Kenfreight (E.A.) Limited v Benson K.Nguti [2016] KECA 688 (KLR)
The bottom line
#Kenyan employers cannot fire staff using only the contract's notice clause; the Employment Act requires valid reasons and a fair hearing before termination.
What this practically means
#Executive summary
#Key legal issues
#Whether an employer can rely solely on the contractual notice clause and bypass the statutory framework of the Employment Act
No. The Employment Act prescribes irreducible minimum terms; freedom to contract is now subject to the statutory duty to give reasons and hear the employee before termination.
The court traced the historical common-law position premised on freedom of contract, then analysed the labour law reform Taskforce and the Employment Act, 2007, modelled on ILO Convention No. 158, which introduced mandatory minimum terms, fair hearing and reasons for termination. Payment in lieu of notice under the contract did not displace the statutory requirements, so termination outside the Act without reason or hearing was unfair.
Whether the respondent's termination was procedurally and substantively unfair
Yes. No reason was given for the termination, no disciplinary hearing was held, and the employer failed to prove a valid and fair reason under sections 43 and 45 of the Employment Act.
The termination letter specified no reason. The warning letters were not converted into disciplinary charges, the board meeting of 17th November 2010 was not a disciplinary hearing, and the employer failed to prove the alleged loss attributable to the respondent. He was replaced by a Belgian national, confirming discrimination. His treatment, including the demand to resign and the manner of eviction from the office, was shabby and unfair.
Whether the payment of Kshs.4,669,677 (15 days' salary per completed year) was ex gratia or based on an established practice
It was based on an established practice of the company and was therefore not ex gratia; it stands independent of the section 49 award.
Applying the law on implied terms by custom and practice, the court found the payment of 15 days' salary per year of service was made pursuant to an established company practice. It therefore could not be treated as ex gratia. However, the section 49 award is subject to statutory deductions under section 49(2), which the trial judge erred in ignoring.
Whether the award of 12 months gross salary was properly within the trial judge's discretion
Yes. The judge properly considered the respondent's rank, long service and difficulty in obtaining alternative employment; the maximum award was a judicial exercise of discretion.
Interference with discretion on appeal requires a showing of misdirection on law or misapprehension of facts. The judge explained the award of 12 months gross salary by reference to the respondent's senior rank and the difficulty of finding equivalent employment, considerations the appellate court endorsed, adding the demeaning treatment and long service.
Legal principles established
#- Termination of employment cannot validly be effected outside the Employment Act; even where a contract permits termination by notice or payment in lieu, the employer must still prove a valid and fair reason and fair procedure under sections 43 and 45 of the Employment Act.
- The employer bears the burden of proving that a termination was fair; the employee's burden is limited to asserting unfair termination.
- An employer must explain the reasons for termination to the employee and give the employee an opportunity to be heard before terminating employment.
- A term may be implied into an employment contract by custom and practice if it is fair, reasonable, notorious and certain and the parties' conduct shows an intention to be bound by it.
- An appellate court will not interfere with an award under section 49 of the Employment Act unless the trial judge misdirected himself on the law or misapprehended the facts.
Court orders
#- 1.Appeal dismissed
- 2.Statutory deductions to be subtracted from the award of Kshs.8,116,344 under section 49
- 3.Each party to bear their own costs
- On appeal from
- Employment & Labour Relations Court of Kenya at Mombasa
- Industrial Court Cause No. 146 of 2013
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction from the Employment and Labour Relations Court
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Easy Coach v Njogu (Civil Appeal 516 of 2019) [2026] KECA 559 (KLR)[2026] KECA 559 (KLR)13 Mar 2026applied
Cite this brief
#Cite this brief
Caselaw, "Kenfreight (E.A.) Limited v Benson K.Nguti [2016] KECA 688 (KLR)", Case Analysis (2016). Civil Appeal No. 31 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/688/eng@2016-03-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.