Industrial Court Holds That Where Poor Performance Is the Reason for Dismissal, the Employer Must Demonstrate the PIP Process Leading to the Dismissal; Declines to Award Costs for Citing AI-Generated
Industrial Court Holds That Where Poor Performance Is the Reason for Dismissal, the Employer Must Demonstrate the PIP Process Leading to the Dismissal; Declines to Award Costs for Citing AI-Generated Cases
Snap-shot
The Industrial Court of Uganda at Gulu has held that an employer cannot simply rely on allegations of poor performance, previous verbal engagements or a disciplinary hearing to justify termination. The Court emphasised that where termination is based on poor performance, procedural fairness and substantive justification are closely interconnected. The employer must demonstrate not only that the employee was given an opportunity to be heard, but also that the alleged poor performance was objectively established through a proper performance management process.
Furthermore, the Court held that the employer ought to demonstrate that the PIP was genuinely designed to improve the employee's performance, contained objective and measurable targets, involved the employee, provided reasonable time and resources for improvement, and was followed by monitoring and feedback.
The Court also issued a strong warning to Advocates concerning the use of artificial intelligence in legal practice. The Court found that Counsel had cited authorities which could not be verified and observed that, if such authorities were generated by AI, their use raised serious concerns regarding an Advocate's duty of candour and professional diligence.
Facts
The Respondent employed the Claimant as Hub Manager on a fixed-term contract from March 2021 at UGX 3,948,000 monthly. After a 2021 appraisal (grade "B"), the contract was renewed for 2022. On 10 February 2022, the Respondent invited him in writing (REX6) to a performance hearing, citing poor performance following meetings and an appraisal in 2021. The hearing was held on 1 March 2022. The Claimant attended alone and said he was twice refused representation. By letter of 14 March 2022, the Respondent terminated him with one month's notice for poor performance. His internal appeal and the Labour Officer's recommendation for compensation failed, and the dispute went to the Industrial Court.
LEGAL REPRESENTATION
For the Claimant: Mr. Jimmy Madira of M/s Madira & Co. Advocates.
For the Respondent: Mr. Ronald Wanda of M/s Matsiko, Wanda & Arinda Advocates.
Issues
1. Whether the Claimant's dismissal was lawful.
2. What remedies are available to the parties.
Submissions of the Parties
The Claimant
Counsel for the Claimant, Mr. Jimmy Madira, submitted that the termination was unlawful and unfair because the Respondent had failed to establish a valid reason for termination and had failed to accord the Claimant a fair hearing.
Counsel submitted that the Claimant's performance had already been evaluated in 2021 and that he had subsequently received a “B” rating and had his contract renewed.
Counsel argued that there was no evidence of a performance appraisal under the Claimant's new 2022 contract.
It was further submitted that the termination was based on recommendations made by the Respondent's Programme Manager without giving the Claimant an adequate opportunity to respond to those allegations.
Relying on Ebiju v Umeme Ltd [2015] UGHCCD 15, Counsel submitted that the Respondent had failed to satisfy the requirements of a fair hearing.
Counsel also invoked Articles 28(1) and 44(c) of the Constitution and section 65 of the Employment Act, submitting that the termination was procedurally unfair, malicious and premeditated.
On remedies, Counsel submitted that the Claimant was entitled to the reliefs sought, including compensation for the unserved portion of his fixed-term contract.
Counsel calculated the unserved period at approximately nine months and submitted that, at a monthly salary of UGX 3,948,000/=, the Claimant was entitled to UGX 35,532,000/=.
Counsel further sought UGX 250,000,000/= in general damages; UGX 50,000,000/= in punitive damages; and costs of the claim.
The Respondent
Counsel for the Respondent, Mr. Ronald Wanda, submitted that the termination was lawful and that no rights of the Claimant had been violated. Counsel argued that the Claimant had exhibited persistent poor performance which had been raised with him on several occasions.
It was submitted that on 10 February 2022, the Claimant had been formally notified of his performance deficiencies and invited to a hearing in accordance with the Employment Act.
Counsel further submitted that the Claimant attended the hearing on 1 March 2022 and was given an opportunity to explain his performance before a duly constituted panel.
The Respondent maintained that management considered the Claimant's performance reports, previous performance concerns and his explanations before reaching the decision to terminate.
Counsel further submitted that the Claimant had been given one month's notice under section 57(3)(b) of the Employment Act. Accordingly, Counsel contended that the termination was both substantively justified and procedurally fair.
On remedies, Counsel submitted that since the termination was lawful, the Claimant was not entitled to compensation, severance, general damages, loss of expectation or punitive damages.
COURT'S FINDINGS
The Court began by distinguishing the two fundamental requirements applicable to dismissal for poor performance. The Court held that a lawful dismissal for poor performance must satisfy two distinct but interconnected requirements:
procedural fairness; and
substantive justification.
The Court stated:
“A lawful dismissal for poor performance must be procedurally fair, in that the process is fair, and substantively justified, in that the poor performance has been established.”
The Court relied on Sanyu Dickson v Post Bank Uganda Ltd [2026] UGIC 92 and the principles earlier developed in Ebiju v Umeme Ltd.
It was noted that the procedural fairness requirements include:
written notice;
sufficient time to prepare a defence;
disclosure of the allegations against the employee; and
informing the employee of the right to respond, be accompanied, cross-examine, call witnesses and present their case before an impartial committee.
The Court also relied on Oliver Kabalisa v Nakasero Hospital Limited [2026] UGIC 60 for the principle that substantive fairness requires a dismissal to be founded on a valid, fair and justifiable reason.
The employer bears the burden of proving the alleged breach or performance deficiency.
Regarding Performance Improvement Plans
One of the most significant aspects of the decision was the Court's detailed treatment of Performance Improvement Plans (PIPs). The Court relied on Bajunana Gordon v Finca Uganda Limited [2026] UGIC 67, Odong v Airtel Uganda Limited [2023] UGIC 24 and Kiyingi v Post Bank Uganda Limited.
The Court observed that a PIP must be a genuine developmental tool, rather than a mechanism designed to create a paper trail for an employee's eventual dismissal.
The Court explained that a lawful PIP should satisfy several requirements.
A PIP must be corrective, not predetermined to result in termination
The Court noted that the primary purpose of a PIP is to help an employee improve.
It should not be used as a bureaucratic formality or as a “veil” for an already predetermined termination.
The Court emphasised that the employer must genuinely seek to improve the employee's performance.
There must be objective evidence of underperformance
The Court held that an employer cannot arbitrarily place an employee on a PIP.
There must be verifiable and objective evidence of underperformance, ordinarily supported by a fair performance appraisal system.
The Court further noted that before a PIP begins, the supervisor should meet the employee face-to-face to explain the performance deficiencies, expectations and proposed improvement process.
The employee must participate in the PIP
The Court held that a PIP should not be imposed unilaterally.
The employee must actively participate in the formulation, implementation and monitoring of the PIP.
The Court observed that the employee must understand:
the deficiencies identified;
the corrective measures;
the standards expected;
how performance will be measured; and
the consequences of failing to improve.
PIP targets should be S.M.A.R.T.
The Court emphasised the importance of S.M.A.R.T. targets.
The targets should be
Specific, identifying the precise performance deficiencies;
Measurable, establishing clear performance indicators;
Attainable/Relevant, ensuring that the targets are realistic and related to the employee's role; and
Timely, providing clear timelines for improvement.
The Court noted that PIPs will ordinarily run for periods such as 30, 60 or 90 days, depending on the circumstances.
The employer must provide reasonable time and resources
The Court held that an employer must make reasonable efforts to assist the employee to improve.
This may include:
coaching;
mentoring;
training; and
other resources necessary to enable the employee to meet the required standards.
The Court therefore rejected an approach where an employer merely identifies deficiencies and proceeds directly to termination.
There must be continuous feedback and review
The Court further held that a PIP cannot be a “set-and-forget” process.
There should be:
periodic reviews;
structured check-ins;
feedback to the employee; and
objective monitoring of progress.
The employee should know whether they are improving and what further improvements are required.
The employee must be informed of the consequences of failure
The Court held that a PIP should clearly identify the consequences of failure to meet the agreed standards.
However, failure to meet a PIP target does not automatically authorise termination.
The Court stressed that a formal disciplinary hearing remains necessary.
10.8 Automatic termination following a failed PIP is unlawful
The Court specifically observed that an employee who fails to successfully complete a PIP must still be subjected to a formal disciplinary process.
The employee must be given an opportunity to explain why they failed to meet the targets before a final decision is made.
The Court stated that:
“Automatic termination is illegal.”
In relation to the case at hand, the Court accepted that, on the face of the written notice, the Respondent had complied with some of the requirements established in Ebiju v Umeme Ltd.
The Court noted that the Respondent had issued a written invitation dated 10 February 2022 and had given the Claimant approximately seven clear days to prepare.
The notice also identified poor performance as the reason for the hearing and referred to earlier performance-related engagements.
Further, the Court noted that the notice informed the Claimant of his right to attend with a person of his choice.
The Court therefore concluded that, to that extent, the Respondent had complied with the basic procedural requirements.
However, the Court made an important distinction.
It held that compliance with the basic disciplinary-hearing requirements was not sufficient in a case founded on poor performance.
The Court observed:
“But is that all there is to procedural fairness?”
The Court explained that poor-performance cases require a deeper inquiry because the performance management process itself forms part of the justification for the eventual dismissal.
The Court made an important observation that, in poor-performance cases, procedural fairness and substantive justification cannot easily be separated.
The Court stated:
“The PIP process itself is reflective of the substantive justification or the reason for the dismissal.”
It further held:
“The two cannot be disaggregated.”
The Court explained that, unlike some misconduct cases where the reason for dismissal may be established independently of the disciplinary procedure, poor-performance cases require the employer to demonstrate the process through which the alleged poor performance was identified, communicated, addressed and assessed.
Accordingly, where the process of placing an employee on a PIP is itself defective, the employer may also fail to establish the substantive basis for dismissal.
The Court found a loophole in the Respondent's case.
The Respondent's witness had referred to an appraisal dated 12 November 2021 and indicated that it would be tendered in evidence.
However, the appraisal was not produced.
The Court also noted that the Respondent's witness asserted that the Claimant had been informed of his performance deficiencies and had received support to improve, but there was no documentary evidence supporting those assertions.
The Court observed:
“The Respondent did not show us that a PIP was formed following documented, objective appraisal gaps or the Claimant’s active participation in setting measurable S.M.A.R.T. goals.”
The Court further noted that it had not been shown:
the duration of the alleged PIP;
the targets set for the Claimant;
the performance indicators;
the periodic reviews;
the resources provided;
the coaching or training undertaken; or
the consequences applicable to failure to meet the targets.
Most importantly, the Court observed:
“The Court did not receive a copy of the performance improvement plan; therefore, we find no proof of poor performance.”
The Court reiterated that the employer bears the burden of establishing the reason for dismissal.
In the present case, the Respondent's assertions regarding the Claimant's poor performance were not sufficient.
The Court held that the Respondent had failed to demonstrate, on a balance of probabilities, that;
the Claimant's poor performance had been objectively established;
the poor performance had triggered a PIP;
the Claimant participated in designing the PIP;
measurable S.M.A.R.T. targets had been established;
the employer provided appropriate coaching or training;
the Claimant was given reasonable time to improve; and
the PIP was properly monitored.
The Court consequently rejected the Respondent's contention that the dismissal was substantively justified.
It held:
“In the absence of a performance improvement plan, it is impossible to find that the Respondent was procedurally and substantively fair.”
The Claimant therefore succeeded on the first issue.
Regarding The Remedies
Having found that the dismissal was unlawful and unfair, the Court considered the remedies available to the Claimant.
The Court declared that the Respondent had unfairly and unlawfully dismissed the Claimant.
The Court ordered the Respondent to issue the Claimant with a Certificate of Service within 21 days of the order.
The Claimant had sought UGX 250,000,000/= in general damages.
The Court, however, awarded UGX 7,896,000/=, equivalent to approximately two months' salary.
The Court considered factors including:
the Claimant's age;
his salary;
his length of service;
the circumstances of termination; and
the psychological distress and reputational harm associated with being dismissed for poor performance.
The Court observed that general damages in employment disputes compensate for non-pecuniary loss such as emotional distress, reputational harm and mental anguish, but that they are not automatically payable.
Punitive damages
The Claimant sought UGX 50,000,000/= in punitive damages.
The Court declined the claim.
Although the Court found that the Respondent had acted unlawfully and unfairly, it did not consider the conduct sufficiently egregious, oppressive or malicious to justify punitive damages.
The Court held:
“The Respondent acted unlawfully and unfairly but not in a manner that attracts punitive damages.”
Loss of expectation / unserved portion of fixed-term contract
The Claimant sought UGX 35,532,000/=, representing nine months of salary which he would allegedly have earned had his fixed-term contract run to completion.
The Court rejected this claim.
Relying on Cornwell Muleya v Uganda National Airlines Company Limited [2026] UGIC 77 and Miyingo v Sogea Satom Uganda [2023] UGIC 60, the Court reiterated the principle that:
“where there is no work, there is no pay.”
Accordingly, the Court held that the claim for wages for the unserved portion of the fixed-term contract was unsustainable.
Severance pay
The Court awarded severance pay.
Under section 86(a) of the Employment Act, the Court noted that an employee who has been unlawfully dismissed is entitled to severance pay.
Applying the benchmark of one month's salary for each year of service, the Court calculated the Claimant's entitlement based on his approximately one year and three months of service.
The Court awarded:
UGX 4,342,800/=
as severance pay.
Perhaps the most striking part of the award concerned the conduct of Counsel for the Claimant.
In his written submissions, Counsel relied upon several authorities, including:
G4S Security Services v Mposa;
Bank of Uganda v Tuyremureeba;
Samson Bagonza v Uganda Revenue Authority; and
Kiggundu v Steel and Tube Industries.
The Court directed Counsel to provide hard copies of the authorities relied upon.
However, according to the Court, Counsel did not provide copies.
The Court subsequently searched available legal resources and was unable to verify the cited cases.
The Court observed that the authorities were not available on ULII and that searches did not produce corresponding cases.
The Court stated that this could mean either that the cases were unreported or that they were “a product of AI hallucinations.”
The Court then addressed the increasing use of artificial intelligence in the legal profession.
The Court noted no regulations govern AI use in Ugandan courts, so a human must remain in the loop. Unverified, AI-hallucinated case law breaches an advocate's duty of candour and assaults the integrity of the judicial process. The Court pointed to the High Court of Tanzania, which suspended an advocate for citing "ghost cases", and to the High Court of Kenya, which struck fabricated authorities from the record. Here the Court struck the authorities, issued a stern warning and denied costs, because misconduct should not be rewarded.
HOLDING
The Court held that the Respondent had failed to establish a valid and objectively verifiable basis for terminating the Claimant on grounds of poor performance.
In particular, the Court found that the Respondent had failed to demonstrate the existence of a proper Performance Improvement Plan and had not produced evidence showing;
objective appraisal gaps;
employee participation in the PIP;
S.M.A.R.T. performance targets;
structured monitoring;
reasonable time for improvement;
coaching or training; or
periodic performance reviews.
The Court consequently held that the dismissal was both procedurally unfair and substantively unlawful.
The Court entered judgment for the Claimant and ordered:
a declaration that the dismissal was unfair and unlawful;
issuance of a Certificate of Service within 21 days;
payment of UGX 7,896,000/= in general damages;
payment of UGX 4,342,800/= in severance pay; and
no order as to costs.
The claims for loss of expectation and punitive damages were dismissed.
Key takeaways
Poor performance must be objectively established
An employer cannot rely merely on general assertions that an employee was performing poorly.
The employer must produce objective and verifiable evidence demonstrating the alleged deficiencies.
2. A disciplinary hearing alone may not cure defects in a poor-performance case
The Court made it clear that giving an employee a disciplinary hearing does not automatically make a termination lawful.
Where the reason for dismissal is poor performance, the employer must demonstrate the performance-management process leading to the dismissal.
3. A PIP must be genuine and developmental
A PIP should be used to improve performance, not as a mechanism designed to facilitate a predetermined termination.
4. Employees should participate in their PIPs
The employee should understand and participate in setting the objectives, targets and improvement measures.
5. Performance targets should be S.M.A.R.T.
Employers should ensure that performance targets are specific, measurable, attainable/relevant and time-bound.
6. Employers must provide an opportunity and resources to improve
Employers should demonstrate that reasonable time, coaching, mentoring, training and other appropriate support were provided.
7. PIPs require documentation
This case demonstrates the importance of maintaining documentary evidence of:
performance appraisals;
meetings with the employee;
identified performance gaps;
PIP documents;
agreed targets;
review meetings;
feedback;
training and coaching;
progress reports; and
final assessments.
8. A failed PIP does not automatically result in termination
Even where an employee fails to meet the targets in a PIP, the employer must still undertake a formal disciplinary process before termination.
9. Procedural and substantive fairness are intertwined in poor-performance cases
The Court's decision is particularly significant in holding that the PIP process may itself form part of the substantive justification for dismissal.
As the Court put it
“The two cannot be disaggregated.”
10. Employers bear the evidential burden
The employer must prove the reason for dismissal. Assertions by managers or supervisors will not necessarily suffice where documentary evidence ought reasonably to exist.
11. Salary for the unserved period of a fixed-term contract is not automatically recoverable
The Court reiterated the principle that salary is generally payable for work done and rejected the Claimant's claim for nine months' salary for the remainder of his fixed-term contract.
12. General damages are discretionary
The Court awarded two months' salary as general damages, taking into account the Claimant's circumstances, including his age, salary, length of service, manner of termination and the distress associated with being dismissed for poor performance.
13. Punitive damages require exceptional circumstances
A finding that an employer acted unlawfully does not automatically justify punitive damages. The Court distinguished unlawful conduct from conduct sufficiently egregious, malicious or oppressive to warrant punishment.
14. AI-generated legal research must be independently verified
This is perhaps the strongest professional-practice lesson from the decision.
Lawyers may use AI as a research and drafting tool, but every authority must be independently verified before being cited in court.
An Advocate remains personally responsible for the accuracy and authenticity of authorities presented to the Court.
15. Fabricated authorities may have consequences beyond losing the case
The Court characterised the citation of unverified or allegedly AI-generated authorities as a matter affecting an Advocate's duty of candour and professional diligence.
In this case, the Court struck the authorities from the record and denied costs, while warning that more serious sanctions could be appropriate in other circumstances.
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