November 17, 2023.
KAMPALA, Uganda | In a recent ruling, the Court of Appeal in Uganda has reinforced an employer’s unrestricted right to terminate employment contracts, shedding light on the legality of such actions. The case, Stanbic Bank (Uganda) Limited vs Nassanga Saphinah Kasule, has set a precedent emphasizing the importance of providing notice or payment in lieu of notice.
Nassanga Saphinah Kasule, an employee of Stanbic Bank, found herself at the center of a termination dispute when the bank ended her employment, invoking a clause in the contract allowing termination with the issuance of the required notice or payment in lieu of notice.
Challenging the termination, Nassanga took the matter to the Industrial Court, arguing that the lack of a specified reason and a disciplinary hearing rendered the termination unlawful. The Industrial Court ruled in her favor, awarding her Ugandan Shillings 65,000,000 as general damages.
However, the Court of Appeal clarified that an employer possesses the right to terminate an employee’s contract with or without cause, as long as proper notice or payment in lieu of notice is provided. The ruling emphasized adherence to the Employment Act, the terms of the employment contract, and any other governing document.
In this specific case, the Court highlighted that a notice of termination spanning three months was issued, rendering the termination lawful. The judges clarified that the requirement for a disciplinary hearing arises only in cases of dismissal based on misconduct or poor performance, not in straightforward termination cases.
Furthermore, the Court clarified the scope of damages in employment matters. It emphasized that damages awarded should be confined to the loss suffered due to the employer’s failure to give proper notice. In the absence of such failure, no damages are applicable for the actual loss of employment or any emotional distress caused by the termination.
The Court’s decision provides clarity on the legal framework surrounding employment terminations in Uganda, reassuring employers of their rights while underscoring the importance of fair practices. As the ruling sets a precedent, it serves as a guide for both employers and employees in understanding the legal parameters governing employment relationships.
