Absa Bank dismissal unlawful despite misconduct findings; Industrial Court holds fair reasons cannot cure an unfair process and clarifies when salary loans survive termination.

Waboga David
2 days ago
7 min read

Industrial Court holds that a dismissal may be substantively justified but unlawful for procedural unfairness; Absa Bank ordered to pay compensation for failure to provide witness statements and restricting an employee’s legal representation.

Facts

The Claimant, Eddy Muleme, was an Information Technology professional who had been employed by the Respondent, Absa Bank Uganda Limited (formerly Barclays Bank Uganda Limited), from 2 July 2007 until his dismissal in July 2018.

At the time of dismissal, the Claimant held the position of Data Centre and Networks Engineer.

In 2018, the Respondent undertook a relocation project involving the movement of offices from Plot 4 Hannington Road to Kampala Road.

The relocation involved the transfer and installation of infrastructure, including network systems; fibre cabling; power installations; and workstations.

The Claimant participated in the relocation project and contended that he introduced cost-saving measures, including the reuse of electrical sockets from the former premises. According to the Claimant, the reuse of the sockets was part of the relocation strategy and was undertaken with the knowledge and approval of senior officers involved in the project.

The Respondent, however, alleged that the Claimant removed electrical installations from the Hannington Road premises without authority and performed duties outside his designated role. On 20 June 2018, the Claimant was suspended pending investigations. He was subsequently invited to a disciplinary hearing held on 28 June 2018. Following the hearing, the Respondent dismissed him on 23 July 2018.

The Claimant appealed against the dismissal, but the appeal was unsuccessful on 28 August 2018. The Claimant thereafter lodged a complaint before the Labour Officer, which was subsequently referred to the Industrial Court.

Claim by the Claimant

The Claimant alleged that his dismissal was unlawful and unfair.

He contended that he had faithfully performed his duties throughout his employment; the relocation project had been authorised and supervised by senior management; the removal and reuse of electrical sockets was undertaken as part of a cost-saving initiative; he had not acted dishonestly or outside his mandate; the disciplinary proceedings were procedurally defective.

The Claimant further alleged that the charges communicated during disciplinary proceedings differed from those contained in his suspension letter; he was denied access to relevant evidence; witness statements were not provided to him; his legal representative was prevented from effectively participating.

He sought various remedies including payment in lieu of notice; severance pay; compensation; damages; repatriation allowance; pension interest; payment of his outstanding staff loan; and costs.

Response by the Respondent

The Respondent denied the allegations and maintained that the dismissal was lawful.

The Respondent argued that the Claimant removed electrical installations without authority; he acted outside his assigned responsibilities; the conduct amounted to gross misconduct; the disciplinary process complied with the Employment Act and the Bank’s disciplinary procedures.

The Respondent maintained that the Claimant was accorded notice of allegations; an opportunity to respond; legal representation; disclosure of relevant information; a disciplinary hearing; and an appeal process.

The Respondent therefore prayed that the claim be dismissed with costs.

Legal Representation

The Claimant was represented by:

Mr. Godfrey Balondemu, Branmark Advocates

The Respondent was represented by:

Mr. Allan Waniala, assisted by:

Mr. Pius Kitamirike; and
Mr. Ronald Nganwa of S&L Advocates.

Submissions of the Parties

Submissions by Counsel for the Claimant

Counsel for the Claimant, Mr. Balondemu, submitted that the dismissal was both substantively and procedurally unfair.

He submitted that the Respondent had failed to prove that the Claimant committed any disciplinary offence recognised under the Bank’s disciplinary procedures.

Counsel argued that although the Respondent relied on dishonesty as a basis for dismissal, it had failed to prove dishonesty or attempted dishonesty.

He submitted that the Respondent’s own witness had admitted that the Claimant was not dishonest.

Counsel further submitted that the Claimant had acted with authority from the Project Manager and Maintenance Officer, and that the removal of sockets formed part of the approved relocation and cost-saving exercise.

On procedural fairness, Counsel submitted that the Respondent violated natural justice by failing to provide witness statements and investigation materials before the disciplinary hearing.

He argued that the Claimant was denied a meaningful opportunity to defend himself because he could not effectively cross-examine witnesses without knowing their prior statements.

Counsel relied on the principle that an employee must be given a fair opportunity to answer allegations before dismissal.

Submissions by Counsel for the Respondent

Counsel for the Respondent, Mr. Waniala, submitted that the dismissal was lawful and justified under Section 69(3) of the Employment Act.

He argued that the Claimant had fundamentally breached his employment obligations by: removing electrical installations without authority; and performing duties outside his assigned role.

Counsel submitted that the offences fell within the Respondent’s disciplinary framework and amounted to gross misconduct.

He argued that the Claimant was afforded procedural fairness because: he received notice of the allegations; investigations were conducted; he attended a disciplinary hearing; he was represented; witnesses were available; and he exercised his right of appeal.

Counsel further submitted that disciplinary proceedings are not equivalent to court proceedings and should not be subjected to strict courtroom procedures.

He relied on Namyalo v Stanbic Bank and DFCU Bank Limited v Donna Kamuli to support the argument that internal disciplinary processes require flexibility.

Court’s Findings

Whether the dismissal was procedurally fair

The Court held that procedural fairness requires compliance with Section 65 of the Employment Act.

The Court observed that an employee must be notified of allegations; given sufficient time to prepare; informed of their rights; allowed to respond; permitted representation by a person of their choice.

The Court held that although the Claimant received notice and attended a hearing, the process was defective because the Respondent denied him effective tools necessary for his defence.

The Court stated:

“The denial of witness statements, in our view, effectively blindfolded the Claimant and his Counsel.”

The Court held that while disciplinary proceedings are not court proceedings, fairness remains the controlling principle.

The Court further stated:

“It is quite correct that disciplinary proceedings are not court proceedings, but for purposes of assessing the lawfulness of the dismissal, the Court will be concerned with whether the proceedings were fair.”

Right to legal representation

The Court considered whether the Respondent improperly restricted the Claimant’s lawyer during the hearing.

The Court held that Section 65(2) of the Employment Act gives an employee the right to be accompanied by a person of their choice.

The Court rejected the Respondent’s interpretation that a lawyer’s role was limited to observing.

The Court held:

“An employee is entitled to have any person of their choice, including a lawyer, whose representations the employer must consider before dismissing the employee.”

The Court therefore found that restricting the Claimant’s lawyer amounted to procedural unfairness.

Whether the Dismissal was Substantively Justified

The Court separately considered whether there existed a valid reason for dismissal.

The Court rejected the Claimant’s argument that the Respondent had failed to prove dishonesty.

It held that the disciplinary matrix expressly prohibited:

“removal of material without authority from the bank.”

The Court found that the Claimant admitted removing the sockets without following the required approval process.

The Court stated that:

“The Claimant explicitly admitted at the disciplinary hearing that he removed the sockets from the 3rd floor of the Hannington Road building.”

The Court further found that the Respondent had sufficient evidence because the Claimant admitted removing the sockets; management witnesses denied granting authority; CCTV evidence placed the Claimant at the location; the Claimant failed to follow asset movement procedures.

The Court therefore held that the Respondent had a valid substantive reason for dismissal.

Court’s Holding

The Industrial Court held that:

The Respondent had a valid and justified reason to dismiss the Claimant.
The dismissal was substantively fair because the Claimant committed misconduct by removing electrical installations without authority.
The dismissal was procedurally unfair because:
1. witness statements were withheld; and
2. the Claimant’s chosen representative was improperly restricted.
Since procedural and substantive fairness are cumulative requirements, the dismissal was unlawful.

The Court stated:

“The dismissal was substantively justified but procedurally unfair, and because these are twin tenets, the Claimant’s dismissal is therefore unfair and unlawful.”

Remedies Awarded

The Court awarded:

(a) Compensation for procedural unfairness

Under Section 65(4) of the Employment Act:

UGX 4,747,500/=

being four weeks’ pay.

(b) Additional payment in lieu of notice

The Court found that the Claimant had served for more than ten years and was entitled to three months’ notice.

Since the Respondent had paid only one month, the Court awarded:

UGX 9,495,000/=

being two additional months’ salary.

(c) Staff Loan

The Court declined to order cancellation of the secured loan.

However, it held that the Respondent could not impose commercial interest rates after dismissal.

The Court ordered that the loan continue at the original staff rate of:

9% per annum.

Read the full case

Key Takeaways

1. Procedural fairness is mandatory even where misconduct is proved

An employer may have a valid reason to dismiss an employee, but failure to follow fair procedures may still render the dismissal unlawful.

2. Employees must receive adequate opportunity to challenge evidence

Where an employer relies on witness testimony, denying access to witness statements may violate natural justice.

The Court emphasised:

“Cross-examination is a most powerful weapon to elicit and establish the truth and it is an ingredient of a fair hearing.”

3. Employees have a broad right to representation

Section 65 of the Employment Act allows an employee to choose a representative, including a lawyer.

Employers cannot limit a representative’s role to mere observation.

4. Disciplinary hearings are not courts, but must still be fair

Employers are not required to conduct criminal trials, but disciplinary processes must satisfy minimum standards of fairness.

5. Valid reasons for dismissal must still follow lawful procedure

The Court confirmed that substantive justification alone cannot cure procedural defects.

Both requirements must coexist.

6. Staff loans after termination require separate consideration

The Court reaffirmed that employee loans are not automatically extinguished after dismissal.

Employers who unlawfully dismiss employees are generally liable to relieve or reimburse the employee for unsecured loans that were expected to be paid from the employee's monthly salary.

However, Secured loans (e.g., mortgages) are distinct legal contracts and are not automatically cancelled. As such, courts will not permit employers to switch the interest rate on such loans from a preferential staff rate to a higher commercial rate following an unfair dismissal, as this would constitute "double jeopardy."