When employers discover what appears to be clear fraud, missing stock, unexplained financial discrepancies, or manipulated records, the instinct is often immediate and decisive. Suspend the employee, report the matter to the police, and terminate the employment relationship. On the other hand, some employers take the opposite approach, choosing to wait for the criminal process to run its course, believing that the presumption of innocence requires them to hold off any employment decision until guilt is established. Both instincts are understandable. Both are also legally flawed.
The recent Court of Appeal decision in Caltex (U) Ltd t/a Chevron Uganda Ltd v Ben Asiimwe & Another [2026] CACA 64 2014 speaks directly to this tension and provides much-needed clarity on how employers and employees should navigate situations where alleged workplace misconduct intersects with criminal proceedings.
In this case, two employees, a depot supervisor and an accountant, were implicated in the loss of oil. They were suspended, reported to the police, charged with embezzlement, and remanded. While the criminal case was ongoing, their employment was terminated without any internal disciplinary hearing or concluded investigation. They challenged the termination, and the High Court found in their favour, awarding a range of damages, including general, exemplary, punitive, and aggravated damages with interest. On appeal, the Court of Appeal upheld the finding that the termination was unlawful but significantly refined the legal principles governing the process, the nature of damages, and the applicable remedies.
At the centre of the Court’s reasoning is a clear and important principle. Criminal proceedings do not replace internal disciplinary processes. An employer cannot abdicate its responsibility to investigate and determine an employment matter simply because the police have been involved or charges have been brought. The Court was emphatic that the existence of criminal proceedings does not absolve an employer from complying with contractual obligations and the rules of natural justice. Even more significantly, the Court clarified that remand or detention does not extinguish the employee’s right to be heard. The obligation to accord a fair hearing remains intact, regardless of the employee’s physical circumstances.
At the same time, the Court rejected the notion that employers must wait indefinitely for the conclusion of criminal proceedings before taking action. Employment relationships cannot be suspended in uncertainty while criminal trials, which may take years, unfold. The presumption of innocence, while fundamental in criminal law, does not prevent an employer from making employment decisions. What it requires is that those decisions are made through a fair and lawful process. In this way, the Court carefully balanced operational reality with procedural fairness.
One of the most significant aspects of the decision is its treatment of suspension. In practice, suspension is often treated as a routine administrative step, deployed quickly and sometimes without much thought to its legal basis. The Court disrupts this approach by making it clear that suspension is not automatic, not implied, and not legally neutral. It must be grounded in the contract of employment or the employer’s policies. Where suspension is not expressly provided for, its legality can be called into question. In this case, the Court noted that suspension was not clearly anchored in the governing employment framework, raising serious issues about its validity.
The decision reframes suspension as a legal mechanism that must be properly structured. It raises critical questions that employers must answer before suspending an employee. Is the suspension authorised under the contract or HR manual? Is it with pay, partial pay, or without pay? What is its duration? What process is intended to run during the suspension? Without clarity on these issues, suspension itself may become unlawful, even before the question of termination arises.
The Court also makes it clear that suspension cannot become a holding pattern. It cannot be used as a substitute for disciplinary action or as a way to defer decision-making while waiting for the State to act. In the case before the Court, the employees were suspended and the matter handed over to the police, but no internal investigation report was produced, and no disciplinary hearing was conducted. The Court found this to be fatal. Employers are required to run their own processes independently of the criminal proceedings, even where the facts appear obvious or the allegations are serious.
The Court further clarified the law on damages in employment disputes. It reaffirmed that special damages must be specifically pleaded and strictly proved. Claims for salary arrears, benefits, or future earnings that are speculative or unsupported by evidence will not be awarded. It also emphasised that damages for wrongful dismissal are generally limited to what the employee would have earned during the notice period. In this case, the High Court’s award of three months’ salary was set aside and reduced to one month’s salary in lieu of notice, in line with the contractual terms.
The Court declined to award exemplary or punitive damages, noting that these are exceptional and require proof of oppressive, malicious, or high-handed conduct, which was not established. However, it did award aggravated damages, recognising that the manner of dismissal caused reputational harm, embarrassment, and disruption to the employees’ lives. This included, for one of the employees, the interruption of professional progression and academic pursuits. The message here is clear. While compensation for wrongful dismissal may be contractually limited, the manner in which an employer handles the process can significantly increase liability.
The Court also addressed the issue of interest, correcting the High Court’s approach. It reiterated that interest must be grounded in both the pleadings and established legal principles. Liquidated sums may attract interest from the date of filing, while unliquidated damages, such as general or aggravated damages, attract interest from the date of judgment. The Court further noted that where no specific rate is pleaded, the default court rate applies.
For employers, the guidance from this decision is both practical and urgent. When criminal allegations arise, it is not enough to act quickly. It is necessary to act correctly. Employers must conduct internal investigations, notify employees of the allegations, provide an opportunity to respond, and make reasoned decisions based on their own processes. Suspension, where used, must be expressly authorised, structured, and linked to an active disciplinary process. Most importantly, employers must resist the temptation to either outsource decision-making to the police or to delay action indefinitely pending the outcome of criminal proceedings.
For employees, the decision reinforces the protection of procedural fairness. Being subject to a criminal process does not strip away employment rights, including the right to be heard. However, it also clarifies that employment is not contingent on the outcome of criminal proceedings. Employers are entitled to act, provided they do so fairly and within the bounds of the law.
Ultimately, this decision brings much-needed discipline to a space that is often driven by urgency and pressure. It reminds us that the real issue in these cases is not simply whether misconduct occurred, but whether the employer followed a lawful and fair process in responding to it. In moments of crisis, when the facts seem clear and the stakes are high, it is tempting to move quickly and decisively. This case is a reminder that in employment law, process is not an obstacle to action. It is what makes that action lawful.