TERMINATION OF EMPLOYMENT: THE NEED FOR REASON AND

HEARING UNDER UGANDAN EMPLOYMENT LAW

Insights from the Landmark Ruling: Stanbic Bank (Uganda) Limited
v. Nassanga Saphina Kasule - Civil Appeal No. 182 of 2021

By Cleopatra Abiikira

ABSTRACT
This paper examines the legal requirements for termination of
employment under Ugandan law, based on the recent landmark case of
Stanbic Bank (Uganda) Limited v. Nassanga Saphina Kasule CIVIL
APPEAL NO. I82 OF 2O21, The case involved a dispute between an
employer and an employee over the validity of a termination clause that
allowed either party to terminate the contract without giving any reason
or hearing. The Court of Appeal ruled that such a clause was unlawful and
that termination, as defined by the Employment Act, 2006, required
justifiable reasons, other than misconduct, and a fair hearing. The paper
analyzes the reasoning and implications of the court’s decision, The paper
argues that the court’s decision was consistent with the protection of
employees’ rights and interests, and that it contributed to the development
and harmonization of employment law in Uganda.
INTRODUCTION.

1
Termination of employment is one of the most contentious and complex
issues in employment law, as it involves the balance between the rights
and interests of employers and employees, and the regulation and
protection of labor relations.
In Uganda, the legal framework for termination of employment is
governed under section 65 of the Employment Act, 2006, which is the
provision that defines what constitutes termination of employment in
Uganda. According to this section, termination of employment means the
discharge of an employee for justifiable reasons, other than misconduct,
by the employer with or without notice, or by the employee with or
without notice as a consequence of unreasonable conduct on the part of
the employer towards the employee. This section also specifies the
notification and hearing requirements before termination, and the
remedies available for unlawful termination
However, the interpretation and application of the Act has been subject to
various challenges and controversies, especially in cases where the
employer and the employee have agreed on a termination clause that
allows either party to terminate the contract without giving any reason or
hearing. Such a clause, which is commonly found in fixed-term contracts,
raises the question of whether it is valid and enforceable under Ugandan
law, and whether it complies with the principles and standards of fair labor
practices.
This paper addresses this question by analyzing the recent landmark case
of Stanbic Bank (Uganda) Limited v. Nassanga Saphina Kasule Civil
Appeal No. 182 of 2021, which was decided by the Court of Appeal on
15th November 2023. The Coram of Justices R. Buteera, DCJ, C.
Bamugemereire, & C. Gashirabake, JJA, reaffirmed the principle that an
employer is not obligated to provide reasons for the termination of an
employment contract under section 65(1)(a) of the Employment Act
2006.
FACTS AT A GLANCE.
2
The case 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.
KEY POINTS FROM THE JUDGMENT.
1. No Requirement for Reasons.
The court has emphatically stated that, unless otherwise specified in
the employment contract, an employer is not obliged to furnish a good
or any reason for terminating an employment contract under section
65(1)(a) of the Employment Act 2006.
2. Notice as a Sufficient Ground.
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
3
 establishment or service is not applicable unless incorporated into the
Employment Act.
3. Payment in Lieu of Notice.
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.
4. Precedent on Notice Requirements.
The judgment referred to the precedent set by the Supreme Court in the
case of Barclays Bank of Uganda vs. Godfrey Mubiru S.C.C.A No.
1 of 1998. It was emphasized that compensation in lieu of notice
suffices as notice, and the right of the employer to terminate the
contract is not fettered by the courts unless the period of service is fixed
without provision for giving notice.
5. Termination without Reasons.
The court highlighted previous decisions, including Stanbic Bank
Uganda Limited vs. Deogratius Asiimwe Civil Appeal No. 18 of
2018, reiterating the position decided by Tuhaise JSC that an
employer can terminate an employment contract for a reason or no
reason at all. The employer's right to terminate without providing
reasons was underscored.
DOES TERMINATION OF AN EMPLOYEE REQUIRE A REASON TO BE
LAWFUL?

As earlier stated, Section 2 of the Employment Act, 2006 defines

Termination of employment as provided for under Section 58 of the Act.
Section 58 provides that termination shall be deemed to take place in the
following instances—
(a)where the contract of service is ended by the employer with notice;
4
(b)where the contract of service, being a contract for a fixed term or task,
ends with the expiry of the specified term or the completion of the
specified task and is not renewed within a period of one week from the
date of expiry on the same terms or terms not less favorable to
the employee;
(c)where the contract of service is ended by the employee with or without
notice, as a consequence of unreasonable conduct on the part of
the employer towards the employee; and
(d)where the contract of service is ended by the employee, in
circumstances where the employee has received notice of termination of
the contract of service from the employer, but before the expiry of the
notice.
THE LAWFULNESS OF TERMINATION WITHOUT HEARING UNDER
SECTION 65(1)(A ) OF THE EMPLOYMENT ACT, 2006.
One of the issues that arises in employment law is whether an employer
is required to accord a hearing to an employee before terminating their
contract under section 65(1)(a) of the Employment Act, 2006. This
section provides that termination of employment means the discharge of
an employee for justifiable reasons, other than misconduct, by the
employer with or without notice, or by the employee with or without
notice as a consequence of unreasonable conduct on the part of the
employer towards the employee, in the Stanbic Bank (Uganda) Limited
v. Nassanga Saphina Kasule, Civil Appeal No. 182 of 2021, held that
termination under this section does not require a hearing, unless the
contract expressly provides otherwise .
The court distinguished section 65(1)(a) from section 66 of the
Employment Act, 2006, which provides that an employee is entitled to a
hearing before he or she is dismissed on grounds of misconduct or poor
performance.

5
The court reasoned that section 66 applies only when the dismissal is
based on allegations of misconduct or poor performance, which need to
be verified and substantiated by the employer. However, if the termination
is not based on any of these grounds, there is no need for a hearing, as the
employer can exercise their contractual right to terminate the contract by
giving notice or payment in lieu of notice, without giving any reason.
LEGAL IMPLICATION OF THE RULING.
This decision has important legal implications for all employers regarding
the lawfulness of termination of employment in Uganda. It confirms that
the employer has the contractual right to terminate the employee without
a reason or hearing, if the termination is done with notice or payment in
lieu of notice, and if the contract does not require a reason or hearing.
However, it also clarifies that the employer has the legal duty to give the
employee a reason and a fair hearing, if the dismissal is done on grounds
of misconduct or poor performance, and if the employee is entitled to a
fair hearing under the Act. Therefore, the decision reminds the employers
to respect the rights and interests of the employees, and to follow the
principles and standards of fair labor practices that are also internationally
recognized.
CONCLUSION
In summary, the recent ruling by the Court of Appeal reinforces the
principle that, unless stated otherwise in the employment contract, an
employer is not required to provide reasons for termination under section
65(1)(a) of the Employment Act 2006. The court emphasized the
significance of compliance with notice periods and clarified the role of
payment in lieu of notice. This judgment provides clarity on the
termination of employment contracts in Uganda, aligning with previous
legal interpretations on this matter.

By Cleopatra Abiikira (PGDLP Candidate)

6
Disclaimer
Thank you for reading this Paper. I hope you found it useful and
informative. Please note that this legal paper is a summary of key points
from the judgment, the opinions of the author and does not constitute legal
advice. If you have any questions or comments, please feel free to contact
the author.