CONTINUED PAYMENT OF SALARY AFTER EXPIRY OF CONTRACT TERM NOT PROOF OF SUBSISTENCE/RENEWAL OF A FIXED TERM CONTRACT: A CASE REVIEW OF ELIZABETH NABATANZI LUGUDDE KATWE V ATTORNEY GENERAL (CIVIL APPEAL NO. 53 OF 2013)

 Introduction

A fixed term contract is an agreement between an employer and an employee that specifies the duration and terms of the employment, usually for a specific project, task, or period. At the end of the contract period, the contract automatically terminates. According to Section 65(1) (b) of the Employment Act, a fixed term contract automatically terminates with the expiry of the specified period or the completion of the specified task unless it is renewed within a period of one week from the date of expiry on the same terms or terms not less favourable.

 The above provision of the law connotes an express communication in the event that a fixed term contract is to be renewed. This blog sheds light on the legal position that continued earning of a salary after the date of expiry of a contract does not imply continuity or renewal of the contract.

 

Brief Facts

The Appellant was appointed as a Special Presidential Assistant by a letter dated 19th January 2006 which she accepted on 27th January. On 16th April 2007, she signed with the Government in respect to the appointment. The contract was for a fixed period of 24 months.

On 3rd May 2008, the President wrote to the Head of Public Service instructing not to renew her contract and on 28th May, she was forcefully evicted from her office on grounds that she was no longer in employment.

The Appellant filed a suit against the Attorney General which was determined in favour of the Respondent. Dissatisfied, the Appellant appealed to the Court of Appeal contesting the trial judge’s finding that her contract had expired. She argued that the agreement signed on 27th April 2007 amounted to a fresh appointment and as such, at the time of her termination, the contract had only run for 13 months with an expiry date of 4th April 2009. She also contended that she continued getting salary up to May 2008 and that if indeed her contract had expired in January 2008, she wouldn’t have received her salary up to January 2009.

 

Decision of Court.

Court found that the agreement signed between the appellant and the Government of Uganda was not a fresh contract but was part and parcel of the contract accepted on 27th January 2006. This is evidenced by her application letter dated 18th September 2007 in which she applied to renew her contract that she stated was due to expire on 28th January 2008. The court therefore held that the Appellant’s contract was set to expire on 28th January 2008 having commenced on 27th January 2006.

 

On continuity of payment of salary.

Court agreed with Counsel for the Respondent that the Public Service was bound to pay the Appellant pending communication from the appointing authority regarding the renewal of her contract. That notwithstanding, the relationship that subsisted from the point of expiry of the contract in January 2008 to May 2008 pending confirmation of renewal of her contract fell short of the legal requirements of a valid contract as per Section 10(1) of the Contracts Act 2010.

Court relied on the decision in Green Boat Entertainment Ltd. V City Council of Kampala (HCCS No. 580 of 2003) in which the essential elements of a valid contract were stated thus:

” In law when we talk of a contract, we mean an agreement enforceable at law. For a contract, intention to contract, consensus ad idem, valuable consideration, legality of purpose, and sufficient certainty of terms, if in a given transaction any of these is missing, it could as well be called something else other than a contract.”

From the above, court held that although the Appellant continued to receive salary even after the expiry of the contract term, that fact alone cannot be construed to mean that her contract had not come to an end. Payment of a salary per se is not proof of existence of a valid contract as per Section 10(1) of the Contracts Act 2010.

 

Implications for Employees and Employers

1. A contract of employment, fixed or permanent commences on the date of acceptance of the contract. Further addenda to the contract or documents to give particular clauses effect do not vary the commencement date of the contract unless otherwise stated.

2. A fixed term contract automatically terminates on the date of expiry unless it is renewed within one week from the date of expiry. Employers and employees must ensure that renewal of a fixed term contract is in express terms and written.

3. Continued payment of salary or other benefits to an employee after the expiry of the contract is not in itself an implication of renewal of the contract. All the essential elements of a valid contract such as sufficient certainty of terms, consensus ad idem and intention to contract must be present. 

Comments

Post a Comment

Popular posts from this blog

Can You Sue a Ghost? Corporate Personality, Labour Law, and The Case of Oringo v Dede Farming Tractors (U) Ltd [2025] UGIC 47

🔹 Introduction In the recent decision of Oringo John v Dede Farming Tractors (U) Ltd [2025] UGIC 47, the Industrial Court of Uganda was faced with an unusual, yet increasingly relevant, legal question in employment law: can a person enforce a labour claim against an employer that disputes its own existence? At the heart of this case were two compelling legal questions; the doctrine of corporate personality and the validity of a contract of employment. The judgment unpacks the tension between classical company law and the evolving principles of labour law. This post delves into the facts, the key legal arguments, and the implications of the Court’s decision for practitioners, employers, and employees.   🔹 Background to the Case Mr. Oringo John was hired as a Workshop Manager by an entity styled “Dede Farming Tractors (U) Ltd” on 12 December 2019 at a salary of UGX 2,000,000 per month. However, from September 2020, his salary payments ceased. He lodged a complaint with ...
Read more

WORKPLACE FAIRNESS: THE LEGAL REQUIREMENT FOR CONSULTATION OF EMPLOYEES AND ADVANCE NOTICE PRIOR TO RESTRUCTURING.

  Introduction Employment restructuring is a crucial exercise that allows institutions to align their workforce with operational requirements. However, when not conducted transparently, it may give rise to claims of unfair termination. This article reviews the recent Industrial Court decision of Namayanja & Others v Cavendish University (Labour Dispute Ref 97 of 2019) in which the Claimants challenged the legitimacy of their termination, asserting that the Respondent unlawfully dismissed them under the guise of restructuring. Their argument rests on the principles of legitimate expectation, procedural fairness, and compliance with statutory labour requirements. Case Background. In November 2016, the Claimants entered into two-year employment contracts with the Respondent. However, their tenure was abruptly cut short when, on June 16, 2017, their employment was terminated under the guise of a restructuring process purportedly aligned with National Council for Higher Educat...
Read more

THE LAW ON CONTINUOUS SERVICE OF EMPLOYMENT IN UGANDA: CASE REVIEW OF GEORGE JOHNSON OJOK & 87 OTHERS VS. TORRES ADVANCED ENTERPRISES SOLUTIONS LLC (LABOUR DISPUTE REFERENCE NO. 024 OF 2015)

  THE LAW ON CONTINUOUS SERVICE OF EMPLOYMENT  IN UGANDA : CASE REVIEW OF GEORGE JOHNSON OJOK & 87 OTHERS VS. TORRES ADVANCED ENTERPRISES SOLUTIONS LLC (LABOUR DISPUTE REFERENCE NO. 024 OF 2015)   Introduction The concept of continuous service in employment law is defined under Section 83 of the Employment Act 2006 as an employee’s period of uninterrupted service with the same employer. This includes c onsecutive periods of employment with two successive employers where the successor has taken over the   business  of the former  employer  as receiver, liquidator, personal representative, or heir, or upon transfer of the whole or part of the  business. It also includes a ny   week  or part of a  week  in which an  employee  is employed for sixteen hours or more . Continuity of service has a number of benefits attached to it such as severance allowance, entitlement to wages when absent from work for good cause, annu...
Read more