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Court of AppealPartially AllowedCivil Appeal No. 82 of 2015· [2016] KECA 398 (KLR)

Steel Makers Limited v Joshua Nzuki [2016] KECA 398 (KLR)

Court of Appeal of Kenya
15 July 2016
2,095 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that private-sector retirement ages are set by contract and conduct, not statute, so retirement can be a valid reason for termination.

What this practically means

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Executive summary

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The respondent, employed by the appellant for some 27 years, was retired by letter dated 20th June 2013 with effect from 24th August 2013, the letter citing attainment of the company's retirement age of over 58 years and his physical fitness, and giving two months' notice. The Employment and Labour Relations Court (Rika, J.) dismissed his claims for notice pay and gratuity but found unfair termination and awarded him six months' salary (Kshs. 299,232/-) on the basis that the employer had failed to prove the reason for termination under Sections 43 and 45 of the Employment Act, 2007. The employer appealed on the fairness of the retirement, the quantum of the award, and the alleged need for medical evidence. Disposing of the appeal on written submissions, the Court of Appeal allowed the appeal. It held that as neither statute nor the respondent's 1986 appointment letter fixed a retirement age for private-sector employment, the question fell within the law of contract and the parties' conduct - including the employer's 2011 attempt to retire the respondent at 58 and its grant of a two-year extension at his request - established a retirement age of 58. The employer having shown a valid reason, the burden shifted to the respondent, who led no evidence to impeach the policy. The Court set aside the judgment and decree of 17th July 2015 and dismissed the respondent's claim, directing each party to bear its own costs in both courts. The respondent's bid for enhanced compensation of twelve months' pay was not entertained as he had not cross-appealed.

Key legal issues

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01

Whether retirement on attaining an age not fixed by statute or contract can constitute unfair termination under Section 45 of the Employment Act

Holding

The retirement was not unfair termination; the employer proved a valid reason (retirement age of 58) and the employee failed to rebut it; where no retirement age is fixed by statute or contract, the matter falls to be determined from the parties' conduct as a contract question.

Reasoning

The letter of 20th June 2013 gave two months' notice and stated retirement on account of age as the reason. Since neither statute nor the appointment letter fixed a retirement age, the court looked to conduct: the employer had sought to retire the respondent at 58 in 2011 but granted a two-year extension at his request. The respondent, bearing the shifted burden, led no documentary evidence that the retirement age policy was false. Notice pay and gratuity claims were also disallowed, as at trial.

p. 4
02

Allocation of the burden of proof under Sections 43 and 45 of the Employment Act in a retirement case

Holding

The employer discharged its burden the moment it demonstrated a valid reason for the termination; the onus then shifted to the employee to impeach that reason.

Reasoning

Under Section 45(2), a termination is unfair if the employer fails to prove a valid and fair reason and fair procedure. Once the employer proved the valid reason of retirement on attaining the company's retirement age, communicated by written notice two months in advance, the employee had to show the asserted policy did not exist. Mere assertion, without evidence or a report from the labour offices he claimed to have visited, was insufficient.

p. 4

Legal principles established

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  • Where the contract or statute does not provide a retirement age in private-sector employment, the retirement age is a matter of contract to be ascertained from the conduct of the parties.
  • Once an employer shows a valid reason for termination, the burden shifts to the employee to prove that the reason was contrary to policy or otherwise invalid.
  • A first appellate court must reconsider and evaluate the evidence itself while making due allowance for not having seen or heard the witnesses, and will not interfere with findings of fact absent no evidence, misapprehension of evidence, or wrong principle.

Court orders

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  1. 1.Appeal allowed
  2. 2.Judgment and decree dated 17th July, 2015 set aside
  3. 3.In lieu thereof, the respondent's claim in the trial court dismissed
  4. 4.Each party to bear their own costs both in the appeal and in the trial court

Authorities

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Legislation

  • Employment ActSection 43
  • Employment ActSection 45 (including Section 45(2)(a), (b) and (c))

Cases cited (4)

  • Selle & Another v. Associated Motor Boat Co. Ltd & Others
    [1968] EA 123
  • Ephantus Mwangi & Another v. Duncan Mwangi Wambugu
    [1982-88] 1 KAR 278
  • Engineer Francis N. Gachuri v. Energy Regulatory Commission
    Industrial Cause No. 203 of 2011
  • Elizabeth Wakanyi Kibe v Telkom Kenya Ltd
    [2014] eKLR
On appeal from
Employment and Labour Relations Court of Kenya at Mombasa
E.L.R.C.C. No. 427 of 2013
Jurisdiction invoked
First appeal on law and fact from the Employment and Labour Relations Court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Steel Makers Limited v Joshua Nzuki [2016] KECA 398 (KLR)", Case Analysis (2016). Civil Appeal No. 82 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/398/eng@2016-07-15

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.