Adam Kafumbe Mukasa v Uganda Breweries Limited
Court of Appeal holds that it is illegal for an employer to terminate an employment contract under the guise of redundancy if the conditions for the termination—as set out in the employer's human resource manual—are not followed.
Employers Should Follow Conditions in Their Human Resource Manuals When Terminating Employee Contracts
An employer can terminate a contract of employment in accordance with the law (the Employment Act) and the contract of employment with the employee. Where the employer terminates the contract of employment for whatsoever reason, the employer must follow the terms and conditions of their human resource manual (where applicable).
The Court of Appeal of Uganda in Adam Kafumbe Mukasa & 2 Others v. Uganda Breweries Limited, Civil Appeal No 115/2018 faulted the respondent company (as employer) for terminating the appellants’ employment on the basis of redundancy, upon finding that the termination did not comply with the conditions of the human resource manual of the respondent company.
The finding of the Court of Appeal was based on the specific definition of redundancy under the respondent company’s human resource manual. The human resource manual defined redundancy as declaring a job superfluous by abolition of office or responsibility.
The Court adopted the definition of abolition to mean entirely doing away with or annulling a position (that it ceases to exist). When the court applied the above definition to the facts, it found that the positions of the appellants had not been abolished but simply enhanced to enable the respondent company achieve the desired ambition.
The appeal from the decision of the Industrial Court before the Court of Appeal addressed the legality of an agreement between an employer and an employee seeking to restrain the employee from making any further claims after termination of the contract of employment and being paid terminal benefits.
Decision of the Court of Appeal.
In a decision rendered on July 15, 2022, the Court of Appeal held, among others, that:
“Whereas it is not in dispute that the appellants signed the termination letter, the termination procedure in the human resources manual … that preceded the so called termination agreement, was not adhered to by the Respondent. The Appellants could therefore not be held to the agreement that was preceded by wrongful acts of the Respondent.”
The appellants were terminated due to redundancy. However, the termination process was found not to have been compliant with the conditions in the respondent company’s HR manual on redundancy, as it provided that: “An employee whose job is declared superfluous by abolition of office or responsibility shall be declared redundant and shall be served with appropriate notice to cease employment.”
Since the positions of the appellants were found not to have been abolished (within the terms of the HR manual) but enhanced, the court held that there was no abolition of the office or responsibility, and the respondent company had no right to terminate employment contracts under redundancy as defined in the HR manual.
The court highlighted the fact that the law requires an employer to prove the reasons for dismissal and where an employer fails, it is deemed unfair dismissal under sections 68(1) and 71 of the Employment Act. The court observed that the employees’ signatures on the termination letters alone could not justify what the court found to be illegal nor legalise an illegality. The court therefore awarded each of the appellants UGX 20,000,000/= as general damages for unfair dismissal, with interest on the damages from time of dismissal.
Effect of appellate Court’s decision.
The decision shines a light to the importance of the HR manual adopted by an employer in the process of termination or dismissal of employees. An HR manual adopted by an employer that lays down procedures, should be followed when terminating or dismissing employees.
An HR manual compliments the Employment Act (and Regulations) and both manual and the law need to be respected when terminating or dismissing employees. Any agreement relinquishing claims against the employee cannot justify unfair dismissal because once an illegality is brought to the attention of the court, it overrides all admissions made by a party.
Employers ought to follow the procedures and conditions set out in their HR manuals to make sure that the processes they undertake to terminate or dismiss employees are justified under the HR manual and the employment laws of Uganda.
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No information contained in this alert should be construed as legal advice from ALP East Africa or ALP Advocates or the individual authors, nor is it intended to be a substitute for legal counsel on any subject matter.
For additional information in relation to this alert, please contact the following:
- Irene Namuli
Head, Corporate & Commercial Department
- Fiona Latigi Lamaro
Associate, Regulatory & Compliance Department