Industrial Court awards former employee over Shs37 million after ruling that bank unlawfully suspended him for 80 days and failed to follow mandatory disciplinary procedures
Centenary Rural Development Bank has been dealt a legal blow after Uganda’s Industrial Court ruled that it unfairly dismissed a former Loans Officer over the disappearance of three customer land titles, despite its own investigation identifying negligence by senior branch officials.
In a damning judgment, the court found that although the bank had substantive grounds to discipline Christopher Bob Babihuga over his handling of the missing land titles, it violated employment law by keeping him on suspension for approximately 80 days and failing to fully advise him of his rights during disciplinary proceedings.
The court ordered Centenary Bank to pay Babihuga Shs34.47 million in severance pay and another Shs2.75 million in statutory compensation for procedural unfairness, bringing the total award to Shs37.23 million.
The ruling exposes serious questions about accountability within the bank, particularly why a Loans Officer was ultimately dismissed when the bank’s own investigators had also implicated his supervisors in the disappearance of the valuable security documents.
Justice Anthony Wabwire Musana, sitting with panelists Adrine Namara, Susan Nabirye and Michael Matovu, delivered the judgment in Labour Dispute Reference No. 134 of 2020, Babihuga Christopher Bob v Centenary Rural Development Bank Limited.
Three land titles disappeared, but investigation implicated senior managers
The dispute dates back to June 2017 when Babihuga, who had worked for Centenary Bank since 2006, received three mailo land titles belonging to a customer, Jamil Kavuma, for mortgage registration.
The documents subsequently disappeared, triggering an internal security investigation that examined how the titles had been handled and what happened to them while in the bank’s custody.
However, the bank’s own Security Investigation Report, authored by Henry Ssenkeezi, did not place responsibility exclusively on Babihuga.
Investigators identified negligence by Branch Manager Katherine Akech and Credit Administrator Alfred Bakyusa, faulting them for failing to ensure that the security documents were forwarded to the Legal Division and for not maintaining daily reconciliation records.
The investigation also found insufficient evidence to establish that the missing titles had been destroyed during cleaning, a possibility Babihuga had raised in a handwritten explanation dated March 16, 2018.
Despite the findings implicating other officials, Babihuga became the employee who faced suspension and eventual dismissal.
He was suspended on July 27, 2018, and dismissed on December 20, 2018.
The circumstances raised a difficult accountability question: why did the Loans Officer bear the ultimate employment consequences when the bank’s own investigation identified supervisory failures in the handling of the same documents?
Court tears apart Centenary’s defence of 80-day suspension
One of the strongest findings against Centenary Bank concerned its decision to keep Babihuga on suspension for approximately 80 days.
The Industrial Court held that the bank had violated Section 62(2) of the Employment Act, which limits suspension during an employer’s inquiry to four weeks or the duration of the inquiry, whichever is shorter.
Centenary Bank attempted to defend its actions by arguing that Babihuga had been restored to full salary after the first four weeks, meaning the suspension was no longer unlawful.
But Justice Musana rejected that argument, saying payment of salary did not automatically terminate an employee’s suspension or cure the statutory violation.
“S.62(2) EA, is couched strictly. A suspension while an employer is conducting an inquiry is limited to four weeks or the duration of the inquiry, whichever is shorter,” the judge ruled.
The court added that the law did not provide that restoring an employee to full pay automatically made an otherwise unlawful suspension legitimate.
“The law does not suggest that restoration to full pay constitutes lifting of the suspension, and we are unpersuaded that we should find that renders a suspension lawful because the law does not say so,” Justice Musana wrote.
The court relied on the precedent in Achiro v Uganda Land Alliance, which established that suspensions extending beyond the statutory period without disciplinary proceedings can constitute an unfair labour practice.
The finding dealt a significant blow to Centenary Bank’s defence and became one of the foundations for the declaration that Babihuga’s dismissal was procedurally unfair.
Bank wins on negligence but loses on the law
In a complicated legal outcome, the Industrial Court did not completely exonerate Babihuga.
The court found that Centenary Bank had a genuine and reasonable basis for believing that he had been negligent in retaining the customer’s land titles.
It therefore accepted that the bank had substantive justification for taking disciplinary action against him.
However, the court drew a clear distinction between having grounds to dismiss an employee and following the law when doing so.
It identified two major procedural failures: the unlawful 80-day suspension and the bank’s failure to fully advise Babihuga of his rights during the disciplinary hearing.
Although the bank had notified him of the allegations, allowed him time to prepare and considered his written defence after he opted not to attend the hearing, those steps were insufficient to cure the statutory violations.
Justice Musana emphasised that substantive justification could not compensate for failure to follow mandatory employment procedures.
“In employment law, procedural and substantive fairness are the twin, non-negotiable pillars of a lawful dismissal: they must stand together, or the dismissal falls,” the court ruled.
“The substantive merit does not sanitise these clear statutory defaults. Where either pillar crumbles, the entire dismissal is unfair and unlawful.”
The finding means an employer cannot simply rely on evidence of employee misconduct to escape liability for violating the procedures governing dismissal.
Babihuga loses constructive dismissal claim
Babihuga had also argued that he was constructively dismissed because the prolonged suspension made his working conditions intolerable.
He had tendered his resignation on November 20, 2018, before the bank eventually dismissed him on December 20, 2018.
However, the court rejected his constructive dismissal argument, holding that an employee who voluntarily resigns while disciplinary proceedings are pending cannot subsequently rely on the same circumstances to establish constructive dismissal.
The court cited employment law precedents from Uganda, Kenya and South Africa in reaching its conclusion.
Nevertheless, the failure of the constructive dismissal claim did not rescue Centenary Bank from liability over the procedural defects surrounding the eventual dismissal.
Why Centenary must pay Shs34.4 million in severance
In another significant aspect of the judgment, the court ordered Centenary Bank to pay Babihuga Shs34,473,075 in severance pay.
The bank’s position was that there had been substantive justification for dismissing him over the missing land titles.
However, the court noted that Babihuga had been dismissed with notice rather than summarily dismissed.
It consequently held that he remained entitled to severance pay under Sections 86(a) and 87(1)(a) of the Employment Act.
The court calculated the entitlement at one month’s salary for every year of service.
Babihuga had worked for Centenary Bank since 2006, making the severance award one of the largest components of the compensation.
The court also awarded him Shs2,757,846 in statutory compensation arising from the procedural unfairness.
Together, the two awards amounted to Shs37,230,921.
Shs200 million damages claim rejected
Despite securing a favourable declaration on procedural unfairness, Babihuga failed to obtain the Shs200 million in general damages he had sought.
The court declined to award the damages, taking into account its finding that the bank had substantive grounds for dismissing him.
He also failed to prove his claim for Shs919,281 in unpaid leave.
Babihuga had relied on an email purportedly showing that he had ten outstanding leave days, but the court found that he had not established the authenticity of the communication.
Centenary Bank had admitted liability for Shs551,569 in outstanding leave, but the court declined to award the higher amount claimed.
Each party was ordered to bear its own legal costs.
A warning to Uganda’s employers
The judgment is a significant reminder to employers, particularly banks and other financial institutions, that internal investigations and disciplinary decisions must comply with the Employment Act.
It also highlights the importance of applying accountability consistently within organisational structures.
In Babihuga’s case, the bank’s investigation identified negligence by the Branch Manager and Credit Administrator in the handling of the missing titles, but the Loans Officer ultimately lost his job.
While the court did not expressly order disciplinary action against the other officials, its findings expose the multiple failures that contributed to the disappearance of the customer’s security documents.
For employers, the central message is that an employee’s alleged negligence does not give management a free hand to disregard statutory protections.
Even where an employer has sufficient evidence to justify dismissal, failure to observe the prescribed disciplinary process can render that dismissal procedurally unfair and expose the organisation to financial liability.
Babihuga represented himself in the proceedings with assistance from Caroline Nankwanga of GraHam Advocates, while Centenary Bank was represented by James Samuel Zeere of S & L Advocates.
The judgment was delivered electronically on November 2, 2026, by the Industrial Court of Uganda.
The outcome leaves Centenary Bank facing a Shs37.2 million bill over a disciplinary process that the court found unlawful, even as the bank maintained substantive grounds for dismissing the employee at the centre of the missing land titles scandal.
