(Labour Disputes Reference No. 296 of 2022 (arising from Labour Dispute No. KCCA/CEN/LC/408/2022; Martin Kasasira v Yalelo (U) Ltd).

1. Background

The Claimant was employed by the Respondent, an aquaculture firm, as a Commercial Director under a four-year contract with a monthly salary of UGX 37,545,000/=. He was initially placed on a six-month probation period before being confirmed on January 5, 2021. On November 19, 2021, the Claimant was placed on a two-month Performance Improvement Plan (PIP) due to concerns about his performance. Despite being urged to improve by the Respondent’s CEO, Piers Mudd, the Claimant was terminated on May 26, 2022, for underperformance during the PIP period from December 2021 to January 2022. Upon termination, he received UGX 49,596,774/=, covering one month’s salary in lieu of notice and 10 days of leave. The Claimant, disputing the termination, demanded an apology and compensation totaling UGX 398,761,851/= for various claims. The Respondent maintained that the Claimant was issued warning letters and put on a PIP but did not make sufficient improvement. The Respondent further argued that the Claimant was given a fair hearing consisting of a warning letter, PIP and emails and his responses were deemed unsatisfactory and he was terminated for poor performance. The Claimant subsequently lodged a complaint with the Directorate of Gender, Community Services, and Production at the Kampala Labour Office, and after several sessions, the matter was referred to the court.

2. Issues

1. Whether the Claimant was unlawfully and wrongfully terminated by the Respondent?

2. What remedies are available to the parties?

3. Decision of the Court

The court observed that the employment contract had been discharged by dismissal, not termination. The court amended the first issue accordingly.

The court distinguished termination from dismissal. It was held that termination is the discharge of an employee from employment at the employer’s initiative for justifiable reasons other than misconduct, such as expiry of the contract, attainment of retirement age, or another reason in section 64 of the Employment Act. That dismissal, on the other hand, means the discharge of an employee from employment at the employer’s initiative when the employee has committedverifiable misconduct. (Akewa v Loving One by One Ministries [2024] UGIC 54 applied).

A lawful dismissal was described to involve observing the right to a fair hearing and that the right to be heard is constituted in the twin test applied when determining the lawfulness of termination i.e. procedural fairness and substantive fairness (Ebiju James v Umeme Limited H.C.C.S No. 133 of 2012 and Mugisha v Equity Bank Uganda Limited [2023] UGIC 62 applied).

Court also held that a lawful dismissal involves observing the right to a fair hearing and the principles for a lawful dismissal are the following;

1. There must be a notice of allegations against the employee served on him or her in sufficient time to prepare a defence.
2. The notice should clearly state what the allegations against the employee are.
3. The notice should state the employee’s rights at the hearing including the right to respond to allegations, the right to be accompanied to the hearing and the right to cross-examine witnesses or call witnesses.
4. The employee should appear before an impartial committee.
5. If there are any investigations and other reports they should be given to the employee in due time before hearing.

(Kabagambe v Post Bank Uganda Limited [2023] UGIC 50 and Kyamagero v Marie Stopes Uganda Limited [2023] UGIC 52 applied)

After an objective evaluation of the evidence and having considered the parties’ respective submissions and the law, the court concluded that the Claimant’s dismissal from employment by the Respondent was procedurally unfair and unlawful for the following reasons:

• The Respondent did not serve the Claimant with a notice of invitation for the hearing, and the email exchange between the Respondent and the Claimant did not constitute a proper notice since it neither contained all the allegations leveled against the Claimant nor did it invite the Claimant for a hearing. (Musimenta v United Bank for Africa [2024] UGIC 53 applied).

• The Claimant was not accorded a fair hearing before the dismissal was effected. The email exchange between the Respondent and the Claimant did not constitute a hearing since section 65 of the Employment Act requires that the hearing should be oral, especially where serious allegations are made. Hence, there was no procedural fairness. (Hot Loaf Bakery Ltd v Ndungutse and 28 others [2023] UGCA 97, Engineer Frederick Mubiru v Engineers Registration Board High Court Civil Appeal No. 087 of 2024 and Stanbic Bank Uganda Limited v Deogratias Asiimwe [2020] UGSC 37 applied).

• Where the dismissal is premised on poor performance, the employer must demonstrate that the employee in issue was appraised and notified about his or her failure to perform, after which he or she was allowed to improve by either being placed on a performance improvement program (PIP) or any other means the employer deems appropriate and, finally, that the employee was subjected to disciplinary proceedings before the dismissal was effected. (Tamale Musisi Rita vs Airtel Uganda Limited LDC 183 of 2017 applied). In the case at hand, in January 2022, the Respondent’s CEO noted the outcome of the PIP. Then, on May 23, 2022, at 20:58, the CEO sent the Claimant an email outlining several issues and suggesting a meeting on May 24, 2022. There was no such meeting except that on May 25, 2022, the Respondent terminated the Claimant. Therefore, the PIP was not procedurally fair.

• The dismissal went against the provisions of Section 65 of the Employment Act and would, on the authority of Tamale Musisi Rita v Airtel Uganda Limited (Supra), be procedurally unfair. This was compounded by the Respondent’s breach of its own Human Resource Manual. An employer failing to follow its own internal procedure is an unfair labor practice. (Charles Ochieng Opiyo v Lake Basin Development Authority [2021] eKLR cited with approval).

Regarding remedies;

1. The court held that the Claimant was entitled to one month’s pay in lieu of notice pursuant to section 57(3)(b) of the Employment Act.
2. The Claimant was awarded the sum of UGX 12,096,774/= as outstanding leave days.
3. The court further awarded the Claimant four weeks’ net pay.
4. Having found that the Claimant was unlawfully dismissed, the court held that the Claimant was entitled to severance pay, calculated at the monthly pay rate for each year worked. As the Claimant was earning a gross salary of UGX 37,545,000/= per month and had worked for one year, ten months and 12 days, the Claimant was entitled to UGX 70,084,300/= in severance. (Kamuli v DFCU Bank [2015] UGIC 10 applied).
5. Considering that the Claimant had worked for about two years and the circumstances surrounding his unlawful dismissal and his monthly salary of UGX 37,545,000/=, the court awarded the Claimant UGX 56,317,500/= in general damages. (Kamuli v DFCU Bank [2015] UGIC 10, Uganda Post Limited v Mukadisi [2023] UGSC 58 and Stanbic Bank (U) Limited v Okou [2023] UGCA 100 applied).
6. The court awarded the Claimant interest on the award at 14% per annum from the award date until payment in full. (Mukankusi v Uganda Revenue Authority [2019] UGCA 2027 and Musimenta v United Bank for Africa [2024] UGIC 53).
7. No costs were ordered against the Respondent. The Court applied the decision in Kalule v Pensions Gesellschaft Fuer Internationale Zusammenarbeit (GIZ) GMBH [2023] UGIC 89.

4. Legal Implications of the decision

This judgment reinforces the importance of procedural fairness in employment terminations and the adherence to statutory and internal procedures. Employers must ensure clear communication and fair hearings to avoid similar rulings.

The decision also highlights the court’s approach to award of damages, interest and costs in cases of unlawful dismissal.