Court of Appeal Holds That Employers Can Terminate Employees Contracts Without Giving Reasons For Termination

The Court of Appeal has ruled that Emplyers can terminate employees contracts anytime without giving reasons for termination as long as they give sufficient notice or pay three months lieu.

On whether there must be a hearing before an employee’s contract is terminated, the court ruled that any hearing before termination can only happen where the employee is dismissed on the grounds of misconduct or poor performance.

“It is my view; this was not a dismissal but a termination. For one to invoke the application of section 66 of the Employment Act, it must be a dismissal on grounds of misconduct or poor performance.

In a case between Nassanga Saphinah Kasule verses Stanbic Bank, the court held that unless it was explicitly stated in the employment contract, the employer for as long as gives notice or pays the salary of three months in lieu of the notice, the termination stands.

Since it is not the case in this matter, it is my view, that there was no need for a hearing.

The purpose of the hearing is to establish whether the allegations advanced against the employee are true…where no allegations were made against the respondents, then there was no need for a hearing,” the judgment reads in part.

“In turning to whether termination under section 65 ( I )(a) needs reasons and/or a hearing, is a matter that has been handled by both the Supreme Court and this court. Where it has been held that an employer can terminate the employee’s employment contract for a reason or no reason at all… It is therefore very clear…that the employer is not required to give reasons for termination of the employment contract under section 65(1)(a). Unless the employment contract states it.

“Otherwise, the employer does not need to have a good reason or any reason to terminate the employment contract. It suffices that the employer has given sufficient Notice as provided for under section 58 of the Employment Act, the employment contract, and any other documents governing the said contract. Where notice is not given, payment in lieu is required as provided by the law and contract,” the unanimous decision written by Justice Christopher Gashirabake reads in part.

The other two justices who agreed with Gashirabake were Richard Butera and Catherine Bamugemereire.

The court wholly ruled in favour of the Bank and set aside the ruling of the industrial court. It also ordered Nassanga to pay the cost of the appeal and also the one in the industrial court.

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