Aren’t contract employees entitled to severance pay?

Friday October 25 2019



Moses Ssesanga

Moses Ssesanga 

By Moses Ssesanga

The company I work for is being sold off. I have been on contract for close to two years and my contract runs out just in time for the sale. The company seems to want to pay benefits to only permanent staff and let my contract run out naturally with no benefits. I have worked in this company even longer than some permanent staff. Do I have a right to claim severance? Is the law in my favour? Thanks Lillian

Dear Lillian,
Companies many times change ownership without impacting their workers. This is the case with boardroom takeovers where it is only the top executives who may be impacted but the other employees only get to see the new owners rolling out new branding, cultural changes and new ways of working. The buyers would have agreed to take over all the employees on their current terms and conditions of service.

However, in other similar transactions, the terms and conditions of the workers may be impacted when the buyers want to reduce the number of employees or even close down some operations or branches to run the business more efficiently. This is when the restructuring of the acquired business would include retrenchment.

The clauses governing layoffs and severance are very clear in the Employment Act of 2006. However, in your case, it is apparent that your contract had termination clauses spelt out differently from the other workers. You are therefore, not expected to be a beneficiary of the severance benefits packages apart from the terminal benefits listed in your contract.

The law only protects your current contract as it was agreed on signing and, since you are aware that its duration is running out in time with your company sale dates, your employer must have been aware that there is an impending change in ownership and moved to limit their exposure when signing up contracts for new hires.
Find out whether the new owners would require your services and negotiate fresh terms with them.

Moses Ssesanga
Head Human Resource
NMG - Uganda
mssesanga@ug.nationmedia.com

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