Is an employer allowed to terminate an employee for no reason? The short answer? Yes. Unless your employment contract states otherwise, your employer does not need a good reason, or indeed any reason, to terminate your employment.
Termination is defined as the discharge of an employee from employment by the employer for justifiable reasons other than misconduct.
Dismissal on the other hand is defined as the discharge of an employee from employment by the employer when the said employee has committed verifiable misconduct.
Termination without cause does not mean you have no rights as an employee. Generally speaking, if you are terminated for no reason or “without cause”, then you must be provided with notice of the termination, or payment in lieu of notice. The amount of notice required is determined by the terms of your employment contract, relevant legislation, and common law legal principles.
In the Court of Appeal Civil Appeal No. 281 Of 2016; Bank of Uganda Vs Joseph Kibuuka & 4 Others stated that there is no requirement for a reason to be given by an employer for termination of services of an employee provided that the requisite notice is given or payment in lieu of notice made.
An employer can end an employment relationship by termination with notice in accordance with the period stated in the employment contract or the period stipulated in Section 58 (3) of the Employment Act, 2006 or payment in lieu of notice and in such a case, an employer does not need not to give a reason for the termination or, hold a hearing.
Court of Appeal Civil Appeal No. 281 Of 2016; Bank of Uganda Vs Joseph Kibuuka & 4 Others settled the uncertainty that had been created by the Industrial Court’s prior holdings that for termination of employment, an employer in addition to issuing a notice of termination or payment in lieu of notice, is required to stipulate a justifiable reason for termination.