The Industrial Court of Uganda has delivered a sharp rebuke to PostBank Uganda Limited, ruling that the bank unlawfully and unfairly terminated the employment of former Senior Internal Auditor Onenchan N. Ronald during a restructuring exercise.
In a judgment delivered on Monday, August 31, 2026, Justice Anthony Wabwire Musana and a three-member panel of the Industrial Court found that PostBank failed to follow mandatory redundancy procedures, did not meaningfully consult the employee and failed to prove that his position had genuinely been restructured.
The Court declared the redundancy “procedurally and substantively unfair and unlawful” and ordered PostBank to pay Onenchan UGX 16.285 million, comprising UGX 3.25 million in a severance/notice shortfall and UGX 13.035 million in general damages, together with interest at the court rate and the costs of the case.
The ruling could have wider implications for employers undertaking restructuring, particularly where existing employees are required to compete for jobs bearing new titles before being shown the door.
Five days’ notice condemned
The dispute arose after PostBank undertook an institutional review that resulted in the re-profiling of Onenchan’s position from Senior Internal Auditor (SIA) to Audit Supervisor (AS).
Onenchan, who had joined the bank in 2015 and had been promoted to Senior Internal Auditor in 2019, applied for the newly profiled Audit Supervisor position but was unsuccessful.
PostBank subsequently issued him a letter dated May 26, 2021, declaring him redundant effective May 31, 2021.
The Court found the five-day period fundamentally defective.
Under the redundancy safeguards considered by the Court, an employer intending to terminate workers for economic, technological, structural or similar reasons is required to give prior written notice of at least four weeks to the Labour Union or Commissioner, setting out the reasons, number and categories of workers affected and the period over which the terminations would occur.
PostBank’s May 26 letter therefore fell dramatically short of the required notice period.
The Court said there was no evidence that the bank had notified a labour union or the Commissioner within the statutory period.
“Employees generally knew of the restructuring” was not enough, the Court held.
The bank’s own evidence showed that Onenchan had been given only five days before his employment was terminated.
The Court also noted that PostBank’s own internal communication had promised affected staff sufficient notice to enable them to seek alternative positions within the bank or elsewhere.
The five-day window, the Court ruled, was not sufficient and breached the bank’s own policy.
‘Notice’ was actually a termination decision
The Court was equally critical of PostBank’s decision to combine the redundancy notice with the actual termination.
The May 26 letter stated that Onenchan had been unsuccessful in the interview for Audit Supervisor and that he had consequently “been rendered redundant effective 31st May 2021.”
But the Court held that a redundancy notice is fundamentally different from a termination letter.
A redundancy notice is supposed to alert an employee to an intended job loss and give them an opportunity to prepare for its consequences. It cannot simply announce that the decision has already been made.
The Court described PostBank’s letter as a decision rather than a genuine redundancy notice and rejected the bank’s argument that paying three months’ salary in lieu of notice cured the defect.
The Court stressed that payment in lieu of termination notice does not eliminate the separate statutory requirement for proper redundancy notification.
PostBank failed to prove genuine restructuring
Perhaps the most damaging finding against the bank concerned the substance of the restructuring itself.
Onenchan had argued that the Audit Supervisor job was essentially his old Senior Internal Auditor job under a different title.
The Court compared the two job descriptions and found striking similarities.
The main objective of the two positions was virtually identical: examining the soundness of financial and management systems, reporting findings and advising management on corrective action.
Other responsibilities, including preparing audit reports and reviewing operational efficiency, measuring attainment of objectives and recommending cost reductions and earnings improvements, were also materially similar.
The Court concluded that the distinction between the two positions was largely one of title rather than substance.
That finding struck at the heart of PostBank’s justification for declaring Onenchan redundant.
The Court said it was effectively impossible to conclude that the Audit Supervisor role had replaced the Senior Internal Auditor position in a way that genuinely made Onenchan’s services unnecessary.
Even more significantly, PostBank failed to explain why an employee with good performance ratings had been unsuccessful in securing a position whose duties were substantially similar to those he had already been performing.
The Court found that the bank’s managerial discretion had not been exercised reasonably or in good faith.
Bank’s own documents undermined its case
PostBank’s defence was further weakened by the evidence it failed to produce.
Its Human Resources Manager told the Court that an external consultant, True North Consult, had been engaged to undertake the restructuring.
But the bank could not produce the consultant’s report, terms of reference, appointment documents, management minutes, old and new organisational charts or a Board resolution approving the removal of positions.
The HR manager also acknowledged that the internal communication relied upon by PostBank did not tell employees that some positions would be removed.
One of the bank’s own internal communications expressly answered a question about whether staff would lose their jobs by stating that the exercise was “not a staff rationalization drive.”
The Court found that the communication did not warn Onenchan that failure to secure the re-profiled position could result in loss of his employment.
Consequently, the bank proved that a re-profiling exercise had taken place, but failed to prove meaningful consultation about its potential impact on the employee’s livelihood.
Loan dispute rejected
Onenchan had also sought a refund of more than UGX 37.6 million, arguing that PostBank had unlawfully applied his terminal benefits to his staff loan after his dismissal.
The Court, however, rejected this part of his claim.
The loan was a UGX 47 million Staff Personal Loan secured by a mortgage over property in Wakiso District. Because it was secured by a mortgage, the Court held that it was not purely a salary loan.
The Court further found that Onenchan had written to the bank acknowledging his outstanding loan balance, requesting a discount and asking that the balance be deducted from his redundancy package.
Although he later alleged that he had been compelled to make the commitment, the Court found that the evidence did not displace his written authorisation.
The Court also found that the loan was only partially insured. The insurer had paid UGX 13.012 million, representing one year’s loan payments, rather than the entire outstanding balance.
As a result, the Court declined to order PostBank to refund the UGX 37.6 million.
Court rejects UGX450 million damages demand
Onenchan had sought a much larger financial award.
His lawyers claimed UGX 250 million in general damages and another UGX 200 million in aggravated damages, in addition to other employment-related claims.
The Court declined the aggravated damages claim, finding no evidence that PostBank’s conduct was sufficiently oppressive, high-handed, malicious or contumelious to justify such an award.
But it nevertheless awarded UGX 13.035 million in general damages, taking into account the unlawful process, the uncertainty and inconvenience suffered by Onenchan, his salary and six years of service.
The Court also ordered PostBank to pay UGX 3.25 million arising from a shortfall in the severance and notice calculation.
It declined to award additional severance because the employee had already received severance benefits and the Court said he could not recover the same entitlement twice.
Costs awarded over bank’s misconduct
In an additional blow to PostBank, the Court ordered the bank to pay the costs of the litigation.
The Court noted that costs in employment disputes do not automatically follow the outcome. However, they may be awarded where the losing employer has engaged in misconduct.
In this case, the Court found that PostBank had “misconducted itself in unlawfully declaring the Claimant redundant.”
The monetary awards will attract interest at the court rate from the date of the judgment until payment in full.
Warning to employers
The judgment sends a strong message to employers that restructuring cannot be used as a shortcut around employment protections.
The Court acknowledged that employers have a managerial prerogative to restructure their businesses, but stressed that this power must be exercised within the law.
For redundancy to be lawful, the Court said, employers must provide proper advance notice, conduct meaningful consultation and demonstrate a genuine and objectively justified restructuring.
Simply changing the title of a position while retaining substantially the same duties will not, on its own, establish genuine redundancy.
The Industrial Court ultimately held that PostBank had failed on both fronts — procedure and substance — and that Onenchan’s termination was therefore unlawful and unfair.
The award was delivered electronically in Kampala on August 31, 2026, by Justice Anthony Wabwire Musana, with the panelists agreeing with the decision.
