The Court of Appeal has quashed an order of the High Court directing the National Social Security Fund (NSSF) to refund UGX 14billion, being the 10% employer contribution for over 900 employees of Uganda Telecom Limited (UTL).
NSSF had appealed against the decision of the High Court.
Uganda Telecom had filed a case against the MD NSSF and the Fund challenging certain actions by which NSSF collected monies as statutory contributions for UTL.
UTL was incorporated with Uganda Posts and Telecommunications Corporation (UPTC), a statutory corporation which offered similar services.
They claim that upon incorporation, the employees of UPTC by operation of statute, had their contracts of service transferred to UTL and most of the employees with which the judicial review applications were former UPTC employees.
In 2015, UTL wrote to the Fund demanding a refund of the 10% employer contributions claiming that the contributions had been made in error for their employees who initially worked under UPTC and were members of Uganda Communication Employees Contributory Pension Scheme (UCECPS).
Therefore, primary case was that the relevant employees were not some of the employees envisaged to make contributions under the relevant law, and therefore, NSSF had wrongfully collected the monies in respect of those paid.
NSSF says that monies were rightly collected from the relevant employees, as they were persona envisaged to make statutory contributions.
In the judgement, High Court found that the UTL employees were exempted from making statutory contributions and therefore NSSF had wrongly collected monies in their regard, ordering NSSF to refund.
Ugandan enterprises urged to explore regional oil and gas opportunitiesThe Uganda Communications Employees Union sued both the Fund and UTL in the Industrial Court challenging any refund of the contributions. They secured a temporary injunction blocking any payment.
However, before the case in the industrial court could be determined, UTL filed an application for judicial review in the High Court, seeking an order to compel the Fund to refund the UGX 14billion, and obtained judgement in its favor.
The Fund was dissatisfied and filed an appeal in the Court of Appeal on grounds that the contributions belonged to a section of former workers of UTL, and not to the employer.
NSSF also says that the High Court had not distinguished between two categories of UTL employees that were affected, that is, former employees of UPTC who transferred services to UTL with terms of service remaining unchanged, and the recruits by UTL who contribute to UCECPS.
In a lead judgement delivered on Monday, 8th August 2022, Justice Cheborion Barishaki said, “UTL’s application in the High Court was wrongly instituted as an application for judicial review yet instead it challenged the correctness of the Fund’s decision to collect statutory contributions from certain UTL employees.”
Quashing the High Court’s ruling means that the Fund is under no legal obligation to refund the employer portion of the contributions directly to UTL and the 10% social security contribution belongs to the employees.
“We welcome the Court of Appeal’s judgment because it affirms our position that once contributions are remitted to the Fund, they belong to the employee for whom they have been paid. Regarding this particular case, we are confident that as an employer, UTL erred in seeking a refund of the employer contributions on the basis of an alleged exemption that was never subjected to interpretation by the Courts of law,” said Richard Byarugaba – NSSF Managing Director.
