The Employee's Dilemma | Calvin Kahiigi

THE EMPLOYEE’S DILEMMA: DECIPHERING THE DOWNSIDES OF THE COURT OF APPEAL’S VERDICT IN STANBIC BANK (UGANDA) LIMITED VERSUS NASSANGA SAPHINAH KASULE.

Calvin Kahiigi*

Abstract

This article delves into the intricacies of the recent Court of Appeal verdict in Stanbic Bank v Nassanga Saphinah, shedding light on the challenges imposed upon employees. By deciphering the downsides of this legal decision, the narrative unfolds the implications, concerns, and potential ramifications for the workforce, offering a comprehensive exploration of the employee's dilemma in the aftermath of the ruling.

Justices of the Court of Appeal Uganda

1. Introduction

The Court of Appeal’s recent judgement in Stanbic Bank (Uganda) Limited vs Nassanga Saphinah (the decision) has been received warmly by employing companies and legal practitioners all over the nation.[1] The decision is pivotal in shaping the understanding of employment law in Uganda, particularly concerning termination of employment.[2] Without delving into the specific details of the ruling, the key takeaway from the same is, that the employer has a right to terminate one’s employment without giving reasons for the same nor according the employee a hearing provided no allegations have been made against the employee.[3]

2. Unravelling the pitfalls of the decision

Article 4 of the Termination of Employment Convention, 1982 provides that the 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, establishment or service.[4] Whereas the decision is on all fours with the law regarding termination in Uganda, and the Justices of Appeal can only be applauded for upholding the employer’s right to terminate an employment relationship, and settling the uncertainty regarding the holding of a hearing prior to termination. The fact that the decision may have adverse effects on employees cannot be ignored. The general implications and disadvantages an employee might face due to such a precedent are hereunder highlighted.

2.1 Insecurity of Tenure.

Knowing that an employer may terminate employment without providing a reason could lead to job insecurity among employees thereby depriving them of the right to security of tenure. According to Miles (2022), job security is simply a sense of knowing that your job is safe from being cut.[5] The right to security of tenure thus guarantees employees an employment environment free from unauthorized or unjust authorisation. It comes with a feeling of protection against things like layoffs and economic downfalls, makes employees feel valued, reduces employee stress and anxiety, increases employee engagement and their productivity as a whole. This goes to show that the uncertainty created by the decision could have a psychological toll on employees and affect their work performance.

2.2 Reduction in Bargaining Power.

It is trite that in employment negotiations, the employer has the upper hand. This is because the employee generally has less bargaining power. Pettinger (2014) has defined bargaining power as the ability for workers to get what they want.[6] One of the ways of increasing such power stems from the importance of an employee’s labour to a given firm.[7] If employers are not required to provide reasons for termination, it makes one’s labour less valuable thereby reducing the bargaining power of employees in negotiating severance terms or in pushing back against unfair dismissals.

2.3 Potential for Abuse.

Such a ruling may leave room for employers to terminate employment arbitrarily, which can be abused in the absence of the need to justify their action. This also creates room for an abusive workplace. As Simmons (2002) denotes, dysfunctional workplaces aren’t created randomly.[8] According to Tom E. Jones:

“An abusive workplace is a place where employees lack the confidence to work together. People fear that making a mistake will get them into serious trouble. Rather than view co-workers as collaborators, people see them as competitors. Employees see themselves as targets and are threatened by anyone connected to management.”[9]

It is very much likely that such a ruling may cause a strain on the relationship between the employer and the employee as it might be seen as promoting a lack of transparency and openness in communication.

2.4 Challenge in Legal Recourse.

For those who have been terminated, the absence of a stated reason for their termination could make it more challenging to prove that the termination was wrongful or discriminatory, should they wish to seek legal recourse. By stating that an employer can terminate the employee’s contract for a reason or no reason at all, the Court of Appeal has essentially made it impossible to challenge one’s termination where notice has been duly given or payment in lieu of notice made.[10] In Florence Mufumba vs Uganda Development Bank, the Court observed that an employee is employed for a reason and can thus not be terminated without a reason.[11] Although this position has essentially been overruled by the Nassanga decision, it would not only be fair but also prudent to provide an employee, before termination, with reasons thereof.

2.5 Impact on Employee Morale.

A precedent that allows termination without explanation can negatively impact the morale of the workforce. As Miles (2022) emphatically denotes, a job is more than just a job as for some people, it offers a sense of purpose and meaning.[12] Feeling like you could lose your job at any time creates real fear.[13] Employees may feel less valued and this could potentially affect loyalty and productivity. Additionally, without a clear reason for termination, former employees might find it difficult to explain the circumstances of their departure to prospective employers. This can complicate their job search and career progression.

3. Conclusion

While it is true and legally justifiable that an employer has an inherent right to terminate the service of an employee, it is only fair that the employee should be notified of the reasons for the said termination. Nevertheless, it should be noted that, despite such a ruling, employees are still protected under various Ugandan laws and regulations, such as the Employment Act 2006, the Labour Unions Act 2006, the Equal Opportunities Act and the Labour Disputes (Arbitration and Settlement) Act among others. The Employment Act, being the primary legislation in such matters sets forth the rights of employees and the procedures to be followed by employers in terminating employment contracts. Employers are expected to comply with the procedural requirements laid down by law, and employees have the right to seek legal redress if they believe their termination was unlawful or unfair.

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References

*The Author is a student pursuing Bachelors of Law (LLB) at the School of Law, Makerere University in Uganda. The author is appreciative of Ms. Ogola Prisca Amoo’s guidance and direction in writing this article. [1] Stanbic Bank Uganda Limited vs Nassanga Saphinah [Civil Appeal No. 182 of 2021]; Kaggwa et al (2023), The Uganda Court of Appeal has Upheld that Employers can Terminate Employees Without Reason by Providing Notice or Payment in Lieu of Notice <https://www.mmaks.co.ug/articles/2023/11/16/uganda-court-appeal-has-upheld-employers-can-terminate-employees-without-reason> [accessed 26th November, 2023]; Arinaitwe (2023), Uganda’s Court of Appeal upholds Employer’s Right to Terminate Employment Contract for No Cause in Stanbic Bank (Uganda) Limited vs Nassanga Saphinah Kasule <https://jbyam.com/ugandas-court-of-appeal-upholds-employers-right-to-terminate-employment-contract-for-no-cause-in-stanbic-bank-uganda-limited-vs-nassanga-saphinah-kasule/> [accessed 26th November, 2023] [2] Termination of employment in Uganda is primarily governed by the Employment Act, Sections 2 and 65 among others. [3] Stanbic Bank Uganda Limited vs Nassanga Saphinah [Civil Appeal No. 182 of 2021] [4] ILO C158 – Termination of Employment Convention, 1982 (No. 158) [5] Madeline Miles (2022), The Secret to Achievig Job Security – And Why It Matters. <https://www.betterup.com/blog/job-security-stability> [accessed 26th November, 2023] [6] Tejvan Pettinger (2014), How Much Bargaining Power Do Workers Have? <https://www.economicshelp.org/blog/5563/economics/how-much-bargaining-power-do-workers-have/> [accessed 26th November, 2023] [7] ibid [8] Kathy Simmons (2002), Workplace Abuse: Causes and Cures <https://www.managedhealthcareexecutive.com/view/workplace-abuse-causes-and-cures> [accessed 26th November, 2023] [9] Tom E. Jones (1998), It's Broken, You Can Fix it: Overcoming Dysfunction in the Workplace. [10] Stanbic Bank Uganda Limited vs Nassanga Saphinah [Civil Appeal No. 182 of 2021] [11] Uganda Development Bank vs Florence Mufumba [Civil Appeal No. 241 of 2015] [12] Madeline Miles (2022), The Secret to Achievig Job Security – And Why It Matters. <https://www.betterup.com/blog/job-security-stability> [accessed 26th November, 2023] [13] ibid

The Employee's Dilemma by Calvin Kahiigi