Millenium auctioneers & court Bailiffs

08/10/2020

Frustration as a ground for Revocation or non performance of Contract by either party.

LEGAL OPINION ON THE ARBITRARY SALARY CUTS THREATENED BY EMPLOYERS AFTER THE COVID19 LOCKDOWN ~ CASE STUDY; THE CHRISTINE KABASWEKE SU***DE
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In letters addressed to the staff of Vision Group, the Human Resource Manager communicated that there will be salary deductions for the months of May, June and July.

Last week, Christine Kabasweke, an accountant with Vision Group reportedly committed su***de after she received communication that her salary would be reduced by 50% following the COVID19 crisis and lockdown.
This was an unfortunate death in the most unfortunate of the circumstances. May her soul rest in eternal peace.

First things first; s.40 of the Employment Act, 2006 provides for the duty of the employers to provide work to the employee in accordance with the contract of employment. But this duty shall not apply if the contract is frustrated among other circumstances and as thus the employer shall not be liable for failure to provide work.

At common law, the rights and obligations of the employee and the employer during the period of frustration are determined by a force majeure clause in the contract. A force majeure clause is a contractual clause that alters the parties' obligations and/or liabilities under a contract when a force majeure event occurs.
A force majeure event refers to an occurrence that is outside the reasonable control of a party and which prevents a party from performing its obligation under a contract e.g the corona virus pandemic.

Whereas it's the position at common law that employment contracts ought to contain force majeure clauses, the Employment Act, 2006(of Uganda) directly incorporates the effects of the force majuere clauses in all employment contracts under s.40.

This means that during the lockdown period, the employer has no obligation to provide work to the employee and the employee has no obligation to execute his duties under the employment contract. This further means that the employer can lawfully suspend employment contracts during the lockdown period or he or she might choose to terminate the said contracts. If the employer chooses the latter option, he has to pay all terminal benefits accruing to the affected employees.

Whereas the consent of an employee must be sought before an employer can force them to go on unpaid or paid leave, the Industrial Court has held that in exceptional circumstances like the COVID19 crisis, the employers can without the employees' consent send them on forced paid or unpaid leave.

However what the employer can't lawfully do is to unilaterally effect salary cuts by any amount except in a few cases. Section 46 of the Employment Act, 2006 provides that the employees salary or wage cannot be reduced by any amount without his or her written consent. The only exceptions to the above statement of the law are tax deductions(PAYE under s.116 of the Income Tax Act(as amended), property rates, subscriptions and contributions imposed by law(eg 5% contribution to NSSF under the NSSF Act) and union dues in accordance with s.50 of the Employment Act, 2006.

Therefore, it is our considered opinion that whereas suspension of contracts by employers could have been legal, the threatened salary cuts by Vision Group among several other employees are not; except where they wilfully consent to such deductions.
All employees except those whose contracts had been suspended during the COVID19 lockdown period are entitled to their full salary unless employers obtain their wilful written consent to reduce their salaries.

If an employer reduces your salary for any reason without your written consent, you may start by seeking further clarification from your Human Resource Manager about the deductions. If his explanation is vague and unclear, you may write to him demanding that the company(or boss) refunds the amount wrongfully deducted and ask him to desist from making any such further deductions from your salary in future.

In the alternative, you may accept this as the employer's repudiatory breach and resign. Then you can claim constructive dismissal and claim compensation for the losses occasioned by your employer's acts and/or omissions.

Employment law requires that the complaint should first be lodged with a District Labour Officer but the Industrial Court has of recent entertained labour claims that have come by ways other than reference or appeal.

Let not our employers push us to committing su***de, just drop your question, contribution & criticism in the comments section.
**********(RIP Christine Kabasweke)***********

Partner ~ Gisa & Co. Law Chambers

08/10/2020

Landlord-Tenant legal gymnastics

LOCK DOWN LEGAL ALERT
(Landlords and/or landladies without written tenancy agreements should not evict tenants except with an order of court)

On 15th May, 2020, Justice Musa Ssekaana delivered a ruling in SOPHIE NAKITENDE v MABU COMMODITIES LTD HCCS No. 117 of 2016 addressing the issue of distress for rent in the absence of written tenancy agreements.

Background
The plaintiff brought the suit against the defendant for breach of tenancy agreement, special damages, general damages, recovery of valuable items(tools of trade) confiscated by the defendant as well as costs of the suit.
The plaintiff entered into a tenancy agreement in 2008 with the defendant. In 2016, the plaintiff slightly delayed to meet her rental obligations for the first quarter of the year and while she was away, the defendant without according her a hearing broke into her shop on 15th March, 2016, seized the merchandise and locked it up. The defendant contended that the plaintiff defaulted on her rent for the month ending on 15th January, 2016, closed her shop and disappeared without notifying her officers. On 15th March, 2016, the plaintiff's merchandise was in the presence of the LC1 Chairperson transferred to the storeroom for storage.

The parties in joint scheduling agreed on several issues and excerpts of some of the resolutions is as follows:-

As to whether the tenancy agreement between the plaintiff and the defendant was lawfully terminated, court observed that there was an oral contract and as such it was hard to impute fundamental terms but rather the conduct of the parties would guide court in establishing when breach would arise. Court further guided that the defendant who wanted to apply the strict rules of enforcing a contract had a duty to ensure that the contract terms are reduced in writing.

Court further observed that the oral agreement did not provide for the consequences of non payment of rent on the due date(15th of every month). The absence of any written tenancy would imply that no stringent terms could be invoked to the extent of closing the shop without some due process.

In His Lordship's dictum, the landlord should not be allowed to use all means available to recover rent arrears or obtain vacant possession for non payment of rent by a tenant. A landlord should not exercise his rights of reentry or recovery of vacant possession extra judicially and acts of hooliganism should not be encouraged and allowed by a court of justice. He further guided that parties should manage their businesses in an organised or orderly manner in order to avoid self help in the landord-tenant relationship which would turn out to be unreasonable and unfair.

Court further added that the act of a defendant seizing the property of the plaintiff was illegal since there was no agreement that if she defaults on to rent payments, the defendant would be allowed to close the shop and seize the property.

It was held that court shall not allow landlords to use extra judicial means in recovery of rent arrears or vacant possession especially where there is no written tenancy agreement. The use of of the LC 1 Chairperson to oversee the whole process of taking the plaintiff's property could not validate the illegal exercise. He further held that no landlord without a tenancy agreement should evict a tenant in an arbitrary manner or without due process.

The defendant's counterclaim for cost of storage of the property subject to his illegal distress failed.

Partner ~ Gisa & Co. Law Chambers

06/11/2019

The selected 100 bailiffs in a group photo after a training at law development center Kampala with The Honorable Judge His Lordship Duncan Gaswaga the Head of the High court Ex*****on and Bailiffs Division in Uganda.

06/11/2019