Severance Pay Cannot Be Awarded to an Unlawfully Terminated Employee, Only to an Unfairly Dismissed One. Industrial Court Rules.

Facts

The Claimant, Busesire Johnson, was employed by Lugazi Homeland College as a security officer starting in December 2015 on a monthly salary of UGX 200,000. His employment was terminated on or about 15th January 2020 without notice or payment of terminal dues.

He filed a complaint with the Labour Officer, who found the termination unlawful and awarded him one month’s salary as severance pay. Dissatisfied with the computation of severance pay, the Claimant referred the matter to the Industrial Court seeking revision of the award, general damages, aggravated damages, compensation, interest, and costs.

The Respondent was duly served with court process, but neither filed any documents nor appeared at the hearing. The matter proceeded ex parte. The Claimant and one witness (CW2, Omurwon Mica) testified that he had served for approximately five years and that the termination was effected without any hearing or valid reason.

Issues

1. Whether the severance pay awarded to the Claimant by the Labour Officer was miscomputed.

2. What remedies are available to the Claimant.

Legal Representation

Ms. Brenda Nakibira and Mr. Dagan Tumwesigwa of LDC Legal Aid Clinic represented the Claimant. The Respondent was unrepresented.

Submissions of the Parties

Claimant's Submissions

It was submitted for the Claimant that the Labour Officer had miscomputed the severance allowance. Counsel argued that under Section 86(a) of the Employment Act, an employee in continuous service for six months or more who is unfairly dismissed is entitled to severance allowance.

It was contended that the Labour Officer, despite finding the termination unlawful, awarded only one month's salary. Counsel further argued that Section 88 of the Employment Act requires severance pay to be negotiated, and in its absence, the approach in Kamuli v DFCU Bank should have been adopted, which awards one month's salary for each completed year of service. Given the Claimant's four years of service and monthly salary of UGX 200,000/=, it was submitted that he should have been awarded UGX 800,000/= instead of UGX 200,000/=.

Regarding general damages, Counsel relied on Omara v Roofings Company Limited, stating that general damages are compensatory and awarded at the Court's discretion. It was submitted that the Claimant's contract was unlawfully terminated without notice, a hearing, or valid reason, causing humiliation, financial hardship, and loss of livelihood. The Respondent's failure to attend proceedings also caused delays and additional expenses for the Claimant.

On aggravated damages, Counsel again cited Omara, which describes aggravated damages as compensation for injury to a claimant's feelings and dignity. It was submitted that the Respondent's denial of the employment relationship, despite four years of service, was malicious and humiliating, warranting aggravated damages.

With respect to compensation, Counsel submitted that the Claimant was entitled to salary compensation from the date of termination until the date of the award, relying on Florence Mufumba v Uganda Development Bank.

The Respondent's Position

The Respondent did not file any pleadings, adduce evidence, or make submissions before the Court.

Court's Findings

Severance Pay Is Not Available for Mere Unlawful Termination

The Court found that the Labour Officer had awarded severance pay after finding that the Claimant's employment had been unlawfully terminated.

The learned Judge clarified that Section 86(a) of the Employment Act permits severance pay only in cases of unfair dismissal and not merely unlawful termination.

The Court reaffirmed its earlier decision in Nganda Joweria v Allen V.R. Stanley Secondary School, where it held that severance pay is unavailable in cases of unlawful termination.

Accordingly, the Court found that the Labour Officer's award of severance pay lacked legal foundation and set it aside.

Labour Officers Lack Jurisdiction to Award General Damages

The Court reaffirmed the principle established in Makawa v Sugar Corporation of Uganda Limited that Labour Officers lack jurisdiction to award remedies such as general damages, aggravated damages, interest, and costs.

The Court observed that such remedies fall within the exclusive jurisdiction of the Industrial Court.

General Damages Are Available in Employment Disputes

Relying on Peter Katongole v Airtel Uganda Limited, the Court reiterated several principles governing general damages in employment disputes;

1. General damages are recoverable in employment disputes.

2. They compensate for non-pecuniary loss including emotional distress, mental anguish, reputational harm, and injured feelings.

3. They are awarded in addition to statutory remedies.

4. They are not automatic and require proof of unfairness.

5. The assessment of quantum is discretionary and fact-specific.

6. Relevant considerations include age, status, length of service, salary, employability, career disruption, and manner of termination.

The Court found that the Claimant's termination without notice or compensation was unfair and had caused emotional and financial distress.

The Court further noted that the Claimant was 51 years old, was approaching retirement age, supported six school-going children, and faced diminished prospects of obtaining alternative employment.

Taking those factors into account, the Court found that an award equivalent to one year's salary was fair and reasonable.

Aggravated Damages Require Proof of Aggravating Conduct

The Court reaffirmed the principles stated in Bank of Uganda v Betty Tinkamanyire and restated in Peter Katongole v Airtel Uganda Limited, that aggravated damages require evidence of;

1. Malice;

2. Oppressive conduct;

3. Callousness;

4. Indifference;

5. Humiliation; or

6. Other aggravating circumstances.

The learned Judge found that although the Claimant suffered emotional and financial hardship, the evidence did not demonstrate conduct sufficiently malicious or oppressive to justify aggravated damages.

The claim was therefore rejected.

Salary Compensation Cannot Be Awarded for Periods Not Worked

The Court reaffirmed its position in Kansiime Nicholas v Kyenjojo District Local Government Council that salary is payable only for work performed.

The Court found that a claim for salary from the date of termination until judgment was speculative and legally unsustainable because the Claimant had not worked for the Respondent during that period.

The prayer for salary compensation was accordingly dismissed.

Holding

The Industrial Court held that the Claimant's reference succeeded substantially on the merits. The Respondent's failure to appear or contest the proceedings left the Claimant's evidence intact. The Labour Officer's initial computation of severance pay was found to have fundamentally misapplied precedent.

Consequently, judgment was entered in favour of the Claimant against the Respondent in the following terms;

1. The order for payment of the severance allowance of one month's salary was set aside.

2. The Respondent was ordered to pay the Claimant UGX 2,400,000/= (Uganda Shillings Two Million Four Hundred Thousand Only) in general damages.

3. Interest was awarded on the sums in (a) and (b) above at the commercial rate of 12% per annum from the date of the award until full payment.

4. The Respondent was ordered to bear the taxed costs of the reference.

Read the full case

Busesire Johnson v Lugazi Homeland College 2026 UGIC 47 (4 June 2026).pdf

Download PDF • 1.36MB

Key Takeaways

1. The Industrial Court clarified that severance pay under Section 86(a) of the Employment Act is applicable to unfairly dismissed employees, not unfairly terminated employees. This distinction is crucial for determining eligibility for severance allowance.

2. The Court reaffirmed its criteria for awarding general damages in employment disputes, emphasizing compensation for non-pecuniary losses and requiring proof of procedural or substantive unfairness. The quantum is discretionary, considering factors like age, length of service, and impact on career prospects.

3. Aggravated damages require a higher threshold of proof, specifically demonstrating malicious, oppressive, humiliating, or degrading conduct by the employer.

4. Claims for salary arrears from the date of termination to the date of the award are generally considered untenable if the employee has not been working for the employer during that period.