Employment Contract

Employment contract refers to the legal relationship between the

employer1 and employee2 that is governed by implied or expressed terms
of contracts and such other statutory rules as that in the Employment Act,
the Labour Unions Act among others.
Employment contract can be entered into through a contract of service;
where, a person agrees in return for remuneration, to work for an
employer and includes a contract of apprenticeship3.
Or contract for service where an employer contracts a person to
independently perform a given work without necessarily subjecting the
employee to direction, control or supervisions, except perhaps for relaying
on the contractor, his wishes for consideration, but not on how to exercise
the contactor`s skills and performance4.
Under Contracts of Service, there is always the employer-employee
relationship where the contract is usually a continuous relationship. There
is always a duty of care owed to employees, as from/ by the employer.
And the employer is generally liable for the vicarious acts of employees.
More so in Uganda for example, the protective legislation applies to
contract (that include the employment Act 2006).
Under the Contract for service, there is employer-independent
Contractor relationship, and the relationship is organised around the
completion of a once-off piece of work. A duty of care, arising from
occupiers liability. The employer is generally not liable for the vicarious

1 Section 2 of the Employment Act 2006, employer means any person or group of
persons, including a company or corporation, a public, regional or local authority, a
governing body of an unincorporated association, a partnership or organization
whatsoever, for whom an employee works or has worked, or normally worked or sought
to work, under a contract of service, and includes the heirs, successors, assignees and,
transferors of any person or group of persons for whom an employee works, has worked,
or normally works.

2Ibid employee, means any person who has entered into a contract of service or an
apprenticeship contract, including, without limitation, any person who is employed by or
for the Government of Uganda, including the Uganda Public Service, a local authority or a
parasternal organization but excludes a member of the Uganda Peoples Defense Forces.

3 ibid
4 Ayebare tumwebaze. The Uganda Employment Law and The Employment Act.
2006, pg. 6

acts of independent contractors. In most cases, protective legislation does

not apply, except, for the Safety Health and may be Welfare at Work Act.
Differences between Contract of Service and Contract for Service
The basic distinctions between the two is that those who are employed
persons work under a contract of service whereas those who are
self-employed, work under a contract for service.
And the
distinctions between the two contracts can be determined as discussed
below, and through the following tests:
And in differentiating the above employment contracts, the following tests
are applies as discussed below.

The Control test; in this, the criterion for distinguishing the employees
from independent contract is the degree of control. In Yewens vs.
NoakesBramwell, L.j. regarded a servant as any one was subject to the
command of employer as to the manner in which he shall do his work,
that is, under a contract where the employer has the power to decide the
things to be done, the ways in which they are to be done, the means to be
employed in doing it, the time when, and the place where it shall be done.
Thus, if the contract gives the employer an extensive control over the
work to be done, to spell out how its to be done, the presumption is that
it is a contact of service, absence of which is a strong indicator of contact
for service.
The integration test, on the other hands conceders the entirety of the
work done. Lord Denning L.jin Stevenson Jordan & Harrison Ltd vs.
McDonald & Evans, stated that
under a contract of service, a man is employed as part of
business5, whereas, under a contract for service, his work although
done for the business, is one not integrated into it but is only
accessory to it
The idea was extended and even received Privy Council approval in the
case of Lee Ming in Sunday Ttibune Ltd6where one of the journalists
wrote a column for the Sunday newspaper for 50 out of 52 in the year and
took part in editorial conference and received pay. She was held to be an
integral part in the business of the newspaper and accordingly one of its
employee. On the other hand, another wrote for the papers on regular
basis but her contributions were not published employment virtually every
week, she visited the paper office nonce a week. And she was not a rate
per word but on the basis of a collective agreement. Carrol j. concluded
that was not an integral part of the business of newspapers, and

5
6(1984) 1 R 505

therefore, was an independent contractor in respect of her dealings with

the company.
Multiple test; in this, court consider all surrounding features, thus
applying what is in fact a multiple test. Certainly, the power of selection,
the payment of wages, income tax, holiday monies and pensions and the
power to suspend or dismiss, are all relevant features which court take
into account.
For example, in Ready Mixed Concrete, McKenre J. held that there were
three conditions necessary to establish whether a contract of service
existed, and they included; 1- the employ agreed to provide his own work
and skill in the performance of service for his employer; 2- that there must
be some element of control exercisable by the employee; and 3- that the
terms of contract must be inconsistent with the existence of a contract of
employment. All these pointed out a contract of service.
Entrepreneurial test / skills; under this criterion, if the person engaged
himself to perform the services as a person in the business of his own
account, then this is a self-employed contract. As it was held in the
Market investigation case, where this entrepreneurial element is
present, as a rule it points to a contract for services, unlike where the
entrepreneurial skills is upon another person, then the employee
depending on the guides of the other is under a contract of service.
Intention, this considers what the parties involved actually intended to
perform. In that if the contract mentions the relationship is a contract for
services then what the contract says is decisive regardless of the amount
of control/integration/economic dependence the worker has. However, on
the other hand, employers and employees (contract of service) cannot
avoid their obligations by writing a contract to be one for services if their
true relationship is that of employment. Thus the intention of the
employee and employer can also determine or alter a contract from its
original shape and status if both parties have mutual agreement, even if it
is against the contract between them. For example in Cunningham v
TNT Express Worldwide 7where persons wish to enter into a contract for
services the Court should not frustrate that wish by unswerving adherence
to a test which looks to the effect of what they have agreed rather than to
the purpose for which they agreed it (per Hardie Boys J at p 715)
(Contractor Calculator, 2008)
In conclusion; the law makes a distinction between a contract of service
and a contract for service. Basically, a contract of service applies to an
employee-employer relationship, while a contract for service applies in the
case of an independent sub-contractor. This distinction is most important
as protection of employment legislation does not apply to independent

7(New Zealand) Ltd [1993] 1 ERNZ 695 (CA)

subcontractors with the exception of the Safety Health & Welfare at

Work Act.

RIGHTS AND DUTIES OF EMPLOYERS AND EMPLOYEES

(Implied and expressed terms and conditions of a
employment)
Refer to Ayebare & Edner
TERMINATIONS OF THE CONTRACTS OF EMPLOYMENT

contract

of

TRADE UNIONS
Trade Union is provided for under Article 298, every person shall have the right to freedom
of association which shall include the freedom to form and join associations or unions,
including trade unions and political and other civic organisations. Trade Union, under
Section 2 of the Labour Unions Act Cap 223, is any combination, whether temporary or
permanent, of a thousand or more persons other than an employees association, the principle
objects of which are under its constitution, the regulation of the relations between employees
and employers or between employees and employees or between employers and employees,
whether such combination would or would not, if this Act had not been enacted, have been
deemed to have been an unlawful combination by reason of some one or more of its objects
being in restraint of trade;
Advantages of Trade Unions include the followings:
Collective Bargaining. Trade unions have power nationally as well as locally; through trade
union, well organized workers have the greatest impact when negotiating contracts with their
employers in order to solve their grievances. Upon which it leads to increase in their wages or
benefits for an entire workplace, can also help save jobs and increase compensation for
overtime. By Union solidarity even unpopular decisions may be more acceptable to the
employer if the workers combine to persuade the employer that such a change is necessary
for a continued health of the business
Access to legal services. Through Trade union members are often offered free or deeply
discounted access to legal services than on individual basis. Union Representatives with
experience of employment relations in particular are a useful source of legal and goodpractice advice on Human Rights and Employment Law issues. This experience may be
especially useful during difficult times, eg during proposed collective redundancies or
business transfers.
Means by which the employees can protect themselves from the tyranny of the
employers. Trades Union helps to protect workers from exploitation by the employees, and
8The 1995 Constitution of Uganda

help to uphold health and safety legislation. Through trades unions members are given
representation to workers facing legal action other than dictatorial decisions.
Effective management. To the employers, trade unions ensure easy negotiating
communications via a single representative. Additionally, workers' moral and production may
increase as they feel compelled to be more involved and loyal to the business.
Education on basic rights. Trade unions also provide basic education and representation to
workers regarding their rights. Basic rights including minimum wage, adequate breaks, basic
health and safety, and protection from discrimination among others.
Improvement in the business decisions. Informing and consulting especially with
experienced union representatives together - with input from workers - can also help you
make better-informed business decisions in general. For example, in relation to what is
required by the workers in order to improve the business, shift patterns or the kind of
equipment you should invest in.
It can improve employee`s satisfaction. When employees deal with unions, they may be
more satisfied because they have a voice to speak to the employer. They get higher wages on
average and better benefits packages. When you meet the needs of the employees better, they
will be more satisfied in their jobs and will be willing to work harder for you. This could lead
to higher productivity and better quality production.

Disadvantages of Trade Unions

Employees lose their individual voices. As they term it a collective bargain, employees give
up their right to negotiate for themselves or to have their individual concerns and benefits
recognized. Being part of a union means allowing the elected union leadership to negotiate
for the group as a whole. Decisions for the group are made based on what is best for the
majority, not necessarily by what is best for any individual employees. For example the
Majority rule such as when the majority votes to strike, this may be a significant
disadvantage to individual employee, since the strike is never necessarily guaranteed to end
positively for the employees. Under a legal action an innocent employee may be dismissed
among others for misconduct.
Difficulties in management of business. Unions can be frustrating for managers, especially
if their relationship with the union is not amicable. This can result in an "us versus them"
mentality, resulting in frivolous grievances or unreasonable resistance to management
decisions, such as discipline or termination. Essentially, this aspect that is advantageous for
employees is a serious obstacle for managers. Even when disciplining or terminating an
employee is justifiable, her union will make every effort to prevent this. Lockouts also are an
issue of concern.
More Lawsuits and Arbitrations. With an organized labour force, employers are likely to
face more challenges to actions you take regarding an employees status. While individual
employees might not have the financial resources or will to contest such things as a
termination, a demotion, a lack of promotion, or alleged harassment or discrimination, a

union worker may be encouraged to file a suit or appeal your actions, and may be offered
union support to do so.
It encourages rigidity in the business plan. Union contracts also make it difficult to make
necessary adjustments when business conditions change, such as laying off workers or
cutting hours when revenues fall. This is because the workers may rely upon the contract of
service entered upon.
Unemployment to the public. If labour markets are competitive, higher wages will cause
unemployment. Trades unions can cause wages to go above equilibrium through the threat of
strikes among others. However when the wage is above the equilibrium it will cause a fall in
employment. More so their company may go out of business and be unable to employ more
workers at all.
Ignores out non-members. Trades unions only consider the needs of its members; they often
ignore the difficulty of those excluded from the labour markets, for example, the
unemployed.
Loss of Productivity. If unions go on strike and work unproductively (work to rule) it can
lead to lost sales and output. Therefore their company may go out of business and be unable
to employ workers at all.
Wage Inflation. If unions go on strike and work unproductively (work to rule) it can lead to
lost sales and output. Especially where the unions become too powerful they can reduced for
higher wages, above the rate of inflation. If this occurs it may contribute to general inflation.
In conclusion, Trade unions being an independent organizations that represent workers to
their employers that is legally recognized by law in Uganda, for example under Trade Unions
Act, Every worker has the right to form and join a trade union and to participate in the
unions activities legally, employer has the right to engage in collective bargaining. This in
turn improves the relations between employees and employers or between employees and
employees as well between employers and employees.
What are the major changes brought about by the Labour Unions
in Uganda?
The labour union has raised an impact and the standards of living by
improving their wages and working conditions. The labour unions through
their representatives have presented workers interests plus economic
rights. Previously, rights of workers in Uganda were not put into
contemplation but with the establishment of labour unions like; the UNAT
(Uganda National Teachers Organisation) which advocates for the rights
of teachers and in doing so, the rights of teachers are made better by
improving their wages and working conditions, plus the levels of
remunerations, terminal benefits and pensions; The minimum (Advisory
Boards and Councils) Act CAP 221, which regulates the minimum
remunerations of employment to employees. Section 14v of the Act lays
down penalty for failing to pay minimum wage or comply with the
condition.

The labour unions have been able to intervene in management of workers

disputes and union management disputes plus bringing the two sides
together. Previously before the establishment of labour unions such,
controversies were not adequately dealt with, but with the coming and
establishment of labour unions in Uganda there has been intervention by
these labour unions to settle such disputes and advocate for peacefully
terms bringing the two sides together.
Labour unions have established mechanisms for solving employees
grievances such as providing for safety and good health at the work place.
The Health and Safety Act provides safe working conditions and
environments. Article 40 of the Constitution provides for the right to be
accorded to women during and after pregnancy. The Occupation Safety
and Health Act provides under Section 13, that its an obligation for an
employer to ensure health, safety and welfare of persons at the work
place. Therefore, basing on such provisions, labour unions have taken the
mandate to ensure that workers are provided with a safe working
environment including in its vicinity. In the case of Swarborton vs.
Cooperative Whole Sale Society. It was held that a servant is entitled
to be paid wages during his absence through his illness provided that the
illness is not so long continued or of such permanent character to
terminate a contract of service.
Labour unions have advocated for equal treatment of women at the work
place. As a matter of fact, women can work in the same industry as men
and no restrictions can be located in law. Article 40 (..) of the
constitution provides every person has a right to practice his or her
profession and carry on lawful occupation, trade or business. Similarly,
Article 21 of the constitution of Uganda provides for non-discrimination
where all human beings are equal before the law and no person can be
discriminated on grounds including sex.
Case in relations. .this goes to a conclusion that labour
unions in Uganda have advocated for non-discrimination in the
employment field.
Nonetheless there are still some brought about by the established labour
unions which include: The labour unions have influenced the political
climate. Where the political climate is contradictory and generally
unfavourable to workers organisations, he world thinks this labour unions
are foe strikes rather than for harmonious relations. In a situation of one
party and no party state or no formal and freely organised oppositions to
the government, the workers are presented with no alternatives to appeal
when the government is not advancing their interests. But where, there is
an opposition and the government is not catering for the interest of

workers, the workers will join the opposition influencing the political
climate.
Challenges
The labour unions in advocating for their rights plus interests, have failed
in their implementations because the union leadership is politically,
ideologically and strategically demobilised. Although historically, the Trade
unions movements have tried to adopt an independent line for the state
and to organize and act autonomously, members of the movement have
always had no clear and definitive social political question and lack of a
political policy. However, some unionists have argued that lack of a
common political position or plocy on major political issues is as a result of
intently weak labour movements.
Funds
Ignorance of the laws.