Court of Appeal Reaffirms That General Damages May Be Awarded in Wrongful Dismissal Claims, Particularly Where Employability, Dignity, and Future Earnings Are Negatively Impacted.

Waboga David
May 1
5 min read

Introduction

The Court of Appeal has refined the legal principles surrounding awards for wrongful dismissal, particularly regarding general damages and interest rates.

The case of Standard Chartered Bank v Makoko (Civil Appeal 307 of 2020) [2025] UGCA 115 (25 April 2025) which was an appeal by Standard Chartered Bank Uganda against the Industrial Court’s award of UGX 1,000,000,000 (Uganda Shillings One Billion) in general damages, USD 108,750 for unvested shares, and 15% interest per annum to the respondent, Grace Tibi Hikira Makoko, a former high-ranking executive with over 20 years of service.

Background of the Case

Between 1995 and 2015, the Respondent was employed by the Appellant Bank in various roles across Uganda and Kenya, including as Regional Head of Financial Markets for East Africa.

In 2015, her employment was terminated without a hearing or the conclusion of a performance improvement plan she had been compelled to undertake. She challenged the dismissal as unlawful and in violation of both the law and the Bank's internal policies.

The Industrial Court agreed, finding that her dismissal was unlawful, and awarded her UGX 1,000,000,000 in general damages, USD 108,750 in unvested shares, and 15% annual interest on both awards.

Dissatisfied with the magnitude of the awards, the Bank appealed. The Respondent also filed a cross-appeal, challenging the denial of reinstatement, basic and statutory compensation, and aggravated damages, among others.

Appellant's Arguments

Excessive General Damages (UGX 1 Billion)
The Industrial Court relied on the wrong legal principles to award excessive general damages.
They relied on the decision of Stanbic Bank v Kiyimba Mutale to argue the Supreme Court did not endorse "substantial damages" as a legal standard.
The award considered factors like emotional distress and reputational harm, which are not compensable under breach of contract as seen in Addis v Gramophone Co.
The respondent failed to mitigate damages, contrary to the principle of restitutio in integrum.
Unvested Share Options (US$108,750)
The appellant argued that the share options are special damages that must be specifically pleaded and proved.
The burden of proof was wrongly shifted to the appellant.
Evidence showed only US$9,400 was outstanding and unvested shares had lapsed.
The court lacked jurisdiction over foreign-listed shares not under the appellant’s control.
Interest Rate (15% p.a.)
The court erred in awarding 15% interest on general and special damages.
High interest on non-commercial claims was unjustified; a lower rate (6–8%) was proposed.
The Appellant relied on the decision of AG v Dr. Okullu where the court capped interest on USD awards due to currency stability.

Respondent's Arguments

Discretion in Awarding General Damages
The award was within the Industrial Court’s discretion based on the facts and the respondent’s status.
They relied on the decision of Robert Coussens v AG , which affirms that appellate courts only interfere if the trial court acted on wrong principles.
The trial court correctly applied Stanbic Bank v Kiyimba Mutale, which endorses substantial damages in appropriate cases.
Mitigation of Damages
The burden to prove failure to mitigate lies with the appellant, as seen in Gulaballi Ushallani v Kampala Pharm.
Testimony showed that the dismissal made the respondent unemployable.
Entitlement to Share Options
The respondent had earned the share options before dismissal.
The appellant cannot use its wrongful conduct to deny her the benefit, as seen in Bank of Uganda v Betty Tinkamanyire.
The unvested options had real economic value as seen in Bradley Jones v JP Morgan Securities Plc.
Interest Award Justified
Given the 5-year delay, the 15% interest was appropriate and not excessive.
Supported by reasoning in AFENET v Dr. Peter Wasswa where courts considered litigation delay when setting interest.

Holding

The Court of Appeal upheld that the respondent was wrongfully dismissed but found the UGX 1 billion general damages award excessive and unjustified.

The Court reduced general damages to UGX 500,000,000, citing a lack of aggravating factors and noting that the original award more than doubled her expected income from the remaining contract term.

Compensation for Unvested Shares Adjusted

The Industrial Court had awarded USD 108,750 for unvested shares. The Court of Appeal found the figure unsupported by evidence and reduced it to USD 20,000, based on a credible estimation.

Interest Rate

The Court reduced the interest on general damages from 15% to 10% per annum, considering the nature of general damages and litigation delays.

The interest on the USD-denominated award was revised from 15% to 8%, reflecting the relative stability of the US Dollar and prevailing bank interest rates, which is consistent with the holding in Attorney General v. Dr. Maj. (Rtd) Anthony Jallon Okullo.

Cross-Appeal Partially Succeeded

The respondent’s cross-appeal on denied statutory compensation under sections 66(4) and 78(1) of the Employment Act was partially successful, but claims for reinstatement and aggravated damages were dismissed.

The respondent was awarded 50% of the costs at the Industrial Court, but no costs were granted for the appeal.

Reinstatement Not Mandatory

The Court clarified that reinstatement is a discretionary remedy under Section 71(6) of the Employment Act and not mandatory. In this case, the employee had been out of the banking sector for 10 years, making reinstatement impracticable given the dynamic nature of the industry.

Procedural Irregularities Do Not Guarantee Reinstatement Where a dismissal is unfair solely because of procedural irregularities, courts are not obligated to order reinstatement. The Court echoed the Supreme Court's stance in Bank of Uganda v Betty Tinkamanyire, cautioning against forcing employers to retain employees they no longer wish to employ.

No Compensation for Remaining Contract Term

The Court reaffirmed that an employee who is wrongfully dismissed is not entitled to claim salary or benefits for the remaining duration of their employment contract. Instead, they are only entitled to damages for the loss suffered. This position is consistent with earlier rulings in Bank of Uganda v Betty Tinkamanyire and Doreen Rugundu v International Law Institute.

Rule of Law Principles Reaffirmed

Appellate Interference with Damages
Appellate courts may revise damage awards only where the lower court acts on wrong principles of law or where awards are manifestly excessive or low, as seen in Rambhai Manjibhai Patel v. Patidor Samag [1944] 11 EACA 11.
General Damages in Employment Law
The decision aligns with the Supreme Court's evolving stance (e.g. Stanbic Bank v. Kiyimba Mutale; Omunyokolo Akol Johnson v. AG), affirming that general damages may be awarded in wrongful dismissal claims, particularly where employability, dignity, and future earnings are negatively impacted.
Statutory vs. Common Law Remedies
The Court declined to revert to the rigid common law position in Addis v. Gramophone Co. that limits damages to notice periods only, affirming that Ugandan courts may consider broader equitable factors in wrongful dismissal cases.

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