Industrial Court of Uganda Says Once Payments Are Documented as “Salary,” an Employment Relationship Is Presumed, Even Without a Contract or NSSF.
- Waboga David
- 3 days ago
- 8 min read
This is a legal alert summarizing the key facts, issues, findings, and implications of the Industrial Court of Uganda case in Nganda Joweria v. Allen V.R. Stanley Secondary School, Labour Dispute Reference No. 92 of 2020.
The Industrial Court Pierces Corporate Veil to Establish Employment Relationship Despite Denial of Contract
Case Citation
Claimant: NGANDA JOWERIA
Respondent: ALLEN V.R. STANLEY SECONDARY SCHOOL
Coram: Hon. Mr. Justice Anthony Wabwire Musana (Presiding), Hon. Adrine Namara, Hon. Susan Nabirye & Hon. Michael Matovu (Panelists)
🔍 Facts
The Claimant, Nganda Joweria, filed a claim for alleged unfair termination after 13 years of service. She claimed she was employed by the Respondent's founder, Richard Joseph Stanley (RJS), under Uganda Little League (ULL) in 2008, initially in the hospitality department, with a salary of UGX 750,000/= and housing privileges on the premises. In 2016, her salary was reduced to UGX 650,000/=, and she was reassigned to the maintenance department of the school. She alleged her services were verbally terminated on March 16, 2021, when her residential privileges were withdrawn, and she was denied access to the premises by security personnel.
The Respondent (Allen V.R. Stanley Secondary School) denied any contractual relationship, claiming the Claimant was a maternal cousin of a Director (AVB) and only resided on the premises out of a "humanitarian gesture" due to frail health. They contended the money she received was "upkeep," not salary, and that her residency was terminated because the dormitory was needed for students and her health posed a risk.
They raised preliminary points that the Claimant lacked a cause of action and locus standi.
❓ Issues
The Industrial Court framed the following issues for determination:
Whether the Claimant has a cause of action against the Respondent.
Whether an employment relationship exists between the parties.
Whether the termination of the Claimant was unfair.
What remedies are available to the Claimant in the circumstances. (Issues 1 and 2 were addressed jointly).
🗣️ Parties Submissions
Claimant's Submissions
The Claimant met the definition of an "employee" under Section 2 of the Employment Act and the "Control Test" and "Integration Test" from case law (Ready Mixed Concrete v Minister of Pensions).
Documentary evidence (JEX2 - Payment Voucher) showed a "December Salary" payment of UGX 650,000/= from the Respondent to the Claimant, and JEX3 (Termination Letter) stated she would still be entitled to her salary benefit, contradicting the Respondent's "upkeep" claim.
There was overwhelming evidence that ULL and the Respondent School were a single entity (sharing premises, directors, letterheads, maintenance department, and staff), justifying holding the School liable for the ULL/Claimant relationship.
Her duties (hospitality for ULL, cleaning/maintenance for the School) were integral to both operations.
Respondent's Submissions
The Claimant did not meet the criteria for an employee, as there was no written or implied contract of service.
The "Control Test," "Integration Test," and "Mutuality of Obligation Test" were absent. The Claimant's engagement was seasonal (ULL tournaments) and not integrated into the School's education business.
The payments were "upkeep" for a sick relative, a humanitarian gesture, and not salary, as she had no written contract and no NSSF/PAYE deductions were made, which is mandatory for school employees.
The Labour Officer's report characterized the matter as a family dispute, supporting the lack of a contractual relationship.
ULL and the School were separate entities with distinct registrations.
🧑⚖️ Legal Representation
Claimant's Counsel: Ms. Kasolo
Respondent's Counsel: Mr. Ddungu
🏛️ Court's Findings
The Court found that an employment relationship existed between the Claimant and the Respondent, and thus, the Claimant had a cause of action.
The Court addressed Issues 1 and 2 together (cause of action and existence of employment relationship), and then considered termination and remedies.
1. Existence of a Cause of Action & Employment Relationship (Issues 1 & 2 – addressed jointly)
The Court held that the Claimant had a valid cause of action and that an employment relationship existed between the parties.
This conclusion followed a detailed application of established employment tests: Control Test, Integration Test, Mutuality of Obligation, and the Economic Reality Test.
Documentary Evidence of Salary Payments
The Court placed decisive weight on written documents, rejecting the Respondent’s “humanitarian upkeep” narrative.
Key documents JEX2 – Payment VoucherA voucher on the Respondent School’s letterhead showing “December Salary – UGX 650,000” paid to the Claimant. JEX3 – Termination of Residential Privileges LetterSigned by the Headmaster (RW2), confirming:“…you will continue to receive your salary benefit of UGX 600,000/=.”
The Respondent argued these references to salary were mistakes, but the Court invoked Section 91 of the Evidence Act, holding:
“Oral evidence cannot be called to contradict documentary evidence.”
The Court concluded:
“Salary is incapable of any construction other than payment for services at regular intervals. It is not accountability and salary is not paid by mistake.”
This finding alone strongly indicated the existence of an employment relationship.
Control Test
The Court held that the Claimant was working under the Respondent’s supervision:
Testimony showed one Abraham Kyeyune supervised her work, and this evidence was unchallenged.
The Court found it “implausible” that the Claimant lived on the school premises, performed daily tasks, received salary, yet supposedly had no role at the school.
The Court therefore held that control existed, satisfying one of the classic indicators of employment.
Integration Test
The Court found the Claimant’s work to be integral to the Respondent’s operations, both under ULL and the School: Hospitality work for ULL was central to its tournaments and operations. Cleaning and maintenance work for the Respondent School was essential to its daily functioning.
The Court observed:
“Cleaning is part and parcel of the employer’s organisation.”
Thus, her roles were not peripheral but integral to the business structures.
Mutuality of Obligations
Because the Respondent paid salary and expected services, mutual obligations existed:
The employer was obligated to provide work and pay for it.
The Claimant was obligated to perform daily duties.
The Court therefore held:
“Because we have found that the Respondent agreed to pay salary, then there was an obligation to provide work.”
This satisfied the mutuality requirement emphasized in Ready Mixed Concrete and Uber v Aslam.
Economic Reality & Single Employer Finding (Piercing of Corporate Veil)
The Court found that Uganda Little League (ULL) and Allen V.R. Stanley Secondary School operated as a single economic entity, notwithstanding their separate registrations.
Factors relied upon:
Shared premises
Shared maintenance department
Overlapping staff
Common directors (including RJS)
Shared letterheads
RW2 (Headmaster) assisting with ULL functions and signing ULL documents
The Court held:
“If indeed these were separate entities, the basis for issuing both JEX2 and JEX3 on the Respondent’s letterhead would be inconceivable.”
Applying the Multiple Test/Economic Reality Test (as in Yusuf Baliruno v CBS), the Court concluded that the Claimant performed work for a single integrated employer, and therefore the Respondent School was liable for her employment rights.
The Legality and Fairness of the Termination
The Court found that the Claimant’s termination was unlawful and unfair on multiple grounds.
Violation of Section 42(5) of the Employment Act – Eviction Without Terminal Benefits
The Respondent ordered the Claimant to vacate employer-provided housing without paying terminal benefits.
The Court held:
“Under Section 42(5)… an employee housed by the employer shall not be required to vacate until he or she has been paid terminal benefits.”
The Respondent’s conduct was therefore illegal.
Termination Based on Ill Health Without Medical Process
The Claimant was removed from the premises partly due to her health status, but the Respondent failed to follow the statutory and judicial procedures governing termination due to ill health.
The Court cited Section 54 of the Employment Act, Tumshabe v Normandy Company and Western Cape Nature Conservation Board v CCMA (South Africa)
These authorities require:
A medical evaluation
A fair process
Consideration of alternatives to termination
The Court held that the Respondent failed all requirements.
Denial of a Fair Hearing
Applying the principle from Stanbic Bank (U) Ltd v Nassanga, the Court held:
“Where an employer gives a reason for termination, then it must hold a hearing.”
The Claimant was never accorded any disciplinary hearing, rendering the termination procedurally unfair.
Summary Termination Without Justification
The Court noted that:
The Claimant’s access to the premises was withdrawn by security guards.
She received no terminal benefits.
The Respondent reneged on the promise to continue her salary benefit.
The Court concluded:
“The summary withdrawal of residential privileges due to ill health… collectively constitute unfair labour practices and therefore render the termination unlawful and unfair.”
Overall Determination
The Court held that:
An employment relationship existed between the Claimant and the Respondent.
The Claimant therefore had a valid cause of action.
The termination was unlawful and unfair, both substantively and procedurally.
The Respondent’s attempt to label salary as “humanitarian upkeep” was rejected based on documentary evidence.
ULL and the School were treated as a single employer due to their integrated structure and operations.
HOLDING
The Court made the following declarations and orders:
Declaration that the Claimant was unfairly dismissed
Damages Awarded
General Damages of UGX 10,800,000/= (representing one year's salary plus three months' notice)
Aggravated Damages of UGX 7,200,000/= (for undignified treatment and summary removal after 13 years)
Punitive Damages of UGX 7,200,000/= (for egregious conduct in summarily removing an ill employee from her home)
Interest of 10% per annum on all damages from date of award until payment in full
Costs Claimant awarded one-half of her taxed costs
Claims Denied
Unpaid leave (UGX 3,000,000) – no evidence of denied leave application
Terminal benefits (UGX 5,000,000) – insufficient proof
Severance pay (UGX 20,000,000) – not applicable to unfair termination under Section 86(a) EA
KEY TAKEAWAYS
1. Documentary Evidence Trumps Oral Explanations
Courts will not accept oral evidence contradicting written documents. If payment vouchers state "salary," employers cannot later claim it was "upkeep" or humanitarian assistance.
2. Employment Relationship: Substance Over Form
The absence of a written contract, NSSF contributions, or PAYE deductions does not negate employment if other factors (remuneration labeled as salary, control, integration) are present.
3. Single Entity Doctrine
Courts will pierce corporate veils where entities share directors, premises, staff, letterheads, and operational departments, treating them as one employer.
4. Termination for Ill Health Requires Due Process
Employees are entitled to full salary for the first month of illness (Section 54 EA)
Termination may only occur after the second month of medical incapacity
Medical evidence must be obtained
A fair hearing must be held
5. Housing Benefits Protection
Employees housed by employers cannot be evicted without payment of terminal benefits (Section 42(5) EA).
6. Fair Hearing Requirement
When an employer provides a reason for termination, a hearing is mandatory (Stanbic Bank v Nassanga).
7. Punitive Damages in Employment Cases
While exceptional, punitive damages are available for egregious, high-handed conduct, particularly where vulnerable employees (e.g., those with health issues) are treated without dignity.
8. Costs Against Employers
Costs do not automatically follow the event in employment disputes but may be awarded against employers guilty of misconduct, including summary dismissals without procedural fairness.
9. Family Relationship Exception is Narrow
Section 1(2)(a) EA exempts family undertakings only where dependent relatives are the sole employees and number five or fewer. This does not apply to schools or businesses with multiple unrelated staff.
10. Holistic Employment Test
Courts apply a totality approach considering control, integration, mutuality of obligations, remuneration, and economic reality, no single factor is determinative (Uber principle).
Read the full case
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