NSSF wins shs14bn Court of Appeal case against UTL

The Court of Appeal has quashed an order of the High Court directing the National Social Security Fund  to refund shs14billion, being the 10% employer contribution for over 900 employees of Uganda Telecom Limited (UTL).

In 2015, UTL wrote to NSSF  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).

UTL demanded shs14.3 billion from NSSF as contributions and interest for 985 employees who the telecom company argued were not entitled to NSSF contributions because they had a separate pension scheme.

The Uganda Communications Employees Union sued both the NSSF  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 NSSF to  refund the shs14billion.

In May 2016 High Court Judge Lydia Mugambe ordered NSSF to pay.

Dissatisfied with the outcome, NSSF  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 argued that he 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.

However, this week, three justices of the Court of Appeal including Cheborion Barishaki, Stephen Musota and Christopher Madrama have quashed the High Court decision.

“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,” Justice Barishaki said in the lead judgement.

The judges ruled that it was wrong for the High Court to allow a judicial review for UTL’s case.

The judgement  of the Court of Appeal means that NSSF  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, "NSSF Managing Director, Richard Byarugaba said in a statement.