Revisiting Bank of Uganda v Betty Tinkamanyire: A Landmark Case on Unlawful Dismissal, Award of Damages, and Employment Law.

Introduction. In a landmark decision that has significantly influenced the legal discourse of employment law in Uganda, the Supreme Court presided over by Justice Kanyeihamba J.S.C, revisited fundamental principles related to unlawful dismissal, damages, and employment contracts in the case of Bank of Uganda v Betty Tinkamanyire[2008] UGSC 21 (16 December 2008) Civil Appeal No.12 of 2007) Drawing upon its earlier ruling in Barclays Bank v Godfrey Mubiru (1998), the Court reaffirmed the critical concept of payment in lieu of notice which is a sum of money paid to an employee by their employer in place of notice, as specified in the employment contract or required by law as stipulated under section 58 of the Employment Act 2006. When an employer terminates an employee's contract without providing the required notice period, they may offer them payment in lieu of notice to compensate for the lack of notice.

Specifically, the Court clarified that employees are entitled to receive payment in lieu of notice when their contracts are terminated without the stipulated notice periods.

However, the Supreme Court also established clear boundaries. Compensation would not extend to cover remaining years of employment, holidays, leave, or other benefits.

In the context of the Bank of Uganda v Betty Tinkamanyire case, the Supreme Court ruled that the appellant (Bank of Uganda) was liable to pay the respondent (Betty Tinkamanyire) three months' compensation in lieu of notice, as per the employment contract. This meant that the Bank had to pay Betty three months' salary in place of the required notice period, acknowledging that her contract was terminated without proper notice and further awarded aggravated damages. The latter recognition stemmed from the respondent’s exemplary service juxtaposed with the appellant’s callous actions.

Background of The Case.

The respondent sued in the High Court for reinstatement, and damages for the involuntary or forceful retirement. It was upon the decision of the High Court, and Court of Appeal on the various awards, and the quantum of damages due to the respondent accruing from the unlawful dismissal of the respondent by the appellant bank that led to this appeal to the Supreme Court.

The facts of the case are as follows. The respondent had served the appellant Bank for ten years in various positions with a good record but was unlawfully dismissed four years before her normal retirement. On August 25, 2002, the appellant sent her to Germany to understudy the Human Resource Management of the Bank of Germany, and upon her return, she was handed a letter dated August 21, 2002, retiring her without reason or opportunity to be heard before the unlawful dismissal. The issue was whether the appellant Bank, as an employer, was liable to pay the Respondent sums of money she would have received had the dismissal been lawful, such as payment in lieu of notice and other sums, including commuted pension.

The Supreme Court, basing its decision on the case of Barclays Bank v Godfrey Mubiru (CA No. 1 of 1998), pronounced that the principle of compensation in lieu of notice applies. The Court laid down the principle that

Where an employment contract stipulates a notice period, the contract can be terminated by giving the stipulated notice, and in default, the employee is entitled to receive payment in lieu of notice. Where no notice period is stipulated, compensation will be given depending on the nature and duration of employment.

The Court further stated that

The contention that an employee whose contract of employment is terminated prematurely or illegally should be compensated for the remainder of the years or period when they would have retired is unattainable in law.  Similarly, claims of holidays, leave, lunch allowances and the like which the unlawfully dismissed employee would have enjoyed had the dismissal not occurred are merely speculative and cannot be justified in law.

I would confine the compensation for the unlawful dismissal of the appellant to the monetary value of the period that was necessary to give proper notice of termination  which is commonly known in law as compensation in lieu of notice. 

The principles established by this court in Barclays Bank of Uganda v Godfrey Mubiru (supra) remain good law that governs the relationship between an employer and employees with regard to termination of the latter’s employment.

The Court limited the appellant's liability to compensation in lieu of notice to three months, which was offered to the respondent and accepted.

The Court also found that the degrading and callous act of the appellant Bank made the respondent eligible for aggravated damages and that it would be unjust for the respondent to lose any of her pension rights, considering she would have continued to serve the appellant faithfully, diligently, and in an exemplary manner. ON THE AWARD OF DAMAGES.

Court held,

Citing the lead judgment, Kitumba, J.A,

“Regarding general damages, the respondent was rightly awarded these damages.  She was a senior member of staff and her services were terminated wrongly.  She was greatly embarrassed and inconvenienced.  She was classified among people who were alcoholics, late comers and fraudsters who were mentioned in Exhibit P.S.

In Kiyingi v National Insurance Corporation, (1985) H.CB 4, where a senior member of staff’s services were wrongly terminated, the court awarded him general damages for embarrassment and inconvenience”.

In a support judgment, the learned Deputy Chief Justice, Mukasa- Kikonyogo observed.

“The humiliation suffered by the respondent on her return from abroad on official duty only to find her successor seated in her chair, was unacceptable and, hence justified the award of punitive damages.”

In his concurring opinion,

J. W. N. Tsekokooko JSC, held and I quote;

The principle governing such an award is well known. Among the cases cited to us, I find the decision of the Supreme Court of Ghana in Nortey – Tokoli & Others Vs. Volta Aluminium Co. Ltd. (1990) LRC (Comm) pages 579, at P.599 apposite.  It concerns assessment of damages in cases of wrongful termination of employment.  It is unnecessary to go into the facts of that case except to say that because of the draught in 1982, the respondent company stopped some production, sent the 463 appellants and some other workers on leave under certain conditions which included an understanding that if electricity supply to the company were restored, they might be given back their jobs.

There was an agreement which provided that, if they were not recalled by 1 January 1984, they were to be considered redundant and the sum due under the loans would be converted to redundancy payments calculated in accordance with the collective agreement which provided for 2 months’ notice to be given of any dismissal or two months’ salary in lieu of notice. 

Eventually the appellants were not recalled and filed a suit and claimed in the High Court (i) damages for wrongful dismissal, (ii) a declaration that the purported termination was null and void and of no effect and (iii) arrears of all salary, allowances and benefits due from their respective dates of wrongful termination to the date of judgment.  Except for (ii) the High Court allowed, inter alia, the claim for damages for wrongful dismissal and awarded the equivalent of 28 months’ salary comprising, in each case two months’ salary in lieu of notice, 14 months’ salary for the period 31 October 1982 to 1 January 1984, and 12 months’ salary in respect of a reasonable period during which the appellants were to look for other employment. 

On appeal the Court of Appeal upheld the decision of the High Court, except for substituting four months’ salary for the 12 months awarded by the High Court as compensation.  The appellants and the company appealed to the Supreme Court of Ghana.

The majority of the court allowed the appeal and dismissed the cross-appeal by the respondent company. The majority held that:

The common law with respect to the relationship of master and servant could be applied in the present case to resolve the question of whether the declaration sought should be granted (see p 598, post).  ………………… the purported termination of the appellants’ employment was null and void and of no effect and the appellants were entitled to a declaration accordingly and their appeal was allowed in that respect.

Two principles regarding the assessment of damages in a case of wrongful termination of employment, both derived from the United Kingdom, competed in Ghana for acceptance. 

The first was that set out in Hadley v Baxendale (1854) 9 Exch 341, [1843-60] All ER Rep 461, and the second was that which did not confine the award of damages to wages of the dismissed worker. 

However, in Ghana, the reasoning of the Court of Appeal in Agbettah v Ghana Cocoa Marketing Board (1984-86) GLRD 16 should be followed so that the courts were able to award damages which reflected the courts’ disapproval of wrongful dismissal and the sum was not confined to an amount equivalent to the worker’s wages. 

In the present case the trial judge had awarded, in the exercise of his discretion, a sum equivalent to 12 months’ salary, and that order should be restored (see p 604, post).  Taylor, JSC., who wrote the lead judgement expressed his opinion at page 603 as follows:

And so we arrive at a situation where two principles for measuring damages compete for acceptance in our jurisdiction.  I think in the selection we must be guided by certain considerations.  A Ghanaian who has suffered a wrong expects redress and our law of wrongful dismissal should reflect it.

It seems to me that the Court of Appeal judges have already set the pace in a landmark decision and it will be a retrograde step to discourage and interfere with the progressive precedent they have set. 

I refer to Agbettoh v Ghana Cocoa Marketing Board (1984-86) GLRD 16.  In that case Apaloo CJ, with whom Francois and Abban, JJA, as they then were, concurred, held in a case in which the plaintiffs had been wrongly retired, that it would be just and proper for the court to mark its disapproval of the plaintiffs’ unconstitutional retirement by ordering that the defendant board pay to each plaintiff an amount equal to two years’ salary in addition to receiving their entitlements under their contract of employment. 

I respectfully find the above reasoning sound.

I think that the respondent was entitled to fair and decent treatment by the appellant.  She should not have been retired in the manner she was.  The judgment was entered in favor of the respondent, awarding her all her pension rights that she had already earned or accrued, other terminal benefits, and subsidized aggravated damages, although the Supreme Court did not order her reinstatement.

EVOLUTION OF UGANDA'S JURISPRUDENCE. Uganda's legal landscape has undergone significant transformation in regard to unlawful dismissal. The courts have emphatically warned employers that terminating an employment contract without providing the requisite notice period, as mandated by sections 58(1) and (2) of the Employment Act 2006, constitutes wrongful termination and is equivalent to summary dismissal under section 69 of the Employment Act.

This judicial stance has reshaped the law on unlawful dismissal, providing a stronger safeguard for employees' rights and emphasizing the importance of adhering to statutory notice requirements in employment contracts.

Most recently the Court of Appeal decision of Stanbic Bank (Uganda) Limited v. Nassanga Saphina Kasule - Civil Appeal No. 182 of 2021https://www.lawpointuganda.com/post/termination-of-employment-the-need-for-reason-and-hearing-under-ugandan-employment-law, which involved a dispute between an employer, Stanbic Bank, and an employee, Nassanga Kasule, over the validity of a termination clause in their contract that allowed either party to terminate the contract by giving one month’s notice or payment in lieu of notice, without giving any reason or hearing.

The employee challenged the termination of her contract by the employer on the basis of this clause and claimed that it was unlawful and unfair.

The Court of Appeal upheld the employee’s claim, and held that the termination clause was contrary to the Employment Act, 2006, and that termination of employment required justifiable reasons, other than misconduct, and a fair hearing. The court also considered the relevant provisions and principles of international labor standards and comparative jurisprudence and found that they supported the employee’s rights and interests.

Justice Christopher Gashirabake, JJA, highlighted that the employer's compliance with the notice period, as outlined in section 58 of the Employment Act 2006 or the employment contract, is sufficient grounds for termination.

The court emphasized that the famous Article 4 of the Termination of Employment Convention No.158 of 1982 which provides for valid reason for termination employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking establishment or service is not applicable unless incorporated into the Employment Act. The court clarified that, in cases where notice is not provided, the payment in lieu of notice is required, as established by law and the terms of the contract. The judgment referenced the concept that payment in lieu of notice can be viewed as the ordinary giving of notice accompanied by a waiver of service by the employer. Conclusion In conclusion, the landmark case of Bank of Uganda v Betty Tinkamanyire (2008) has significantly shaped the legal landscape of employment law in Uganda. The Supreme Court's decision has established crucial principles regarding unlawful dismissal, damages, and employment contracts.

The Court's emphasis on payment in lieu of notice as a safeguard for employees' rights has set a vital precedent, ensuring that employers adhere to statutory notice requirements.

The recent Court of Appeal decision in Stanbic Bank (Uganda) Limited v. Nassanga Saphina Kasule (2021) has further reinforced these principles, emphasising the importance of justifiable reasons and a fair hearing in termination of employment. As Uganda's jurisprudence continues to evolve, these landmark cases will serve as a foundation for protecting employees' rights and promoting fair labor practices in the country.

Prepared by

Fiona Adong Student of Law, Uganda Christian University

(UCU-LL4)