Courts can award general damages in addition to payment in lieu of notice in unlawful termination claims.

Introduction

Usually, when a Plaintiff or Claimant proves that their legal rights have been violated, courts award compensation in the form of general damages. It is well known that general damages are restorative in nature – that is – they are intended to put the individual in a position he or she would have been had the infringement not occurred.

In employment disputes, courts have grappled with the question of how to fairly compensate aggrieved employees. Until recently, it has not been clear whether unlawfully terminated employees are entitled to general damages in addition to payment in lieu of notice. Previous court decisions reveal a notable inconsistency on how this issue has been handled.

Case Law

In Bank of Uganda v Betty Tinkamanyire for instance, the Supreme Court declined to award general damages to the employee holding that compensation in unlawful dismissal claims should be restricted to the monetary value of the appropriate notice period. This principle was applied in other Supreme Court decisions such as Ahmed Ibrahim Bholm v Car & General Limited, Gullabhai Shillingi v Kampala Pharmaceutical Limited and recently in the Court of Appeal decision in Stanbic Bank Uganda Limited v Nassanga Saphinah Kasule.

This principle traces its origin to a 1909 decision in Addis v Gramophone Co Limited where the House of Lords held that if there be dismissal, the employer must pay an indemnity, but that indemnity cannot include compensation for the injured feelings of the employee or the fact that the dismissal makes it difficult for him or her to obtain fresh employment.

The idea appears to be that since a notice period can terminate a contract of employment, the appropriate compensation for an employee who is terminated without receiving such notice, is to award them the monetary equivalent of the notice period they were entitled to receive.

Later decisions of the Supreme Court appeared to depart from this principle, which created uncertainty. In Stanbic bank v Kiyemba Mutale, the Court re-opened this principle and awarded general damages outside the notice period. Similarly, in Omunyokol v Attorney General, the Court awarded UGX 150,000,000/= as general damages for loss of future earnings, embarrassment and inconvenience.

It is hoped that the recent Supreme Court decision in Uganda Post Limited v Consolate Mukadisi will resolve the inconsistency and provide clarity on whether employees are entitled to general damages in addition to payment in lieu of notice in unlawful dismissal claims. In this case, the Court held that an unlawfully terminated employee is entitled to payment in lieu of notice as compensation but this does not prevent the Court from considering the claim for general damages as an independent award. ?

The Court held further that general damages and payment in lieu of notice serve different purposes. Payment in lieu of notice is intended to compensate the employee for the employer’s breach of contract in failing to provide the appropriate notice. On the other hand, general damages compensate the employee for the non – economic harm and distress caused by the unlawful termination.

The Uganda Post Limited decision has now been followed and applied in the recent Industrial Court decision of Sadat Sserunjogi v Guiness Transporters Limited T/A Safe Boda, where it was observed that the decision resonates with article 126(2)(c) which mandates adequate compensation for victims of wrongs and Article 10 of the International Labour Organisation Termination of Employment Convention 1982 (No. 158) which requires courts and labour tribunals to award adequate compensation to victims of unlawful termination.

Conclusion

Earlier decisions, such as Betty Tinkamanyire, had overlooked the broader implications of unlawful termination. These judgments did not fully account for the fact that unlawful terminations can be costly and burdensome, requiring significant time and resources to recover the payment in lieu of notice. Moreover, such terminations often lead to emotional distress, reputational damage, and other non - monetary losses for the employee.

Employers are advised to comply with all pre-termination protocols to avoid situations where they are forced to pay general damages to unlawfully terminated employees.