Uganda: Court of Appeal confirms employers can terminate an employee’s contract without cause

On 15 November 2023, the Court of Appeal of Uganda reaffirmed the employer's right to terminate the employment relationship by providing notice or payment in lieu of notice.
It stated that where the notice period is observed, or compensation is paid in lieu thereof, employers are not obliged to give reasons for dismissal under Section 65(1)(a) of the Employment Act.
It is based on the assumption that termination of employment is distinct from dismissal for misconduct or poor performance, which requires procedures and reasons.

The case (Stanbic Bank (Uganda) Limited v. Nassanga Saphinah Kasule, Civil Appeal No. 182 of 2021) concerns a bank employee who was dismissed with notice under a clause providing that each party had the right to terminate the contract with the required notice or payment in lieu of notice.

The Industrial Court upheld the employee's appeal, declaring that the dismissal was unlawful, and awarded her substantial compensation.

The Court of Appeal, however, overturned the judgment, relying on the Supreme Court's binding precedents that recognise the validity of termination when contracts provide for termination with notice of a specified period. Therefore, it ruled that no reason or hearing is necessary for the termination.

The Court also clarified that, in the absence of such notice, the termination remains valid, and the employee is entitled to receive the compensation in lieu of notice provided for in the contract or determined according to the nature and duration of the work.

You can find a similar previous decision confirming the jurisprudential orientation of the Court of Appeal here.

Employers should draft employment contracts that expressly contain termination with notice clauses to make it easier to exercise this option.