Okello Opio v Stanbic Bank of Uganda Limited (Labour Dispute Claim 45 of 2015) [2012] UGIC 1 (22 April 2012)

THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA AT KAMPALA LABOUR DISPUTE CLAIM NO. 045/2015 ARISING FROM HCT-CS 0012/2013

BETWEEN

OKELLO OPIO MILTON CLAIMANT

5

10 VERSUS

STANBIC BANK OF UGANDA

LIMITED RESPONDENT

15 Before

1. The Hon. Head Judge, Ruhinda Asaph Ntengye

Panelists

- 1. Mr. Michael Matovu - 20 2. Ms. Suzan Nabirye - 3. Ms. Adrine Namara

AWARD

25 Brief Facts

30

The claimant was an employee of Uganda commercial Bank ltd (which later on metamorphosed into Stanbic Bank, the respondent) since 3rd March 1987. On 3rd May 2002, he was suspended on allegations that he was involved in acts of gross negligence including irregular banking activities. He was arrested and charged in court with the offences of embezzlement and causing financial loss contrary to Section 269 of the penal code but was later on acquitted by the court. According to the respondent the claimant was subjected to a hearing after which he was dismissed for various banking irregularities that he committed. Having been dissatisfied with the process leading to his dismissal he filed Case

35 no. 012/2013 in the High Court at Lira which eventually referred the matter to this court.

Issues

- 1) Whether the claim is barred by Section 3 of the Limitation Act. - 2) Whether the claimant's employment was lawfully determined. - 40 3) What remedies are available to the parties?

Representations

The claimant was represented by Ms. Acan Stella of Acan & Co. Advocates while the respondent was represented by Mr. Isaac Walukaga of MMAKS

45 Advocates.

Evidence adduced

The claimant adduced evidence from himself alone while the respondent adduced evidence from one Harriet Deborah Manager Employee relations and governance in the respondent bank.

50 Both witnesses signed witness statements which are on the court record.

SUBMISSIONS

Both parties filed written submissions. The Claimant through his lawyer, argued on the first issue that the claim was not barred by Section 3 of the

- 55 Limitation Act because according to her the cause of action begun when the claimant was acquitted of the charges levelled against him. On the second issue, counsel for the claimant argued that the unlawfulness of termination began with the suspension which was contrary to Section 63 (a) of the Employment Act without *'A* pay as provided thereunder. She argued that - 60 65 the claimant was not given sufficient time to prepare for defense contrary to Section 66 (3) of the Employment Act since he got informed on 20/5/2002 and was required to appear for hearing on 22/5/2002. According to counsel when the claimant appeared before the disciplinary committee, he sought more time to prepare in vain and asked the committee an adjournment to enable him get bank statements that were under investigation but was not accepted. He was - just handed over to the police on 23/5/2002. According to counsel the

purported proceedings of the disciplinary committee were not given to the claimant and not a single witness testifies against the claimant. In counsel's view the respondent bank had capacity and machinery to recover

- 70 whatever money was allegedly lost and the fact that the respondent did not take any legal step torwards recovery implied that there was no loss at all. Counsel argued that whereas the claimant was dismissed for causing financial loss to the respondent, there was no proof of any loss. In her view evidence of irregularities that the respondent referred to was examined by the court and - 75 they were found to be non- existent when the claimant was acquitted. Counsel argued that the reason of terminating the claimant was unjustifiable and that the respondent just wanted to get rid of him by fabricating the reason. - 80 On the third issue, counsel argued that the claimant was entitled to general damages because he and his family went through untold suffering as they could no longer afford access to basic needs because of lack of earning ^a living. Counsel also argued that the claimant was entitled to compensation for his property which he had acquired using staff housing loan but which was sold to recover the loan upon his dismissal. Counsel went on to submit that the - 85 claimant was entitled to along service award having served for 16 years and also to severance allowance and costs of the claim. In reply to the above submissions, counsel for the respondent argued on the first issue that the claimant filed the claim after the period prescribed under Section 3(l)(a) of the Limitation Act and it was filed 11 years after the cause of - 90 action arose. According to counsel, in the absence of a plea of exemption by the claimant, the claim ought to be dismissed for being filed out of time. On the second issue, counsel contended that the onus was on the claimant to prove that he was terminated against the law.

95 Counsel strongly argued that the failure of the state to prove the charges against the claimant beyond reasonable doubt did not mean that the claimant had been unlawfully terminated. Counsel relied on Christopher Amasava Vs Kenya Revenue Authority & Another (2021) Ekir for the legal proposition that the outcome of criminal proceedings against a claimant had no bearing on the propriety of termination of employment.

100 Referring the court to ^a disciplinary meeting in the minutes - Exh R8, Counsel argued that the claimant was on 24/6/2002 accorded ^a hearing. Relying on

Dorothy Namyalo Vs Stambic Bank Uganda Limited LDC 166/2014, counsel submitted that Disciplinary proceedings are not conducted at the same level as court proceedings. According to counsel it was an agreed fact that the claimant was heard prior to his termination. Counsel argued that the claimant did not complain that he was given insufficient time to defend himself or that he was not aware of the complaints against him but he made his defense which was found weak and he was terminated as a result.

110 115 On the third issue, counsel submitted that the claimant could not recover salary arrears from May 2022 since the claim was after his termination for wages he did not earn. He contended that the claimant could not be entitled to long term service award because he had not served the required 20 years, and that the claim for refund of 4,000,000/= was misplaced as the claimant paid it in settlement of the money he owed to the bank.

DECISION OF COURT

120 The preliminary objection raised was earlier on raised in this court which delivered ^a ruling on 14/10/2016. The ruling was to the effect that the objection was *res Judicata* having been determined by High Court at Lira in Case 0012/2013 by dismissing the same with costs to the plaintiff. This court held *"For that matter, the preliminary objection is dismissed for offending the legal principle ofRes judicata. In the circumstances, the respondent*

- 125 *deserves to pay costs for engaging both counselfor the claimant and this court into unnecessary litigation over a legal point they knew had been adjudicated upon by a competent court. They will pay 1,500,000/= on or before the next date thefile is called in court, order accordingly."* - 130 The above ruling was delivered in the presence of Mr. Walukaga Isaac for respondent and M/s. Stella Acan for the claimant. We are at ^a loss as to why both counsel still took time to re- introduce an objection that was decided upon twice and in their presence!! Both counsel ought to follow up their cases properly in the future. - 135 The case for the claimant, as we understand it, is that his suspension without *yi* pay was illegal and that he was not accorded ^a fair hearing given that he was

not given sufficient time to prepare ^a defense to the charge, making the termination unfair and illegal.

The case for the respondent on the other hand is that the claimant committed various banking irregularities that caused financial loss and he was accorded ^a hearing on the same which culminated into finding him responsible leading to his dismissal.

By ^a written statement, the claimant informed court that when an audit team came to his branch at Lira, they asked for certain explanations regarding

145 certain vouchers and they seemed satisfied with his explanation only the next day to return and inform him that he was under suspension. He was later on served with ^a suspension letter (Annex B).

On 22/5/2002, he appeared before some three people who informed him that they constituted a disciplinary committee. He asked for time to be ready to

- 150 respond to the accusations which was denied and he therefore had to proceed. According to him it was agreed that before he closed his defense the bank would obtain statements of the questioned accounts and would interview the owners of the accounts in his presence but this was not to be. - 155 160 The evidence of one Harriet Deborah was that the claimant while acting as branch Head at Lira got involved in irregular withdraws of money from customer accounts, sending Telegraphic transfers without cover, paying crossed cheques over the counter, illegally borrowing customers funds, delegating strong keys to ^a banking assistant instead of an officer and maintaining ^a faulty procedure for safe custody of overnight cash deposits. According to the witness on interrogation the claimant did not offer satisfactory explanation and he appeared before a disciplinary committee.

165 We have noted that the claimant was suspended on 3/05/2002 and the suspension letter clearly stipulated that he would not be paid any salary or housing allowance while on suspension.

Section 63 (i) of the Employment Act provides

"*(i) whenever an employer is conducting an inquiry which he or she has reason to believe may reveal a cause for dismissal of an employee the employer may suspend that employee with halfpay."*

The claimant was suspended without any pay allegedly because the Human Resource Manual provided for non-payment in the case of the claimant. Since this was contrary to the provision of the Employment Act, we find that none

- 175 payment of half pay was in breach of Section 63 (i) of the Employment Act. The claimant was entitled to ¹/z pay during the period of suspension. No evidence was adduced to suggest that the claimant was given ^a notification of the hearing. The letter of suspension did not particularize the alleged irregular banking activities that the claimant was allegedly involved in. For this - 180 reason it was expected that ^a notification of hearing would include these particulars to enable the claimant prepare a defense.

In his own testimony, the claimant asserted he got to know about the need for him to report to headquarters from his wife who heard over the radio that he

- 185 was to go to headquarters on 22/5/2002 and when he arrived he was ushered into a disciplinary hearing. In terms of the decision of Ebitu James vs Umeme HCCS 133/2012 this was an ambush because he was not prepared for the hearing of accusations which were read to him as soon as he appeared before the committee. We therefore fault the respondent for not notifying the - 190 claimant of the accusation before he appeared for the hearing, as espoused in the above Ebiju James case.

However, looking at the disciplinary hearing we form the opinion that the claimant did not satisfactorily explain the following irregularities.

- 1) Debiting customer accounts using internal debit advices amounting to irregular withdraws from customer's accounts. - 2) Sending TTS without cover - 3) Paying crossed cheques over the counter - 4) Illegally borrowing customers' funds received for safe custody. - 5) Delegating strong room keys to Banking assistant instead of an officer.

6) Maintaining an improper procedure for safe custody of overnight cash deposits.

As a manager he had the responsibility to protect the bank from any foresee able loss or likely loss of funds which belonged to customers of the Bank. In the case of Barclays bank of Uganda Vs Godfrey Mubiru S. C. C. A 1/98 the role of bank managers (and other staff of the bank) was explicitly spelt out as in the

following terms *"managers in the banking business have to be particularly*

*careful and exercise a duty of care more diligently than managers ofmost businesses. This is because banks manage and control money belonging to other people and institutions, perhaps in their thousands and therefore are in*

*potential."*

\*

Consequently even if the claimant using un orthodox methods to with draw cash would not eventually cause loss, the fact that he used wrong procedures in handling accounts of certain customers, amounted to fundamental breach

*a specialfiduciary relationship with their customers whether actual or*

- 215 of his obligation to all the time follow procedures that tended to protect loss of funds. It is therefore not a complete defense that the unorthodox methods used by the claimant did not cause financial loss because the money was eventually put back or because there was no evidence that financial loss was occasioned as a result. - 220 225 Therefore, while blaming the respondent for not according the claimant sufficient time to prepare for his defense, we at the same time find that the claimant breached his fundamental obligation to protect the bank from potential loss as a result of un orthodox methods. For the reason that the claimant breached his fundamental obligation, it is our finding that the dismissal was notunlawful because it was justified under Section 69(3) of the Employment Act which provides:

"An employer is entitled to dismiss summarily, and the dismissal shall be termed justified, where the employee has, by his or her conduct indicated that he or she has fundamentally broken his or her obligations arising under the contract of service."

The third issue is: what remedies are available to parties?

Most of the reliefs prayed for by the claimant in his memorandum of claim were based on the assumption that the dismissal was wrongful.

235 Since the court has held that the termination was lawful, such reliefs are not granted. However, as pointed out failure to pay the claimant *Vi* salary during his suspension was wronful. Since the respondent has been faulted for not complying with the tenets of ^a fair hearing by not according sufficient time for the claimant to prepare his defense, we hereby order, like we did in

Kanyangoga Vs Bank of Uganda Labour Dispute Claim No. 080/2014, a four weeks' pay in accordance with Section 66(4) of the Employment Act.

The amounts allowed in this award shall carry interest 15% from the date of this Award till payment in full.

Delivered & signed by:

245 1. Hon. Head Judge Ruhinda Asaph Ntengye

PANELISTS

- 1. Mr. Michael Matovu - 2. Ms. Adrine Namara - 250 3. Ms. Suzan Nabirye

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Dated: 22/04/2022