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 Education (NCHE) requirements.

The Claimants argued that the Respondent failed to notify or consult them about the restructuring, effectively depriving them of the opportunity to compete for remaining positions. They contended that the Respondent had previously assured them of job security, having retained them as the "core group" of staff, hence orchestrating their termination in a manner that sought to legitimize an unfair dismissal, evidenced by the fact that several restructured positions were subsequently filled by other employees or merely renamed.

Legal Argument on Unfair Termination Due to Restructuring.

It was argued that the Respondent’s justification for terminating their employment was flawed, given that the restructuring exercise had already ended before the Claimants’ contracts were renewed in November 2016. An assurance of job security from the Vice Chancellor in August 2016 created a legitimate expectation that they would not be terminated based on restructuring. Citing Bank of Uganda v. Joseph Kibuuka & 4 Ors, he argued that the Respondent was estopped from invoking restructuring as a basis for termination.

It was further asserted that the Respondent had failed to prove any new restructuring decision after issuing the Claimants' contracts and neglected statutory notification requirements under Section 80(1) of the Employment Act. The mandatory requirement for employees to receive advance notice and an opportunity for consultation, as established in Vice-Chancellor of Massey University v. Wrigley & Anor was emphasized, noting that the lack of proper notice rendered the restructuring procedurally defective. Additionally, the arbitrary termination process ignored fair selection criteria, such as the "Last in, First Out" (LIFO) method endorsed in Rolls Royce plc v Unite the Union. Counsel also contested the Respondent’s reliance on the NCHE report, arguing that it did not implicate the Claimants but rather identified broader management issues. It was also noted that their roles continued to exist under new titles, invalidating the justification for restructuring-based termination.

 Court’s Decision.

The court reaffirmed that consultation is crucial in any redundancy process to ensure fairness. It acknowledged that the Respondent had conducted a legitimate restructuring following the NCHE’s 2015 report, which led to course reductions and staff downsizing. However, it found that the Respondent failed to follow proper legal procedures in effecting redundancies. The university renewed the Claimants’ contracts in November 2016 despite the ongoing restructuring, creating uncertainty regarding their employment status. The court highlighted that the Vice Chancellor’s email primarily addressed academic staff, leaving the fate of administrative employees unclear.

Further, the Claimants were terminated five months after the restructuring had concluded beyond the three-month legal threshold under Section 81 of the Employment Act. The Respondent failed to provide advance notice or consult the affected employees. Consequently, the court ruled that while restructuring itself was lawful, the termination was procedurally unfair and unlawful due to non-compliance with statutory requirements under Regulation 44 of the Employment Regulations, 2011.

Relevance to Employers and Employees

This decision underscores the importance and mandatory requirement of procedural integrity in employment restructuring. Employers must adhere to statutory requirements, including providing adequate notice, consulting affected employees, and ensuring fairness in selection criteria. Failure to comply not only risks legal consequences but also damages organizational trust and reputation. To mitigate such risks, employers should consider;

        i.            Conducting transparent restructuring by documenting decisions and communicating clearly with staff.

2. Follow legal notification requirements, ensuring employees have sufficient time to prepare for potential changes.
3. Implementation of fair selection criteria based on objective standards such as performance or tenure.
4. Exploring alternative measures like reassignments or voluntary exits before resorting to termination.

Employees facing restructuring must be proactive in understanding their rights and monitoring employer compliance with the Employment Act. This case highlights that assurances from employers can create legitimate expectations of job security, reinforcing the need for vigilance in cases of sudden termination. To safeguard their interests, employees should:

1. Keep records of employment communications, including assurances regarding job stability.
2. Seek legal counsel if termination appears unfair or procedurally defective.
3. Engage in discussions with employers about restructuring outcomes and possible alternatives.
4. Advocate for workplace fairness by ensuring that consultation processes are properly followed.

Ultimately, this case reinforces the underlying principle that restructuring should not be used as a pretext for unlawful dismissals. Upholding procedural fairness benefits both employers and employees by fostering transparency, trust, and legal compliance in workplace transitions.