efficiency, and the Courts cannot fetter his or her discretion to increase or decrease the number and or quality of staff required for the business. The Court's only role is to ensure that the reorganization or restructuring is carried out according to the law or that the subject of the Court's inquiry is whether such termination for redundancy is fair and, therefore, lawful. - [27] In *Aporo v Mercy Corps Uganda\** we observed that redundancy in the employment sphere, means a situation in which an employee is laid off from work because the employer no longer needs the employee. Being that there was common cause as to the reason for termination, this Court's inquiry is therefore on the lawfulness of such termination. - [28] What is the threshold? In *Okumu,* we observed that the Court's inquiry into the lawfulness of termination under Section 81 *(now Section 80)EA* is on procedural and substantive lawfulness. In terms of the procedural prescripts, Section 80(1 )EA requires an employer who wishes to terminate not less than ten employees in three months for reasons of an economic, technological, structural or similar nature to; - (i) Notify the labour union at last four weeks before the first of such terminations is to take place or; - (ii) Notify the Commissioner in writing of the reasons for terminations, the number and category of workers likely to be affected and the period in which they are to be carried out. - [29] Before us, there was no evidence to show that the Claimants were unionized so that the procedure of their termination should be tested against the provision of Section 80(1)(a)EA. - [30] In terms of notification to the Commissioner, as required under Section 80(1)(b)EA, Ms. Musumba and Mr. Lubowa, appearing for the Respondent, attached a notification letter ref

**IDRIBI/ iy Wabwre Musana J**

**⁶ [2024] UGHC27**

**⁷ [2023] UGIC 10**

**⁸ [20201 UGIC >1**

**⁹ [2024] UGIC 23**

PBU/MD/191/20 dated the 19lh of October 2020 and stamped received by the Commissioner Labour on the 27lh of October 2020 to their written submissions. This letter was placed after page 6 of the Respondent's written submission and referred to in Paragraph 4 line 4 on page 2 of the Respondent's written submissions. Counsel wrote the words "See notification attached".

- [31] Should we accept this letter of notification in evidence? We think the answer to this question must be a resounding no. This Court was confronted with similar circumstances in *Okumu. We* held documents that appeared for the first time at the submission stage were against the rules of trial practice and inimical to the minimum level of collegiality expected of trial advocacy, fair game, and a right to a fair hearing. We struck off the evidence as it had not been properly presented, tested in cross-examination and admitted. While Section 19 of the Labour Disputes( Arbitration and Settlement) Act Cap. 227 does not bind this Court to the rules of evidence in civil proceedings, the idea that a party can place evidence in the written submissions without making an application for admission of the evidence after the opposing party has closed its case and filed written arguments does not resonate with the principles of a fair, trial. Therefore, the letter attached to the Respondents' written submissions is expunged from the record. Because of Q expunging this letter, we are unable to find that the Respondent notified the Commissioner for Labour, Industrial Relations and Productivity of its intention to terminate the Claimants on account of redundancy. The Respondent would not be found to have complied with Section 80(1)(b)EA. The Termination would be procedurally wrong to this extent. - [32] Were we to consider this letter, the Respondent would find itself in a second difficulty. The letter was dated the 19lh of October 2020. The termination letter for the 1st Claimant was dated the 24lh of August 2021 and the 2nd Claimant's was dated the 10th of May 2021. Section 80(1)EA provides for terminations contemplated within a period of **not more than three months.** In the case before us, the Claimants' terminations are outside the three-month window afforded under the provision of law. Three months from October 2020 would lapse on the 19¹¹¹ of January 2021 and not in May 2021 when the 2nd Claimant was terminated. Therefore, even if we were to consider the letter of the 19th of October 2020 as notification to the Commissioner, it would be out of the time stipulated by statute. To this extent, the Respondent would have been found not to have complied with the law. - [33] Ms. Musumba and Mr. Lubowa made another proposition on notification of redundancy. Counsel submitted that the Respondent held ^a "town hall" meeting during which matters relating to restructuring were discussed. RW1 and RW2 conceded under cross-examination that "town hall" was ^a virtual meeting. According to Black's Law Dictionary[10](#page-7-0), the expression "town hall" appears to have its origins in politics in the United States being an informal public meeting at which ^a politician or official speaks about his or her policies and answers questions from members of the public on issues important to the community. The use of "town halls" in the employment sphere became common in organisations with improvements in technology. Ian Wells in an article titled "The Growing Importance of Town Hall Meetings" [11](#page-7-1) suggests that COVID-19, remote working and remote teams have fueled the popularity of "town halls" which, according to Wells, is ^a great way to engage staff. But do "town halls" meet the legal threshold for notification?

<span id="page-7-0"></span>**¹⁰ 11\* Edition Bryan A. Gamer, Thomson Reuters at page 1795**

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<span id="page-7-1"></span>**¹¹ htins://lQ(ihicconnecl.coin aij/irnoortance-tc/wn-hail-meetings/ last accessed on 14.01.2025 at 7:43 pm**

- ] Section 80EA does not provide for notification of redundancy in terms of a public meeting between the employer and employees. Section 80(1)(a)EA requires the notification to the union to include the names of the representatives of the labour union and Section 80(1 )(b) requires the notification to the commissioner in writing. It follows therefore that while ^a "town hall" may be useful in commencing the consultative process of a redundancy termination, the employer is required to put, in writing, the reasons for the impending termination in its notification to the union or Commissioner and by necessary implication, to an individual employee. The purpose of the written notice explains the importance of records in a challenge such as the present one. Comparative jurisprudence supports the proposition that a "town hall" would not be considered sufficient notification of an impending redundancy. In *Nqaira & 126 others v Sendwave Limited (ZEPZ)'²* Ndolo JK was considering Section 40 of the Kenyan Employment Act 2007 which requires an employer to give one month's notice of an impending redundancy termination. In that case, the Employer/Respondent called for a town hall meeting, after which the Claimants were locked out of the work portal and denied email access. A day later, the Claimants received a letter addressed to the Ministry of Labour under reference 'Notification of end of Employment because of Redundancy'. The Claimants later received letters via DocuSign under reference 'Confirmation of End of Employment by reason of Redundancy'. In her judgment, Lady Justice Ndolo was not persuaded that the notification of redundancy complied with the law. The Court drew the inference from the Respondent's action that by the time the town hall meeting was being convened, the Claimants had already been selected for redundancy and there was no room for mitigation. Her Lordship found and held that the communication to the Claimants regarding the impending redundancy did not qualify as a redundancy notice as defined in law. - [35] Comparative jurisprudence explains the essence and import of a written notice. The notice aids in any examination of procedural unfairness. This is especially so because Ms. Musumba argues that REX 12 and REX 25 were individual notices of redundancy. These letters were both captioned "NOTICE OF REDUNDANCY". They then informed each of the Claimants that they had been unsuccessful in their respective applications and were now redundant. The Claimants were asked to handover and their terminal benefits computed. In our view, these were not notices of an impending redundancy but termination notices. The letters do not speak of any impending redundancy. They are couched in declaratory language and formally advise the Claimants that they have been rendered redundant. This is not the spirit of the consultative process drawn from Article 13 of the ILO Termination of Employment Convention No. 158 of 1992 from which Section 80EA is crafted. The unique attributes of a redundancy termination were explained by Professor John Grogan in "Workplace Law" where he observes that employers have an undoubted right to terminate for economic reasons but because of the greater economic and social ill effects of terminating an active employee who may have rendered impeccable service to the employer and is still able to do so, the procedural requirements of such terminations ought to be adhered to minimize the prejudice associated with redundancy terminations. Indeed, the Claimants both led evidence of good performance and positive appraisals. They had served the Respondent without blemish. The 2nd Claimant was appointed Chairperson of the Contracts Committee by the Secretary to the Treasury. He considered this a position of esteem and an acknowledgment of his contribution to the Respondent. Therefore, rendering him redundant in a transition would be prejudicial to his estimation of his worth.

**LDR l6l/M22A»a»»drftnlfitiiy Wabwire Musaua J**

**I? ¹20241 KE EL RC 567 (KLR)** - [36] Mr. Semwanga submitted that the letters of termination did not amount to notice, and that notice is about an intended redundancy. We agree that this would be a procedural defect. But does that mean that the Claimants had no knowledge of the institutional review and restructure? Both Claimants testified that they were not individually notified of the restructuring exercise and did not see a copy of M/S True North, the consultant's report on the outcome of the review process. They did not dispute the "town hall" at which the institutional review was first discussed. It is quite correct to say that the matters of institutional review could have been discussed at this town hall meeting but as a legal standard of notification of redundancy, we cannot say that this would meet the yardstick of notification of an intended redundancy of the 1st and 2nd Claimant. There were no minutes of the "town hall" to ascertain what was discussed. There was no sharing of a report by the consultants, with the Claimants discussing the impending redundancy. In all these circumstances, we would find that the Respondent was procedurally wrong in terminating the Claimants. We are fortified in taking this position by the decision of the Employment and Labour Relations Court of Kenya in *Veronica Mkiwa Mwalwala* i/ *Faiza Bhanji t/a Villa Kalista Enterprises[13](#page-9-0)* where Rika J found that there must be a notice of intention to declare a redundancy, followed by consultation involving either the union or the unrepresented employees and then a notice of termination after the consultation. The Court held that the notice of intention to declare a redundancy was different from the notice of termination. - [37] Do these procedural missteps render the termination substantively unfair and unlawful? In our view, procedural and substantive fairness in a redundancy termination are inexplicably intertwined. In other words, in rendering a decision on substantive fairness this Court would be concerned with how the decision to render the employee redundant was reached and not why. The why would be a preserve of the Employer's autonomy; to decide on business efficacy and • this is not within the precincts of the Employment and Labour Court. In other words, it is not the business of the Court to decide if an employer should downsize, right size, reorganize, restructure or terminate its employees for business reasons. Business reasons are simply about business. The interests of the Court are procedural and to the Court, it would be whether that decision to render employees redundant was implemented fairly. In *Aporo,* this Court cited the dicta of Judge Abigail Holt(s/tt/ng *alone)* who laid out the guidance from the Employment Appeal Tribunal in *Williams & Others v Compare Maxam Limited[14](#page-9-1)* on redundancy dismissal to be;

*"In general terms, employers acting reasonably will seek to act by giving much* **o** *warning as possible in impending redundancies to employees so they can take early steps to inform themselves ofthe relevant facts, considerpositive alternative solutions and, if necessary, find alternative employment in the undertaking or elsewhere. The employer will consult about the best means by which the desired management result can be achieved fairly, and the employer will seek to see whether, instead of dismissing an employee, he could offer him alternative employment. A reasonable employer will depart from these principles only where there is good reason to do so.''*

[38] The procedural guidelines impose a level of substantive fairness in the decision to terminate on account of redundancy. As pointed out in *Aporo,* a termination for redundancy is at no fault of the employee. Where the employer finds that he, she or it must sever an employment relation

<span id="page-9-0"></span>**¹³ F202Q1 KEELRC 1821 (KLR)**

<span id="page-9-1"></span>**¹⁴ [1982] IRLR 83**

due to redundancy, there ought to be a consultative process. A consultative process promotes fair labour practices. The fairness of the decision to terminate a given employee calls for transparency in declaring a given position redundant. Fairness makes for justice in a case and not for the employee whose position has been declared redundant to feel victimized. It is all about fairness. The idea of a consultative process was also explained by the Court of Appeal of Kenya in *The German School Society & another v Ohany & another[15](#page-10-0)* in the following terms

*"In essence, consultation is an essential part of the redundancy process and ensures that there is substantive fairness. The employer should ensure that it carries out the process in as fair as possible and that all mitigating factors are taken into consideration."*

- [39] This stance would be consistent with the dicta of Mwangushya JSC in *Hilda Musinguzi v Stanbic Bank Ltd[16](#page-10-1)* where his Lordship held that a Court could not fetter the employer's right to terminate an employee if the employer followed procedure to prevent employees from being terminated at the whims of the employer. The fairness of the consultative process means that an employer ought not to draw a list of targeted employees and then meet the procedural threshold for termination and justify the same. In establishing substantive fairness of redundancy, it ought to be shown that the process was fair, transparent, objective and involved the employee. The employee ought to be treated fairly. In the present case, we are not satisfied on the evidence before us as laid out above, that the Claimants were fairly treated mainly because the process post "town hall" does not appear to have been transparent, objective, clear and fair as explained in paragraph [41] below. - [40] The other hypothesis advanced by the Respondent to justify the termination is that the Claimants were invited to apply for positions in the new structure which they unsuccessfully did and were then rendered redundant. Ms. Musumba cited *Nankabirwa* in support of the view that the unsuccessful applications to advertised roles rendered the termination lawful. In *Nankabirwa,* the Claimant was on leave when she was advised to apply for two jobs that had been advertised. She did not apply nor attend interviews. The Court found that the Claimant had been rendered redundant. - [41] In the matter before us, the evidence of the 1st Claimant is that he was surprised to receive ^a letter of redundancy on the 24lh of August 2024. But in paragraph 12 of his witness statement, he testified that he had applied for two roles, one for Manager Integrated Risk and the other for Manager Reconciliation and Support. What was in the 1st Claimant's mind the likely outcome of the interview? He would either qualify or not. Had he been informed that a failure in any of the interviews would render him redundant? We find no evidence of such communication. Indeed, even the 2nd Claimant who applied for the position of Manager Operational Risk and Financial Crimes and served in that position in an Acting Capacity from 21st October 2020, submitted his application for a substantive appointment in March 2021 and received his redundancy notice on 10th May 2021, there was no indication and communication of possible job loss. It is this lack of transparent communication on the part of the Respondent that in our view renders the termination for redundancy substantively unfair. While redundancy is an acceptable mode of termination of an employment contract, the process must be fair. On page 23 of the Respondent's trial bundle

<span id="page-10-1"></span><span id="page-10-0"></span>**¹⁵ [2023] KECA894 ¹⁶ SCCA 05/2016**

was ^a document titled "Q" and "A". In it was ^a series of questions and answers about the restructuring process. Bullet 3 read as follows:

# *3. Will Stafflose theirjobs*

*This is not a staff rationalization drive. The objective is to review our organizational setup and purpose an organizational structure and( related HR policies, processes andprocedures) that can support delivery of our strategic plan.*

The Internal Memo REXH 4 informing the Respondent's employees of institutional review did not suggest job loss. Coupled with the absence of minutes of the town hall, it would be impossible to say that the Respondent communicated the possibility of job loss and for this reason, we are unable to accept the hypothesis that by applying for new positions, the Claimants were made aware that they would find themselves redundant if unsuccessful. A review of the Respondent's Human Resources Policies, 2018(REXH 30) and 2020(REXH 31) did not lead us to any conclusion on adherence to the procedure on termination for redundancy that we should reach any other conclusion except that the Respondent did not treat the Claimants fairly, and we so find.

**[42]** In all circumstances, we do not find that the Respondent treated the Claimants in a fair, objective and transparent manner. The purported notices of redundancy were in fact termination in themselves. In the result, we hold that the Claimants' terminations were unlawful. Issue one is answered in the affirmative.

#### **Issue II. Whether the Claimants are entitled to a bonus for the year 2020**

- **[43]** Citing Section 90EA(now *Section89EA)* and paragraph 14(O)(IV)(a-f) of the Respondents HRM EXH34, it was argued for the 1st Claimant, that he was entitled to a bonus pay of UGX 950,000/=. For the Respondent, it was contended that bonus pay is neither an entitlement nor a benefit under the law or under the Respondent's HRM. - **[44]** We agree with Ms. Musumba's submission. Under Section 89(1)EA, any gratuity, bonus, or pay other than what is provided for in the Act is taken into account in the calculation of any severance and shall be deducted from any severance pay that is due. Bonus pay is gratuitous or discretionary. The 1st Claimant was paid severance pay for 3 years and seven months. In the present circumstances and given the gratuitous nature of bonus pay, we are unable to find that the 1st Claimant is entitled to bonus pay for the year 2020.

## **Issue III. What remedies are available to the parties**

**[45]** Having found the termination procedurally and substantively unfair, the Claimants would be entitled to remedies. The Court is mindful that the Claimants received severance pay, three month's salary in lieu of notice and a certificate of service. These shall be taken into consideration in an award of any remedies.

**LOR I6I/ wa^Arflhtiiiy Wabwira Musana J**

## *Severance pay*

- [46] Citing Section 87(a)EA and *Hot Loaf Bakery Limited v Ndungutse and 28 Others¹⁷* it was argued that the 1st Claimant was entitled to UGX 380,000/=, while the 2nd Claimant was entitled to UGX 1,050,000/= in additional severance pay. Under Section 86EA, severance pay, as a remedy is available to an employee who is unfairly dismissed, dies in the service of his or her employer, terminates his or her contract of employment for physical incapacity not occasioned by his or her own serious and wilful misconduct, is terminated because of death or insolvency of the employer or has a contract terminated by a labour officer following inability or failure to pay wages. - **[47]** In our view, the provision does not cater for severance pay where an employee is unfairly or unlawfully terminated. Indeed, in *Ndungutse,* the Court of Appeal was dealing with a question of computation of severance pay in a matter of unlawful summary dismissal and not termination. But because the parties agreed to payment of severance pay, this Court shall not interfere with payments of severance pay already paid to the Claimants. Except, there shall be no award of additional severance pay as Section 86EA does not make provision for severance pay in cases of unlawful or unfair termination.

# *Unlawful deductions*

- [48] It was submitted for the 1st Claimant that the Respondent unlawfully debited his account for UGX 2,471,983 for repayment of his loan. Counsel cited *Florence Mufumba v Uganda Development Bank Ltd™* for the proposition that the Claimant was entitled to relief from the loans intended to be wholly settled by salary reductions in the case of unlawful termination. - **[49]** Counsel for the Respondent countered that the Insurers had said the sum of UGX 830,266/= to the 1st Claimant and he had conceded as much in cross-examination. Regarding the sum of UGX 1,641,983/=, the Respondent argued that this sum was deducted by another entity, a staff SACCO and not the Respondent. On this basis Counsel distinguished *Mufumba.* - [50] Under Section 44EA, deductions on wages are generally not permitted except as provided under the Act. Under Section 45EA, taxes, rates, subscriptions or contributions imposed by law, where employee consent is given, rent and reasonable accommodation and union dues are permitted deductions. - [51] In the present case, the 1st Claimant was shown REX17, his Bank Statement for the period 1st May 2021 to 9th November 2022. He confirmed his account number. The statement showed that there was an insurance claim paid in the sum of UGX 830,266/=. Having acknowledged that this payment was made, we are unable to order a refund as that would amount to unjust enrichment. - **[52]** Regarding the SACCO deduction, by CEX53, the 1st Claimant complained about deductions. CEXH 54 which was his statement indicates a deduction of UGX 1,641,983/= on the 22nd of April 2022. The 1s' Claimant left the Respondent Bank in August 2021. There were several insurance payments of UGX 830,266/= onto his account in settlement of his loan indebtedness. The sum

**LOR ,■ Wabwira Musana J**

**^&quot; I20231UGCA97**

**^&quot; [1965] EA 789**

of UGX 1,641,983/= did not appear in REX 17. However, in an email CEX56, from Didas Tumwebaze to the 1st Claimant, it is explained that loan recoveries for 27th April 2022 included two months March and April 2022. In our estimation and judgment, the sum of UGX 1,641,983/= would represent two payments as explained by Mr. Tumwebaze. It is consistent with loan collections, and we do not think that the 1st Claimant laid ^a sufficient basis for the hypothesis that this was an unauthorized deduction from his account. Similarly, we do not accept the suggestion that this sum was a recovery by a SACCO as suggested by the Respondent as the evidence does not support that hypothesis. Therefore, we hold that the deduction of UGX 1,641,983/= did not amount to an unlawful deduction.

## *Acting allowances*

- **[53]** For the 2nd Claimant, it was argued that he was entitled to payment of acting allowance for 18 months amounting to UGX 21,600,000/= plus fuel and airtime for a total of UGX 23,400,000/=. Mr. Semwanga submitted that the only evidence of payment of acting allowances was for the period the 2nd claimant was acting Head of Risk. - **[54]** Ms. Musumba and Mr. Lubowa countered that the Respondents' HRM provided for acting allowances for higher positions and that at the level of Ag Senior Manager Strategy and Partnerships, the Claimant was at the same level as Senior Manager Risk. He accepted this position with no additional acting allowance. - **[55]** According to clause 4.9 of the HRM, an acting appointment is when an employee is called upon to take on duties and responsibilities of a post higher than his or her official position. The letter of appointment to acting capacity was admitted in evidence and marked CEX60. In paragraph two of the letter, Judy N. Kikonyogo, Head of Human Resources wrote that this was a horizontal movement for which there were no acting allowances. The letter bore the 2nd Claimant's signature. Therefore, on the evidence before us, we are not satisfied that the 2nd Claimant has made a case for payment of acting allowances. We agree with Counsel for the Respondent that he was not entitled to acting allowances for the position of Ag Senior Manager Strategy and Partnerships and the claim is hereby disallowed. - **[56]** By a similar token, clause 4.9.8 of the HRM provides that an employee in an acting capacity is not entitled to all benefits at the higher post. Therefore, all other acting allowances claimed had they been attached to a higher post would be and are hereby disallowed.

## *Damages*

[57] On general damages, Mr. Semwanga relied on *Bank of Uganda v Kibuuka and 4 Others* ¹⁹ for the proposition that where termination is unlawful, the Court ought to award general damages. It was suggested that the Respondent flouted all necessary steps and therefore the 1st Claimant was entitled to UGX 100,000,000/= in general damages while the 2nd Claimant was entitled to UGX 250,000,000/=. We were also asked to award the 12 years' salary at UGX 573,465,600/= and the 2nd Claimant UGX 1,312,023,840/= as 10 years' salary because the Claimants were permanent and pensionable. 18

**18120211 UGCA 33**

**LOR 161 y Wabwire Musana J**

- ¹ For the Respondent Ms. Musumba citing *Uganda Development Bank v Mufumba* ^submitted that Respondent had not caused the Claimants any wrong and therefore there was no justification in any award of general, punitive or aggravated damages. In Counsel's view, the Respondent was not callous or indifferent and there was no evidence of lack of compassion that aggravated damages should be awarded. - **[59]** The principles regarding an award of general damages in employment disputes have been settled by the Supreme Court in *Uganda Post Limited v MukadisP¹* where the Court observed that general damages can be awarded in addition to the payment in lieu of notice given to an employee who has been unlawfully dismissed from employment. General damages are awarded in addition to payment in lieu of notice and are not tied to specific financial losses. General damages are assessed by the court and are not restricted to the salary or pecuniary benefit stipulated in the employment contract. They are awarded to compensate the employee for non-economic harm and distress caused by the wrongful dismissal. These damages include compensation for emotional distress, mental anguish, damage to reputation, and any other non-monetary harm suffered due to the dismissal. - **[60]** In the circumstances that we have found that the Claimants were unlawfully terminated, they are entitled to general damages. As to quantum Counsel sought UGX 100,000,000/= for the 1st Claimant and UGX 250,000,000/= for the 2nd Claimant In *Kasasira v Yalelo Uganda Limited\*²* an unlawfully terminated claimant who had worked for about two years and was earning a monthly salary of UGX 37,545,000/=, was awarded UGX 56,317,500/= in general damages. This followed from the considerations on quantum, in *Stanbic Bank (U) Ltd v Constant Okou[\\* 212](#page-14-0)³* Madrama, JA (as *he then was)* held employability or prospects of employment, age, and manner of termination as considerations for the quantum of general damages. *Mukadisi* also holds the value of the subject matter, or the salary would also be ^a consideration. - **[61]** In the matter before us, each of the Claimants received severance pay, three months payment in lieu of notice, and untaken leave. We think that in paying the terminal benefits, the Respondent was attempting to mitigate the effects of a redundancy termination. By offering severance pay for each year worked and paying three months' salary in lieu of notice, the Respondent was mitigating the damage and prejudice occasioned by the redundancy declaration. This mitigation means that there would be a diminution in general damages. In *Kabaqambe v Post Bank Uganda Limited*[24](#page-14-1) we found that the Respondent was procedurally unfair in terminating Mr. Kabagambe but it had a justifiable reason for dismissing him. We held that this had the effect of decreasing the quantum of damages awarded. In the present case, there was notice. However, it remains that the 1st Claimant received 7 days' notice while the 2nd Claimant received about 21 days' notice. The law requires a redundancy notice of four weeks. For this reason, we are of the persuasion that the Claimants would be entitled to additional general damages despite having been paid their terminal benefits and payment in lieu of notice. - **[62]** The 1st Claimant had worked for the Respondent for close to 4 years. He was earning UGX 3,800,000/=. Considering all circumstances, the Claimant's monthly salary of UGX 3,800,000/= - m[£01&UG!CJ?4

- **22 [20171 UGIC 24** - <span id="page-14-0"></span>**²³ Civil Appeal No. 60 of 2020** - <span id="page-14-1"></span>**²⁴ [20231UGIC 50**

**²¹ [2023] UGSC 58**

and payment of his terminal benefits we would grant the Claimant the sum of UGX 11,400,000/ in general damages.

- **[63]** The 2nd Claimant was earning UGX 10,933,532/= at the time of his termination. Applying the same considerations as we have in respect of the 1st Claimant including receipt of UGX 95,066,850/= in terminal benefits, we would award the 2nd Claimant the sum of UGX 32,800,596/= in general damages. - [64] On the question of salary for 12 and 10 years respectively, it is the position of the law that an employee is entitled only to salary earned per Section 40EA.[25](#page-15-0) Therefore, we decline to award the 1st and 2nd Claimants the sums of UGX 573,465,600/= and UGX 1,312,023,840/= respectively.

## *Aggravated damages*

- **[65]** Citing *Bank of Uganda v Betty Tinkamanyire[26](#page-15-1)* Counsel for the Claimant sought aggravated damages of UGX 200,000,000/= for the 2nd Claimant and UGX120,000,000/= for the 1st Claimant. Citing *Mufumba* Counsel for the Respondent contended that none of the elements for aggravated damages were present. - **[66]** We agree with Mr. Semwanga's restatement of the law that aggravating circumstances include illegalities and wrongs in the termination compounded by the Respondent's lack of compassion, callousness and indifference. The Respondent's conduct must be degrading to the employee and that is the point that Kanyeihamba JSC made in *Tinkamanyire.* His Lordship considered the posttermination review by the employer which showed a stellar regard for the Respondent and considered the callousness and indifference of the Appellant's employees. In the present case, the post-termination processes including the issuance of certificates of service, the exit interviews and processing of terminal benefits do not in our view reflect an indifferent and callous approach on the part of the Respondent's employees. Therefore, we do not find any aggravating circumstances that warrant an award of aggravated damages. We therefore decline to award any.

# *Interest*

**[67]** An award of interest is at the discretion of the Court. See *Ahmed Bholim v Car and General Ltd[27](#page-15-2)* and Section 26 of the Civil Procedure Act Cap. 282. We consider interest at the rate of 14% per annum on the award of general damages from the date of this award until payment in full to be appropriate in this case.

*Costs*

**[68]** In this Court, an award of costs in employment disputes is the exception on account of the employment relationship except where the losing party has been guilty of some misconduct.[28](#page-15-3) In the present case, we are not persuaded to award the Claimant the costs of the claim as the Respondent may have been procedurally and substantively unfair in its decision to render the Claimant's redundant but did not misconduct itself.

**LOR 161/**

<span id="page-15-0"></span>**²⁵ See Qlweriy v Equity Bank (U) Limited [20211 UGIC 45**

<span id="page-15-1"></span>**²⁶ [2008] UGSC 21**

<span id="page-15-2"></span>**²⁷ [2004] UGSC 8**

<span id="page-15-3"></span>**²⁸ See Kalnie v Deustche Gesellschaft Fuer Internationale Zuzammenarbeil (GI2) GMBH [20231 UGIC 89**

# **Final Orders**

- **[69]** Finally, it is our finding that the Claimants were unfairly and unlawfully terminated. We make the following orders: - (i) It is hereby declared that the Claimants were unfairly and unlawfully terminated from employment by the Respondent. - (ii) We order the Respondent to pay the 1st Claimant the sum of UGX 11,400,000/= in general damages and the 2nd Claimant UGX 32,800,596/= as general damages. These sums shall carry interest at 14% p.a. from the date of this award until payment in full. - (iii) No order as to costs.

**It is so ordered.**

**LDRI6IZ forty Wabwira Musana J**

**Page 18 of 18**

**16.01.2022**

**9:52 a.m.**

**Appearances:**

- **1. 2nd Claimant in Court.** - **2. 1st Claimant and Counsel are absent.**

Court Clerk: Mr. Samuel Mukiza

**2nd Claimant:** My lawyer has another matter and is unable to come to Court today.

**Court:** Award delivered in open Court.

Anthony Wabwire Musana, 10:43 alm\ **Judge,(industrial Court.**

**o**