Makerere University in Dilema Over Directive to Pay UGX 23b to Retired Staff

The judges say Makerere University had been “notorious in failing to comply with the provisions of the Trustee Deed and specifically by failing to transfer the funds in to the Scheme, even after judgement on admission was entered by this court as far back as 24/05/2016.”
Makerere University Main Building
Makerere University is in dilemma of fulfilling court’s directive to pay approximately 23 billion shillings to its staff under the Makerere University Retirement Benefits Scheme (MURBS). 

Until last year, the University Council, the supreme governing body of the institution was stuck with the heavy debt that the university has struggled to clear. 

With intense pressure from the 2,178 scheme beneficiaries, the University Council at its 147th meeting held from 6th to 8th August 2019 asked the University management to present to Council a detailed report in respect to the Court matters between the Makerere University and MURBS. 

In their August 2nd 2019 ruling, the Industrial Court Justices Asaph Ruhinda Ntegye and Linda Lillian Tumusiime Mugisha refused to scrap off the 7% annual interest slapped on the Shs.23.9bn adopted amount from April 30, 2019, until the full payment of the money. 

The judges say Makerere University had been “notorious in failing to comply with the provisions of the Trustee Deed and specifically by failing to transfer the funds into the Scheme, even after judgement on admission was entered by this court as far back as 24/05/2016.”  

Part of this is detailed in an 11-page report compiled by John Fisher Kanyemibwa, an advocate with M/S Kateera & Kagumire Advocates, the Makerere University External Lawyers. The report shows how the university is in breach of agreement and has severally failed to honour court orders to make payments to the retirees. 

Among the outstanding obligations include the taxed costs of the suit to a sum of Shs.186.6Million. 

“We have previously advised several times that the said costs be settled. The University account has been garnisheed for the recovery of the said sum,” says Makerere external lawyers. 

In their report to council, Court is set to award the Trustees separate costs in the garnishee proceedings. 

“The additional costs should have been avoided by settlement of the claimant’s taxed costs,” lawyers say. 

Adding that; “There is still pending in court taxation proceedings in respect of costs awarded to the Trustees in respect of the garnishee proceedings which were brought to enforce the partial decree arising out of the consent partial award.” 

This report, awaits University Council's decision, a response that was differed at the council's December 20, 2019 meeting due to lengthy agenda. 

On April 2nd, 2012, the registered trustees of MURBS dragged the university to court seeking Shs.1.6bn as special damages for unremitted Deposit Administration Plan (DAP) funds with a compounded interest of 10% per year from July 1996 till full payment. 

 This money was deducted by the University from its employees from July 1996 to June 2005 on account of DAP contributions which were not remitted to National Insurance Corporation (now NIC Holdings Limited) or the Trustees as successors of the said scheme effective April 1st 2009.

Additionally, the retirees demanded Shs.10.8bn unremitted DAP funds with a compounded interest of 10% per year from July 2015 until the full payment of the amount. 

The said money was deducted by the institution from the staff salaries between July 2005 and June 2010 but was not remitted to the relevant bank accounts for the scheme. 

The MURBS trustees also sought a court award of Shs.32.75bn unremitted In-house retirement benefits Scheme (IHRBS) funds together with an interest of 15% per annum from July 2007 until full payment of the said funds. 

Upon constituting the Industrial Court in 2014, the Civil Division of High Court transferred the matter to the industrial court where it was registered as a labour dispute. 

The parties engaged in some negotiations for a settlement, yielding to a partial consent award on February 10th, 2015. 

The University agreed to pay Shs.1.56bn DAP funds to the Trustees for the period between 1996 and 2005, and its accrued interest of 10% per year until the date of consent of the award. 

The University also agreed to pay un-remitted employer contributions to the Trustees a total of Shs.10.87bn for the period 2005 and 2010 plus the 10% interest for the same period. 

Additionally, it was also agreed that the university pays unremitted contributions to the staff arising out of salary enhancement in May 2005, totalling Shs.4.38bn as well as payment of Shs.110.5M salary enhancement contributions for months of July and August in 2005/2006 Financial Year.

The claim for the unremitted benefits under the IHRBS was to be handled separately as the parties were still verifying the exact amounts due to the Trustees.  

This agreement, however, was not honoured, prompting the Trustees to seek Garnishee orders from the industrial court.   

On July 22nd 2015, the MURBS Trustees filed an application seeking the Industrial Court to compel Makerere to pay the 23bn shillings as the value of the Scheme as of November 28th 2011. The money had by 2015 accumulated to more than Shs.30bn. 

In September 2016, University bank accounts in Stanbic, DFCU, Centenary and Crane Bank were frozen following an order issued by the industrial court in response to a plea lodged by former employees under Makerere University Retirement Benefits Scheme (MURBS) seeking to recover arrears of 30.68Bn Shillings. 

 The seizure of the university accounts affected its operations, prompting authorities to run to government through the ministry of education and ministry of finance for help. 

In October of the same year, government agreed to pay the amount in a space of two years following the commitment made by the Secretary to the Treasury Keith Muhakanizi in a meeting held on 3rd October 2016 between Ministry of Finance, Ministry of Education, Makerere University and its former employees under MURBS. 

Subsequent to the said award on admission, Makerere University appointed an actuary on February 26, 2018, to verify transfer values of the In-House Retirement Benefits Scheme dating April 1, 2009. 

The actuary submitted a report dated September 30th 2018 showing that the transfer values of the said scheme as of April 1, 2009, amounted to Shs. 16.48bn before interest. 

This was after the University had made direct payments in the total sum of Shs. 4.2Bn to some of the beneficiaries of the scheme which had to be reckoned with in establishing the liability of the university under the said scheme. 

These transfer values and the subsequent payments were verified by a Joint Verification Committee consisting of representatives of the Trustees and the University. 

Another report of the Joint Verification Committee confirmed the actualization of the scheme to the value of Shs. 28.1bn including the 7% interest as of April 30th 2019. 

A close reading of the report, however, shows that Makerere University continued paying the beneficiaries between April 1st 2009 and April 30 2019. It, however, states that the approval of the said report would be subject to Makerere signing off the list of members paid off in the same period. 

In June of the same year, the Trustees sought to enforce the judgement on admission by causing a Notice to Show Cause why execution should not issue. 

On the basis of the actuarial report, and the report of the Joint Verification Committee, the University was instructed to apply for court review of the said judgement on admission. 

During the hearing of the application by Court both on July 25th and August 2nd 2019, ruling it in favour of the University to enter the rightful agreed figure of Shs. 23.9bn up from the accumulated Shs. 28bn.