The first case concerns former employees of the Bank of Uganda who sued on the grounds that they were prematurely retired without benefits and that no cause was given for their dismissal. The Industrial Court found that the dismissal was illegal and unlawful, and awarded all the former employees substantial damages. Later, the Court of Appeal overturned the judgment, stating that the employment relationship can be terminated with notice, even without justification.

The decision is based on the fact that Uganda, although it has ratified, on 18 July 1990, the International Labour Organisation's Convention No. 158 on Termination on Employment and enacted the provisions under  it by of the Employment Act 2006, has never enacted any law providing for the obligation to provide a good reason for dismissal. In particular, The Employment Act omitted the precept in Article 4 of the Convention on the requirement for cause for termination, according to which “the enactment employment of an employee shall not be terminated except there’s a legitimate cause for such termination related with the capability or conduct of the employee or primarily based on the operational necessities of the enterprise, institution or service”.

For this reason, the Court found there was no foundation for an obligation to provide cause in each case of termination.

Shortly thereafter, in apparent contradiction to the Court's decision, the Industrial Court, in the case Asiimwe Apollo v Law Development Centre, stated that employers must give reasons for terminating an employment contract, relying on the case of Hilda Musinguzi v Stanbic Bank Uganda, where the Supreme Court stated that “the right of an employer to terminate a contract cannot be fettered by the courts so long as the procedure for termination is followed to ensure that no employee’s contract is terminated at the whims of the employer and if it were to happen, the employee would be entitled to compensation.”

In the cited case, however, the Supreme Court clarifies that this is referred to cases where an employer dismisses an employee for misconduct, and a specific procedure must be followed to prevent an employee being terminated based on employer's impulse. The employee is informed of the grounds for disciplinary action, the right to representation and the right to face accusers. Consequently, the dismissal has to be justified.

On the other hand, an employer’s right to terminate the contract of employment for reasons not related to misconduct (eg. the termination arose out of the need for restructuring by the employer) only requires giving the employee notice or payment in lieu of notice. This was the kind of termination that the Court of Appeal dealt with in the Kibuuka decision.

This important distinction between dismissal for disciplinary reasons and termination by notice, according to the Supreme Court, is that the former requires necessary grounds to justify the dismissal, whereas the latter only requires sufficient notice.