The Industrial Court has halted proceedings in a long-running labour dispute between former Lweza Clays Limited employee Kaddu Sentamu and the company, pending the resolution of a separate High Court case challenging the firm’s receivership.
In a preliminary ruling delivered on June 12, 2026, Justice Anthony Wabwire Musana, together with panelists Adrine Namara, Susan Nabirye, and Michael Matovu, ruled that the court could not proceed to determine the employment dispute until the legal status of the company’s receiver is conclusively resolved.
Sentamu sued Lweza Clays Limited, accusing the company of unlawfully terminating his employment after placing him on a one-month leave in April 2011 and never recalling him to work. He claimed salary arrears, severance benefits, unremitted National Social Security Fund (NSSF) contributions, compensation for a workplace injury, and damages totaling more than Shs79 million.
The former Assistant Production and Operations Manager told the court that he had worked for the company since 2004 and remained in uncertainty after being sent on leave without explanation or a disciplinary hearing.
However, Lweza Clays denied liability and argued that the company had been placed under receivership by Tropical Africa Bank in November 2008, transferring management powers to receiver Fred Muwema. The company maintained that any claims arising during the receivership period should be directed against the receiver rather than the company itself.
Court records showed that the validity of Muwema’s appointment as receiver has been the subject of extensive litigation stretching back nearly two decades. Although an earlier High Court decision had nullified the appointment, subsequent rulings by the Court of Appeal and the Supreme Court ordered a fresh hearing of the dispute. The main suit challenging the receivership remains pending before the Commercial Division of the High Court.
The Industrial Court noted that determining whether Sentamu remained an employee of Lweza Clays or became an employee under the receiver’s administration is central to deciding who bears responsibility for any employment-related obligations.
Justice Musana observed that insolvency laws place certain liabilities, including wages and employee benefits, on receivers in specific circumstances. He added that proceeding with a final decision before the receivership dispute is settled could result in conflicting court decisions and uncertainty over the proper party responsible for any award.
The court further emphasized that employees occupy a vulnerable position during insolvency proceedings because they are not involved in the financial transactions that lead to receivership but depend on their wages and employment benefits for their livelihood.
While rejecting arguments for outright dismissal of Sentamu’s claim, the court held that fairness and the interests of justice required the matter to be paused until the High Court determines the legality of the receivership arrangement.
As a result, Labour Dispute Reference No. 29 of 2017 has been stayed pending the outcome of High Court Civil Suit No. 300 of 2008, which is currently before the Commercial Division.
The ruling means Sentamu’s claims for salary arrears, NSSF contributions, termination benefits, and damages will remain unresolved until the receivership dispute is finally determined.
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