Procedures For Terminating the Agreement
The Employment Act requires an employer before reaching any decision to dismiss an employee on the ground of misconduct or poor performance to hear and consider any representations and defences to the alleged misconduct which the employee has made. The employee should be given a fair hearing and reasonable time within which to prepare his representations to the allegations.
At the disciplinary hearing, the law requires the employer to explain to the employee in a language the employee may be reasonably expected to understand, the reason for which the employer is considering dismissal and the employee is entitled to have another person of his or her choice present during this explanation.
A recent Court of Appeal decision has clarified that an employer is in some instances not mandated to give a reason or hearing before termination where the contract contains a clause allowing termination of the contract with notice or payment in lieu of notice.
The law therefore allows an employer to lay off an employee in accordance with the notice provisions in the employment contract and Section 58 (3) of the Employment Act or to make payment in lieu of notice without the need to state a reason for the termination.
Instant or summary dismissal is dismissal without notice or with shorter notice that what is provided for under the law. An employer is entitled to dismiss summarily, and the dismissal is justified, where the employee has, by his or her conduct indicated that he or she has fundamentally broken his or her obligations arising under the contract of service.
The Employment Act requires an employer to accord an employee a fair hearing before forming a decision to dismiss summarily.
An employee who has been summarily dismissed without justification may within six months after the date of dismissal present a complaint to a labour officer who shall seek to settle the matter in the first instance by mediation or conciliation.
Unless the contract of employment stipulates otherwise, the employee may terminate a contract of employment with or without notice as a consequence of unreasonable conduct of the employer or where he has received a notice of termination from the employer but before the expiry of the notice period.
Termination On Notice
A contract of employment may be terminated by either party by notice. Unless termination is under summary dismissal, notice is mandatory.
An employee may be terminated after the notice period or by the employer payment in lieu of notice due. The Employment Act provides for the following minimum notice periods:
- 2 weeks for service of more than 6 months but less than 1 year;
- 1 month for service of more than 12 months but less than 5 years;
- 2 months for service of more than 5 years but less than 10 years;
- 3 months for service of 10 years or more.
Termination By Reason Of The Employee's Age
Under the Pensions Act, termination of employment is deemed to take place where an employee attains the age of 60 years.
Automatic Termination In Cases Of Force Majeure
The law does not specifically provide for automatic termination of employment contracts in cases of Force Majeure. The Contracts Act generally provides for discharge of contracts by frustration.
An employment contract like any other contract maybe affected by force majeure. The Employment Act provides that in cases where the employer’s legal position formed the basis of the employment, the death of the employer shall cause the contract of service to terminate one month from the date of death.
The Employment Act further provides that it is the employer’s duty to provide work, except interruptions to his business are as result of natural calamities, a strike or other industrial action, or economical and technological reasons that result in reduction of work that is beyond the employer’s control. In these circumstances however, the employer is required to pay the employee at the same rate as if he had provided work.
The Employment Act provides that where an employer contemplates terminations of no less than 10 employees over a period of not more than three months for reasons of economic, technological, structural or similar nature, the employer shall notify the representative of the labour union, if any, that represents the employees in the undertaking and notify the Commissioner for Labour in writing of the reasons for the termination, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out.
The employer is required to give notice and pay the terminal benefits due to the employees in accordance with the law.
Termination By Parties’ Agreement
A contract of employment can be terminated mutually by agreement of the parties to the contract of employment so long as the agreement does not limit the operation of the provisions of the Employment Act to the detriment of the employee such as providing a termination notice period shorter than the one prescribed by law.
Directors Or Other Senior Officers
Employment of directors and other senior officers is regulated by the same employment laws that govern employment of junior staff.
Special Rules For Categories Of Employee
The Employment Act empowers the minister for labour on the recommendation of the labour advisory board to make rules and regulations applicable to the employment of special categories of employees who in his/her opinion are in need of special protection under the law.
The minister consequently enacted regulations for the special categories of employees such as the Employment (Employment of Children) Regulations to govern the employment of children below the age of 14 years and the Employment (Recruitment of Ugandan Migrant Workers Abroad) Regulations to protect the rights Ugandan workers desiring to work abroad.
Specific Rules For Companies in Financial Difficulties
The insolvency or winding up of an employer causes the contract of employment to terminate within one month of the commencement of insolvency or winding up order. However, where the business continues to operate or is transferred, the employee’s claim for wages will have priority over all other claims which have occurred during 26 weeks preceding the declaration of insolvency or winding up.
Where an employer is unable or refuses to pay wages, a labour officer shall declare the contract terminated on application of the employee without prejudice to any claim for wages and any other terminal benefits due to the employee under the said contract.
Restricting Future Activities
The Contracts Act provides that an agreement which restrains a person from exercising a lawful profession, trade or business of any kind, is to that extent void unless the restraint is reasonable in respect of the interests of the parties concerned and in respect of the public. The test for unreasonableness is if the restraint exceeds what is reasonably necessary to protect the proprietary interest of the employer.
Under the Whistle-blower Protection Act, a person must not be subjected to any victimization and/or occupational detriment by his or her employer or by any other person on account, or partly on account, of having made a protected disclosure. A whistle-blower is considered victimized on account of making a protected disclosure if he/she is subjected to a discriminatory or other adverse measure by the employer or a fellow employee.
Special Rules For Garden Leave
The law does not provide for Garden leave following resignation or termination of employment.
The Employment Act provides for payment of severance allowance. The amount is subject to negotiation between the employer and the employee under the contract and where the contract of employment is silent, the Courts have now determined that the amount due and payable should be computed at a rate of 1 month’s pay for each completed year of service.
An employee who has been in continuous service for at least 6 months is entitled to severance pay in any of the following circumstances:
- Unfair dismissal of the worker by the employer;
- Death of the employee at work not attributable to his own serious and wilful misconduct;
- Termination by the employee due to physical incapacity not attributable to his own serious or wilful misconduct;
- Termination by reason of the death or insolvency of the employer;
- Termination by a labour officer following the inability or the refusal of the employer to pay wages;
Severance allowance is not payable where an employee is on probation, or where he has been summarily dismissed with justification or when an employee is first dismissed but later is offered reemployment which he/she unreasonably refuses. It is also not payable to an employee who abandons his employment and absconds the workplace for a period of more than 3 days without any explanation given to the employer.
Special Tax Provisions And Severance Payments
The Income Tax Act provides for taxation of employment income defined under the law to include any amount derived as compensation for the termination of any contract of employment whether or not provision is made in the contract for the payment of such compensation, or any amount derived which is computation of amounts due under the contract of employment.
Allowances Payable To Employees After Termination
The Employment Act provides that an employee is entitled to all benefits arising under his/her employment contract and upon termination, an employer is obliged only to pay the terminal benefits accruing from the contract of employment and not after termination.
Time Limits For Claims Following Termination
The general timelines for filing claims under the law are stipulated under the Limitation Act which stipulates 3 years for claims arising under contract.
However, the employment Act provides that an employee who has been continuously employed by his or her employer for at least 13 weeks immediately before the date of termination, shall have the right to complain that he or she has been unfairly terminated vide a complaint to a Labour officer within three months of the date of dismissal, or such other period as the employee shall show to be just and equitable in the circumstances.
In instances of summary dismissal without justification, the law provides that the employee has 6 months from the date of dismissal within which to lodge a complaint with the labour officer and where in both cases, the labour office does not dispose of the claim within 90 days of submission, the claimant may proceed to the industrial court.