On Aug.08, Uganda’s Court of Appeal overturned the High Court decision directing the National Social Security Fund to refund Uganda Telecom Shs14bn contribution belonging to former employees.
This verdict meant 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 more than 900 employees.
While delivering the judgment on August.08, 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.”
NSSF Managing Director, Richard Byarugaba, said the Fund welcomes the Court of Appeal’s judgment because it affirms its 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 contribution based on an alleged exemption that was never subjected to interpretation by the Courts of law,” he said,
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 Uganda Posts and Telecommunications Corporation (UPTC) and were members of Uganda Communication Employees Contributory Pension Scheme (UCECPS).
The 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 applied for judicial review in the High Court, seeking an order to compel the Fund to refund the Shs 14 billion.
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.
The High Court had also 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.
Background to UTL troubles
Established in 1988, UTL is one of the longest-running telecom operators in Uganda. Libyan Post, Telecommunication and Information Technology Holding Company (LPTIC) via its subsidiary LAP-Green holds 69% majority shareholding in UTL whilst the Ugandan Government holds a minority 31% shareholding in the company.
The telecom company has been limping without funding since former Libyan leader Muammar Gadhafi was killed in 2011.
In 2017, LPTIC withdrew financing from UTL arguing that the Uganda government had failed to convert the debt it owes to UTL into LPTIC equity.
The Libyans also argued that the government failed to accept to expunge the liabilities for actuarial amounts of pensions which exceeded the statutory contributions of 10% for the company’s former workers during the time of privatization.
Agreeing on these two issues then, the majority shareholders would have enabled shareholders to raise about US$48million through the sale of towers and funding from the LPTIC to revamp UTL. The telecom firm is currently under full management of the government of Uganda.
