termination

Termination of employment: What you need to know

In labour court, cases of unfair/wrongful termination soar by the day. They can be dramatic, especially where the employee or employer acts contrary to his promises and obligations under labour law. Did you know that you can avoid the drama by learning the basics of termination of employment? This article discusses the intricacies of termination in employment law in a simple language. This is so that the reader can understand the basics about termination of employment without using complex legal notions.

Employment under contract

A contract is an agreement between parties creating enforceable obligations recognised by law. Contracts entail the gist of terms and conditions that parties therein must adhere to in order to be bound by their intentions. There are several types of contracts but the fundamental principles are;

  • It must be between parties agreeing to be bound by the contract,
  • The contract must be recognised by the governing law of the land. Illegal contracts are unenforceable. A party that defaults is not at fault because the obligations therein are illegal.
  • It must stipulate the period within which it is to be observed.
  • It provides the duties, liabilities and responsibilities to be borne by the parties.

Contracts may be oral or written, as long as parties concerned have mutually agreed upon the mode. It is pertinent to have a written contract, however, to clearly impose an obligation in case one party evades his responsibility.

Termination

This is the act of ending something. When a contract is terminated, it is ended. The parties are no longer obligated to act upon their obligations since the agreement is complete, acted upon or overridden by certain factors. Termination dictates that it must be made according to the agreement in a contract. If it is not followed, the party aggrieved by the termination has rights to enforce the contract or sue the breaching party.

Ways of ending a contract include;

  • Expiry of the contract where there is a definite period
  • Frustration and other factors making it difficult to enforce the contract. These may include, natural disasters collectively known as ‘force majeure’ in law (war, floods, earthquakes, storms and typhoons, hurricanes, avalanches, death/illness/incapacitation of either party, suspension of the contract or any party therein, dissolution or winding up of a company, etc)
  • Retirement age for contracts where the employee is limited by retirement
  • Election to end the contract by giving the other party notice
  • Summary dismissal, where the employer without notice ends the contract.

Notice in termination of employment

 Notice refers to informing a party of something. In employment law, notice may be oral or written. Where a contract of employment specifically requires written notice to be made in a certain manner, it must be followed. If not, the breaching party is liable to suffer damages in law. Notably, notice period starts running from the date it is given.

It only requires the party giving notice to do so in reasonable time.  Notice is fundamental to ending a contract and cannot be replaced. Because some contractual obligations are implied, notice may be difficult to estimate. However, some jurisdictions like Uganda’s have set minimum notice periods for ending employment where it is not specifically provided. Under section 58 (3) of Uganda’s Employment Act, a ‘minimum notice period’ is divided into four (4);

  • Not less than 2weeks where employment is of more than 6months but less than 1year
  • Not less than 1month where employment is of more than 12months but less than 5years
  • Not less than 2months where employment is of 5 years but less than 10years
  • Not less than 3months where employment is of more than 10years.

Payment in lieu of notice

This statement literally translates as ‘payment instead of notice’. There are instances where notice is made with immediate effect contrary to the agreed upon period. For instance, an employer notifies his employee of the termination of the employee’s services prior to ending term. It may be given with the intention of fast-tracking its effect.

In such times, the notification is measured in ‘sums’, meaning that the employer will evaluate how much money to compensate the employee for the period left in the contract and pay that amount and all other benefits he is entitled to, sometimes with bonus.  Payment immediately ends the contract of employment.

Dismissal as a form of termination of employment

  1. Summary dismissal

An employer may terminate his employee’s contract due to the latter’s conduct which leads to a breach of a fundamental term of the contract. It follows that the breach cannot be corrected by any acts. When this happens, the employee is not entitled to any legal remedies except his wages earned during the period when the contract existed. The latter period of the contract is marred by the breaching conduct which severs the employee’s entitlements.

It is a lawful action. Employee misconduct affects the parties’ services; especially the employer’s whose business may suffer irreparable damage. Acts amounting to misconduct depend on the terms in the contract.

To justify summary dismissal, the contract assigns roles, obligations and conduct of enforcing a contract. If the contract subjects its parties to certain behaviour, acting contrary to the same may lead to summary dismissal.

There may be implied acts which lead to summary dismissal. These include,

  • Insubordination: As an employee, obeying the employer’s rightful and legitimate orders is vital. These orders, the law considers, must be lawful within the employment’s defined duties. Orders may be verbal or written orders.

They must also be reasonable for any person of sound mind to infer an obligation. Orders which harm the employee or risk his person (i.e. dangerous), cause the employee to act illegally or commit crimes are illegal.

Any summary dismissal from such orders gives the employee the right to sue for redress.

  • Negligence: Every employee is assumed to have required skill to perform his obligation. Because negligence is a tort (civil wrong), an employer may face a law suit from negligent acts of his employee. The employer, therefore, has the right to terminate the services of an incompetent employee for negligence.

If the agreement hinges on the employee to work after receiving apprenticeship from the employer, the employer cannot terminate the services of the employee without proper justification, i.e. the employee fails completely to grasp the skills in a given period.

  • Abandonment of work: An employee must be present at work place as required. Exceptions to this include holidays, vacations, leave and specific periods of absence granted by the employer.

When an employee resigns from work, refuses to report to work, or deliberately stops working even when he is at the work place, he can be dismissed summarily without notice. He also loses his entitlement to benefits under a contract.

Courts infer absence from the intention and acts of the employee. If the acts were justified, an employee has a right to be heard and given another chance in the contract. However, the justification ought not to burden or affect the employer’s productivity and standards.

  1. Wrongful dismissal

An employee willing to perform his obligations and has not breached his terms of employment may be dismissed without reason. This is a wrong act by the employer. The employer is in breach.

This type of dismissal may have insufficient or no notice. Notice is important in communicating acts affecting an employment contract/relationship. Where the employee still performs his obligations as contracted, he is entitled to complete his ‘promise’ without duress. In unfortunate circumstances, it is ‘wrong’ if the employer ends the contract before its expiry, thus ‘wrongful dismissal’.

Sometimes, the employee make act contrary to terms of the contract. If the employer does not condemn these acts, it is assumed that he pardoned, overlooked, disregarded, forgave (e.t.c) the employee. Terminating the contract on acts the employer disregarded is wrong. An employer, therefore, must terminate the contract upon commission of the wrong act by the employee. He cannot re-visit past wrongs to effect a dismissal.

If the contract dictates that the employer must subject the employee to disciplinary measures, it is wrongful dismissal if he does not. The law presumes that forms of disciplinary measures be exhausted before the employee is dismissed. Contrary to this, the dismissal amounts to a wrongful dismissal.

  1. Unfair dismissal

In unfair dismissal, the Ugandan law provides that the employee must be in continuous employment for at least thirteen weeks immediately before termination. Probation and trial periods do not count.

An unfair dismissal may be lawful but not fair in terms of employment relationships. For example, If Mwangi dismisses Mumbi if she spends a fortnight nursing her newborn son after serving her statutory maternity leave. Mwangi may have granted Mumbi her legal leave, yes, but he may not give her an opportunity explain her extended leave which reason is justifiable in court.  If Mumbi’s child suffered pneumonia and Mumbi had to stay longer, Mumbi ought to be heard before being dismissed.   Without regard to her maternal responsibility as a new mother, Mwangi will have acted unfairly to dismiss Mumbi, even if the extended leave without notice is illegal and can amount to dismissal.

All complaints are lodged before the Labour Officer responsible for the jurisdiction where the employment existed. Complaints are lodged within three (3) months of dismissal. Any later date is a preserve of the officer to decide.

Proper procedure in termination and the right to be heard

Procedure is complicated but efficient in assessing whether or not the dismissal (any) is lawful. Just as a contract is an agreement on terms governing the employment relationship, termination should be agreed upon in the same spirit.

Termination necessitates sufficient notice to the party affected by the breach, termination or change of circumstances that may affect the employment. This means that a right to be heard is essential in ending employment, mutually.

In natural justice, to sue, to be heard and to have a matter settled is fair and legal. Written contracts require termination to be written.

Employee’s remedies of termination

Once it is established that a wrongful termination occurred, an employee can sue for

  • Reinstatement to the job. The employer is directed to have the employee return to the job and continue his employment like before. All gratuities, entitlements and benefits must be paid. This can be difficult if the relationship is sour.

In common law, courts revere this result and opt for compensation for the wrongful dismissal.

  • Damages. It is like compensation for loss of earnings. It literally balms the employee’s distress even though money cannot measure or quantify emotional breakdown.

If the employment is a fixed term kind but terminated before that time expires, the employee is entitled to reparation for the unexpired time in addition. This is because he may have planned, executed and acted as if the contract will end at a later date only to be frustrated by the termination.

Damages may be specific (quantified with evidence of expenditure receipts) or general (estimated by courts)

  • Formal apology. It may seem unnecessary but it often reconciles parties. It also helps parties to avoid litigation expenses.

Employer’s remedies of termination

Employers, too, suffer loss on termination. To them, their readily available remedy is to dismiss a breaching employee. Other avenues include;

  • Indemnity: This common law remedy follows that any termination or act that frustrates the performance of a contract should be remedied by indemnity. The breaching party does. Acts performed by the employee outside of the scope of employment are induced on the employee. Strict liability, for instance entitles the employer to indemnity because the employee alone is responsible for loss, damage or frustration of the contract. If the employer acted in collusion with the employee or is held vicariously liable in law, he cannot claim to benefit from indemnity.
  • Injunction: An employer may institute an injunction against the employee, restraining him from continuing the breach. An injunction may also restrain the employee from causing acts which may be detrimental to the employer’s business against third parties.

For instance, if an employee uses skill acquired at the employer’s workplace to enable the employer’s competitors gain an advantage over him. This sort of restraint usually occurs in industrial processes and trade businesses.

  • Accountability: An employer can demand the employee to account for unfair gains the latter acquired while in employment.
  • Replacement of employees: When an employee is dismissed, his job remains undone. An employer has the right and freedom to replace him to continue productivity of the job.
  • Costs for loss, in case an employee sues

Conclusion

Termination is a sensitive and lengthy topic in employment/labour law.

In a market where jobs are limited, competition for the few jobs means that the employees must adhere to strict procedures of employment law and termination. Otherwise, the employers may take advantage of the loophole in termination of employment and harvest lump sums in legal suits. On the other hand, employees may suffer loss of earnings, experience and skill if employers disregard the formers’ rights to a contract of employment.

Every employer or employee must have basic knowledge of how the labour office operates.

Good luck!

BY ATUHAIRWE AGRACE

This article appears in our weekly digital law magazine, The Deuteronomy Vol 2, Issue 4 of February 25th 2017

To receive The Deuteronomy in real time, click HERE

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