Paramount Bank Ltd v Mohammed Ghias Qureishi & another [2005] KECA 302 (KLR)

The court re-stated the principle that a contract of service must be terminated by notice unless the hiring is for a definite period, and that silence does not mean no notice is required; usage determines length, and failing usage, reasonable notice applies. Drawing on the decisions of the predecessor court on the nature of employment and availability of suitable alternative posts, and considering the respondent's age of about 60 and the near-impossibility of obtaining further employment, the court deemed 12 months reasonable.

The appellant's defence was that the respondent resigned of his own accord and the resignation was accepted. The court independently reviewed the evidence and found the respondent was crudely forced out of office in utter disregard of the contract. The trial judge had found it inconceivable that a man of the respondent's position and age would resign without other employment, and the appellate court found no fault with that careful consideration.

The trial judge found the official salary was Shs.40,000 with a further Shs.200,000 paid under the table to avoid income tax, and held such a contract contrary to public policy and unenforceable. The Court of Appeal agreed the privileges enjoyed by the respondent - company car, accommodation and easy access to loans - would not be available to a person earning Shs.40,000 per month, and held that courts do not sanction illegality.

The employment agreement allowed termination only upon three specified events: the death of the employee, sickness or incapacity preventing performance of functions, or gross default, misconduct or breach of the contract's conditions. The respondent was guilty of none of these, so summary dismissal without cause was contractually unavailable. This finding underpinned the court's conclusion that a substantial period of notice was required and that the dismissal was wrongful.

The respondent was summarily dismissed, physically ejected from the company house and office, and threatened over his loan. The court acknowledged the inhuman treatment but observed that the law affords no compensation for injured feelings; the recoverable loss was confined to the pecuniary entitlements quantified on the basis of the reasonable notice period.