The Court of Appeal has determined that employers possess the authority to terminate employee contracts at their discretion, with or without justification. In the case involving Nassanga Saphinah Kasule and Stanbic Bank, the court emphasized that unless explicitly stated otherwise in the employment contract, termination stands if the employer provides adequate notice or pays three months’ salary in lieu of notice.
The court clarified that, under section 65(1)(a), an employer is not obligated to furnish reasons for termination unless specified in the employment contract. Justice Christopher Gashirabake, supported by Justices Richard Butera and Catherine Bamugemereire, underscored that a hearing is unnecessary when termination occurs without cause, as outlined in section 58 of the Employment Act.
Nassanga’s contract with Stanbic, terminated in 2012 without a stated reason, led to a legal dispute. Despite the Industrial court initially ruling in her favor, awarding Shs 65 million for wrongful termination, the Court of Appeal overturned this decision. The court held that a hearing is only required in cases of dismissal based on misconduct or poor performance, which did not apply in Nassanga’s termination.
Ultimately, the Court of Appeal ruled in favor of Stanbic Bank, emphasizing compliance with contractual obligations. It set aside the Industrial court’s decision, mandating Nassanga to cover the costs of both the appeal and the initial industrial court proceedings.