Van Leer East Africa Ltd (greif (k) Ltd) A Business of Greif Bros Corporation v Baiba Dhidha Mjidho
The bottom line
#Kenya's Court of Appeal slashed a Kshs 7.7 million redundancy award to about Kshs 103,000, ruling that severance is based on basic salary and statutory rates, not allowances or union agreements.
What this practically means
#Executive summary
#Key legal issues
#Meaning of 'salary' for computation of terminal dues
Salary means basic salary only; the respondent's last basic monthly pay slip figure of Kshs.139,253/= was the correct basis, not gross income of Kshs.281,620/=
The Court adopted the reasoning in Kenya Ports Authority v Edward Otieno that damages for wrongful termination are the wages for the period of notice, and held that 'salary' and 'wages' in their ordinary meaning do not include allowances or provident fund arrangements. The trial Judge's use of gross income was therefore an error of principle.
Enforceability of an unpleaded CBA against a non-unionised management employee
The CBA was not binding on the employer in relation to the respondent and could not be relied upon because it was not pleaded
Clause 2 of the CBA covered only employees represented by the union. The respondent was neither a union member nor represented by the union, and the CBA was not pleaded in the plaint. The Court also held that section 16A(1)(e) applies to all employees irrespective of management status, but its statutory rates, not CBA rates, govern.
Termination as redundancy and entitlement to statutory severance
The termination by reason of worldwide restructuring and abolition of the respondent's position amounted to redundancy under section 16A of the Employment Act, entitling the respondent to notice pay, leave pay and 15 days' severance pay per completed year
All the facts constituting redundancy under section 16A(2) were adequately pleaded in paragraph 6 of the plaint, which was admitted in the defence, even though the word 'redundancy' was not used. The respondent was thus entitled to rely on the Employment Act and on his contract of employment, with severance computed on basic salary.
Damages for breach of the Competition clause
The award of Kshs.3,379,440/= was erroneous in both liability and quantum because unreasonableness of refusal and actual loss were not proved
The clause imposed on the employee the burden of proving damages flowing from an unreasonable refusal to release him from the restraint. The trial Judge made no finding of unreasonableness, led no evidence of the salary the competitor would have paid, and quantified the award on the respondent's earnings from the appellant rather than the loss suffered.
Effect of absence of cross-appeal
Having not cross-appealed, the respondent could not ask this Court to disturb the disallowance of the leave claim, even though the Court doubted its correctness
The Court indicated it might otherwise have reversed the trial Judge's finding that a statutory claim was a claim for general damages, but the absence of a cross-appeal precluded it from doing so.
Legal principles established
#- In ordinary usage, 'salary' or 'wages' under the Employment Act means basic salary only and does not include allowances, provident fund arrangements or other additional payments
- A Collective Bargaining Agreement between an employers' association and a trade union is not enforceable by or against a management-level employee who is not a party and not represented by the union
- A party cannot rely on a document or agreement that has not been pleaded
- Section 16A(1)(e) of the Employment Act applies to all employees irrespective of management status
- An employee claiming indemnity under a competition/restraint clause must prove the unreasonableness of the employer's refusal, the damage suffered and its quantum
- Statutory severance pay on redundancy is at the rate of 15 days' pay per completed year of service, not the CBA rate of 23 days
Court orders
#- 1.The judgment of the High Court awarding the respondent Kshs.7,685,420.85 plus interest and costs is set aside
- 2.Judgment substituted in favour of the respondent for Kshs.103,480/= being Kshs.1,787,078 less Kshs.1,683,548 paid pursuant to the preliminary decree dated 14th October 2003
- On appeal from
- High Court of Kenya at Mombasa
- H.C.C.C. No. 159 of 2003
- Jurisdiction invoked
- First appellate jurisdiction under the applicable provisions governing appeals from the High Court to the Court of Appeal (not expressly cited in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Van Leer East Africa Ltd (greif (k) Ltd) A Business of Greif Bros Corporation v Baiba Dhidha Mjidho", Case Analysis (2007). Civil Appeal 86 of 2006. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2007/273/eng@2007-06-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.