Stanbic Bank(U) Limited V Okou R. Constant, Court of Appeal Civil Appeal No. 60 of 2020, Judgment delivered on 17 March 2023
Background to the case.
The Appellant filed this Appeal against part of the award of the Industrial Court arising out of a Claim filed by the Respondent arising from unlawful termination. The Respondent as well cross appealed part of the award of the Industrial Court. The major issue for determination by the Court of Appeal was whether the Industrial Court erred in holding that the Respondent was unlawfully terminated.
Judgment of the Court
The Court of Appeal agreed with the Industrial Court’s finding that the Respondent was unlawfully terminated. The Court of Appeal further stated that:
a) Termination of an employment contract must be within the precincts of Section 65 of the Employment Act 2006. According to Subsection 1 of Section 65, an employer can only terminate an employee after giving the requisite
b) Section 58(5) of the Employment Act 2006 renders void any agreement between the employer and the employee doing away with the giving of notice before termination. However, as per the same Section, an employee can consent to payment in lieu of
c) In situations where the employee does not consent to payment in lieu of notice, then the termination is deemed to be a summary dismissal pursuant to Section 69 of the Employment Act 2006. The said Section requires proof of “fundamental breach of contractual obligations” before a summary dismissal can be upheld as being
d) In the instant case, the termination was a disguised summary dismissal because the employee had not consented to payment in lieu of notice and therefore the termination was an unlawful summary dismissal because there was no proof that the employee had fundamentally breached his contractual obligations. Outstanding loans upon a finding of unlawful termination are handled on a case-by-case basis and different factors are considered before the employer is adjudged liable to pay back.
Effect of the Court’s judgment
This judgment has created an interesting departure from the Supreme Court’s Position in Barclays Bank of Uganda V Godfrey Mubiru Supreme Court Civil Appeal No. 1 of 1998 which cemented the position that payment in lieu of notice can suffice. The Court in the instant case emphasized that Godfrey Mubiru was pre the enactment of the 2006 Employment Act and hence it was no longer good law.
The judgment further tries to clear the confusion regarding whether the employer is liable to paying outstanding loan obligations in the event of a finding of unlawful termination/dismissal. There has been a plethora of contracting jurisprudence on this but this judgment tries to put in place parameters for consideration before an employer is rendered culpable.
Concluding observations.
This ruling has created an interesting “turn around” in the law relating to payment in lieu of notice. In as much as it is welcomed seeing the highhandedness exhibited by some employers at termination/dismissal, it creates a state of confusion in circumstances where the employee refuses to consent to the payment in lieu of notice. In such situations; will the dismissed/terminated employee continue to work under such precarious circumstances until their notice period is done? That is the White Elephant in the Room.
