Court of Appeal Clarifies the Law on Temporary Contracts, Continuity of Employment, and Terminal Benefits

Waboga David
Aug 30
10 min read

Introduction

Employment law in Uganda provides important protections relating to continuity of service, terminal benefits, and pension entitlements, ensuring that employees are not unfairly deprived of accrued rights upon termination or change in employment status.

Continuity of employment is particularly critical in determining an employee’s eligibility for severance packages, gratuity, and pension contributions, which are often tied to the length of service and the nature of termination.

Terminal benefits, which include payments such as gratuity, severance pay, and accrued leave, serve to cushion employees against the economic disruption of job loss, while pension benefits safeguard long-term financial security in retirement.

In a recent decision of Ssenuni Mohamed and Others v Kampala Capital City Authority (Civil Appeal No. 262 of 2018) [2025] UGCA 297 (29 August 2025), the Court of Appeal, while dismissing an appeal, clarified the application of these principles.

Justice Jesse Byaruhanga Rugyema, JA (with whom the other Justices concurred) upheld the Industrial Court’s award in favour of KCCA, clarifying the legal status of vocational contracts, the doctrine of freedom of contract, the Court emphasized that employment contracts that exclude payment of terminal benefits… are not considered illegal or to be excluding or limiting the operation of the Act to the detriment of the employee. This is so because of the doctrine of freedom of contract.

Coram

Luswata, Byaruhanga Rugyema & Alibateese JJA

Legal Representation

The Appellants were represented by Mr. Wamimbi Emmanuel of M/s Wamimbi Advocates & Solicitors, Kampala, while Ms. Doreen Tumusiime of the Directorate of Legal Affairs, Kampala City Council Authority, represented the Respondent

Facts

The appellants, Ssenuni Mohamed, Bakiti Faisal, Mawanda Matia, and 31 others, were employed by the Kampala City Council (KCC), the predecessor to the respondent, Kampala Capital City Authority (KCCA), as Law Enforcement Assistants. Their primary role was to enforce law and order within Kampala city.

The appellants were initially hired on various dates, with their employment formalized through “Vocational Employment Offers” issued between 2005 and 2007. These contracts were short-term, ranging from 3 to 6 months, and explicitly excluded terminal benefits upon expiration.

The appellants claimed they worked continuously from 1999 until their termination on February 15, 2012, without notice or terminal benefits. The appellants’ core contention was that their continuous service, despite the temporary nature of their contracts, rendered them permanent or pensionable employees under the Employment Act, 2006, and the Pensions Act.

They argued that the “Vocational Employment Offers” were a legal facade designed to deprive them of their statutory rights, including gratuity, pension arrears, and general damages.

They further alleged that their termination was unlawful due to the lack of notice and that they were unfairly treated compared to other KCC/KCCA employees who were regularized as public officers.

The respondent, KCCA, denied the appellants’ claims, asserting that the appellants were employed on temporary, fixed-term contracts for specific tasks. Upon completion of these tasks or the expiration of the contract terms, their services terminated automatically without the need for notice or terminal benefits.

The respondent emphasized that the contracts were clear, mutually agreed upon, and legally binding, with no provision for terminal benefits.

The Industrial Court ruled in favor of KCCA, finding that the appellants were employed on temporary terms, their contracts expired naturally, and they were not entitled to terminal benefits or pension.

Dissatisfied, the appellants appealed to the Court of Appeal, raising three grounds centered on the Industrial Court’s evaluation of evidence, its findings on continuity of employment, and the legality of the “Vocational Employment Offers.”

Grounds of Appeal

The Appellants challenged the Industrial Court’s decision on three grounds:

The court erred in finding they did not prove continuity of employment despite evidence of uninterrupted service.
The court failed to properly evaluate evidence, wrongly concluding that they were not unlawfully terminated.
The court erred in holding that “Vocational Employment Offers” did not prejudice the Appellants despite excluding terminal benefits contrary to Section 4(a) of the Employment Act.

The Court of Appeal consolidated all grounds under the single issue of whether the trial court properly evaluated evidence regarding continuity of employment and entitlement to terminal benefits.

Arguments of the Parties

Appellants’ Arguments

Counsel for the appellants, Mr. Wamimbi Emmanuel, argued that the Industrial Court misdirected itself by focusing on the label of “Vocational Employment Offers” rather than the substance of the appellants’ employment relationship.

The key points of their submissions were:

The appellants had worked continuously and uninterruptedly for KCC and later KCCA from 1999 to 2012, performing regular and exclusive services under the respondent’s control. This continuity, they argued, qualified them as permanent employees under Sections 83 and 86 of the Employment Act, 2006, regardless of the temporary contract labels.
The respondent’s failure to provide notice or terminal benefits upon termination on February 15, 2012, violated statutory protections. The appellants contended that their consistent redeployment and salary payments, including increments, indicated an indefinite employment term, entitling them to notice or payment in lieu thereof.
The “Vocational Employment Offers” were a legal facade designed to circumvent the appellants’ rights under the Employment Act and Pensions Act. By excluding terminal benefits, these contracts violated Section 3(a) of the Employment Act, which renders void any contract provision that limits or excludes statutory protections to the detriment of the employee. Counsel cited Betty Tinkamanyire v. Bank of Uganda (SCCA No. 12 of 2007), which held that contract clauses excluding statutory protections are void and unenforceable.
As employees of KCC, a statutory local government entity, and later KCCA, a central government entity, the appellants qualified as public officers under the Pensions Act. Their continuous service for over 10 years entitled them to retirement pensions under Sections 2 and 6(1) of the Pensions Act.
The appellants argued that other KCC/KCCA employees performing similar enforcement duties were regularized as public officers, while the appellants were arbitrarily excluded, constituting unlawful discrimination under Section 5 of the Employment Act and Article 21 of the Constitution of Uganda.
The prolonged use of temporary contracts effectively extended the appellants’ probationary period beyond the statutory limits, violating Section 66 of the Employment Act.

Respondent’s Arguments

Counsel for the respondent, Ms. Doreen Tumusiime, countered that the appellants’ claims were baseless and unsupported by evidence.

The respondent’s submissions included:

The appellants were employed on fixed-term, temporary contracts explicitly labeled as “Vocational Employment Offers.” These contracts, executed between 2005 and 2007, clearly stated that the appellants were not entitled to terminal benefits upon expiration. The respondent argued that the parties were bound by these mutually agreed terms.
There was no evidence of continuous employment beyond the contract terms. The appellants’ services terminated upon the expiration of their contracts, as provided under Section 64(1)(b) of the Employment Act, which does not require notice or terminal benefits for fixed-term contracts.
The contracts were lawful and did not contravene the Employment Act. The exclusion of terminal benefits was a valid term agreed upon by the appellants, consistent with the doctrine of freedom of contract, as articulated in Printing & Numerical Registering Co. v. Samson (1875) L.R 19 Eq. 462. The respondent emphasized that the appellants did not complain about the contract terms during their employment.
The appellants did not hold pensionable offices, as their contracts were temporary and did not accrue pension rights under the Pensions Act. The respondent relied on Regulation 4 of the First Schedule of the Pensions Act, which requires service in a pensionable office for at least 10 years to qualify for a pension.
The appellants’ claim of unequal treatment was unfounded, as their employment terms were distinct from those of regularized employees. The respondent argued that the appellants freely chose to accept the vocational employment offers, exercising their right to choose employment under Article 40 of the Constitution and international labour standards.

Court’s Findings

The Court of Appeal, in its duty as the first appellate court, re-evaluated the evidence under Rule 30(1)(a) of the Judicature (Court of Appeal Rules) Directions.

On Continuity of Employment

The court found that the appellants were employed on temporary, fixed-term contracts labeled as “Vocational Employment Offers” between 2005 and 2007. These contracts, ranging from 3 to 6 months, explicitly excluded terminal benefits and did not provide for automatic renewal.

The court rejected the appellants’ claim of continuous employment from 1999 to 2012, noting that no evidence supported their assertion of employment prior to 2005.

The testimony of Ssenuni Mohamed (CW1) confirmed that appointment letters were issued only between 2005 and 2008, and no documentary evidence, such as payslips or contracts, substantiated earlier employment.

Under Section 83(1) of the Employment Act, continuous service requires uninterrupted employment with the same employer or a successor employer. The court held that the appellants’ contracts expired naturally, and no evidence showed that they continued working under oral contracts or received salaries post-expiration.

The court affirmed the Industrial Court’s finding that the appellants’ employment terminated upon contract expiration, as provided under Section 64(1)(b) of the Employment Act, which does not require notice or terminal benefits for fixed-term contracts.

The court noted that

“The overwhelming evidence on record is that the Appellants were individually hired on various dates by KCC as Law Enforcement Assistants between 29th June 2005 and 9th November 2007 as reflected by the copies on record of Vocational Employment Offers.”

No evidence (such as payment records) was produced to prove continuous employment after expiry of contracts

“We have… established that there was no continuity of service after the expiry of their contracts because the expired contracts were neither renewed nor extended. No evidence was adduced to prove that they continued working and receiving salary even after their contracts expired.”

On The Lawfulness of Termination

The court found that the appellants’ termination was lawful, as their contracts expired by effluxion of time. Section 64(1)(b) of the Employment Act provides that a fixed-term contract terminates upon the expiry of the specified term or completion of the task, without the need for notice if not renewed within one week.

The court noted that the respondent did not renew or extend the appellants’ contracts, and no evidence of unilateral termination or dismissal was adduced. The testimony of Richard Lule (RW1), KCCA’s Director of Administration and Human Resource, confirmed that the appellants’ services ended due to contract expiration, not dismissal.

The court rejected the appellants’ reliance on Sections 64(1)(a) and 57(3) of the Employment Act, which require notice and a fair hearing for terminations other than fixed-term contract expirations. The court emphasized that the appellants’ employment was governed by the law of contract, and their termination complied with the agreed terms.Legality of Vocational Employment Offers.

The court addressed the appellants’ argument that the “Vocational Employment Offers” violated Section 3(a) of the Employment Act by excluding terminal benefits. The court held that the exclusion of terminal benefits was lawful under the doctrine of freedom of contract, as articulated in Printing & Numerical Registering Co. v. Samson.

The contracts were entered into freely, with the appellants’ consent, and did not contravene public policy or statutory protections.

The court distinguished Betty Tinkamanyire v. Bank of Uganda, noting that the case involved a contract that explicitly violated mandatory statutory protections, whereas the appellants’ contracts were consistent with the Employment Act’s allowance for mutually agreed terms.

The court further held that not all employment contracts must include terminal benefits, and the appellants’ voluntary acceptance of the contract terms estopped them from claiming benefits outside those terms.

The court cited Bubolo Fred v. Uganda Railways Corporation (HCCS No. 84/2009), where the court refused to allow plaintiffs to vary clear contract terms to claim unprovided benefits.

Pension Entitlement

The court examined the appellants’ claim to pension rights under the Pensions Act. While acknowledging that KCCA employees could qualify as public officers under Section 1(iv)(D) and (N) of the Pensions Act, the court found that the appellants did not meet the criteria for pension entitlement.

Regulation 4 of the First Schedule requires service in a pensionable office for at least 10 years. The appellants’ temporary, fixed-term contracts did not constitute pensionable service, and their contracts explicitly excluded pension benefits.

The court distinguished A.G v. Tumushabe John (Civil Appeal No. 35 of 2002), where continuous, formalized employment entitled the employee to a pension, noting that the appellants’ employment was neither continuous nor pensionable.

On Discrimination and Equal Treatment

The court rejected the appellants’ claim of unlawful discrimination. The appellants argued that other KCC/KCCA employees performing similar duties were regularized, while they were excluded. The court held that the appellants’ employment terms were distinct, based on their voluntary acceptance of vocational contracts.

The right to free choice of employment, protected under Article 40 of the Constitution, Article 23(1) of the Universal Declaration of Human Rights, and the ILO Employment Policy Convention No. 122 of 1964, allowed the appellants to accept the offered terms.

The court found no evidence of discrimination based on prohibited grounds under Section 5 of the Employment Act or Article 21 of the Constitution, such as race, sex, or disability.

On Probationary Period

The court dismissed the appellants’ claim of an illegal extension of their probationary period, finding that Section 66 of the Employment Act was inapplicable. The appellants’ contracts were fixed-term, not probationary, and no evidence showed continued employment under different terms post-expiration.

The court noted

“We have…established that there was no continuity of service after the expiry of their [Appellants] contracts because the expired contracts were neither renewed nor extended instead new contracts were drawn. No evidence was adduced to prove that they continued working and receiving salary even after their contracts expired. The Respondent having not renewed or extended the claimants [Appellants] expired contracts, they terminated on expiry in accordance with Section 65(1)(b) and there was no requirement for the respondent to give notice.”

Holding

The Court of Appeal held that the appellants’ appeal lacked merit.

The Industrial Court’s findings were supported by the evidence, and no error in law or fact led to a miscarriage of justice.

Specifically, the court held:

The appellants were employed on temporary, fixed-term “Vocational Employment Offers” that expired naturally, without renewal or extension, terminating their employment lawfully under Section 64(1)(b) of the Employment Act.
The appellants failed to prove continuous employment from 1999 to 2012, as no evidence supported their employment prior to 2005 or post-expiration of their contracts.
The exclusion of terminal benefits in the contracts was lawful, consistent with the doctrine of freedom of contract, and did not violate Section 3(a) of the Employment Act.
The appellants were not entitled to pension benefits, as their temporary contracts did not constitute pensionable service under the Pensions Act.
There was no evidence of unlawful discrimination or an illegal extension of a probationary period.

The appeal was dismissed in its entirety.

Orders

The Court of Appeal issued the following orders:

The appeal is dismissed for lack of merit.
Each party is to bear their respective costs of the appeal, considering the appellants’ disadvantaged position as a group of employees who lost employment due to contract expiration.

Legal Principles

Doctrine of Freedom of Contract:
Parties of full age and competent understanding have the utmost liberty to contract, and their agreements, when freely and voluntarily entered, are enforceable unless they contravene public policy, involve misrepresentation, or lack good faith as seen in Printing & Numerical Registering Co. v. Samson.
Sanctity of Contract Terms
Employees are bound by the express terms of their employment contracts and cannot claim benefits outside those terms unless the contract violates mandatory statutory protections (Bubolo Fred v. Uganda Railways Corporation).
Termination of Fixed-Term Contracts
Under Section 64(1)(b) of the Employment Act, fixed-term contracts terminate upon expiration without the need for notice or terminal benefits, provided they are not renewed within one week.
Pension Entitlement
Under the Pensions Act, pension rights accrue only to employees in pensionable offices with at least 10 years of continuous service. Temporary, fixed-term contracts do not qualify unless explicitly designated as pensionable.
Right to Free Choice of Employment
Employees have the right to choose their employment freely, as protected under Article 40 of the Constitution, international human rights law, and ILO conventions. This right precludes claims of discrimination based on differing contract terms accepted voluntarily.

Read the full case below