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Court of AppealPartially AllowedCivil Appeal No. 127 of 2013· [2017] KECA 331 (KLR)

The Youth Agenda v Rita Kijala Shako [2017] KECA 331 (KLR)

Court of Appeal of Kenya
22 September 2017
AMAsike MakhandiaWilliam OukoW. OukoSKS. Gatembu Kairu
4,991 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed firing a CEO without proof of reasons or a hearing was unfair, but cut her compensation from Kshs 2 million to under Kshs 800,000.

What this practically means

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Executive summary

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Youth Agenda, a civil society organization, employed Rita Kijala Shako as CEO on a two-year contract commencing 5 January 2009 with a six-month probation and provision for termination on three months' notice or pay in lieu. On 22 December 2009 the appellant informed her she had been reassigned, appointed her deputy as CEO, and later locked her out of her office. She declined a demotion to a non-existent junior position of Assistant Programme Officer; the appellant then terminated her contract on 28 January 2010, purportedly with retroactive effect, citing poor performance and absconding. The Industrial Court (Mukunya, J.) found the termination unfair and awarded her Kshs. 2,377,672.60, comprising 10 months' salary as compensation and a conceded balance for three months' salary in lieu of notice. The Court of Appeal, in a single judgment of the court, affirmed the finding of unfair termination: the appellant proved neither poor performance nor absconding, and the respondent was never accorded a hearing as required by Sections 41(1) and 43 of the Employment Act; the probation exemption under Section 42 was unavailable since probation had lapsed. Although the employment fell short of the 13 months required by Section 45(3), the contract's breach clause preserved the claim, as parties may contract more favourable terms. However, the Court found the 10 months' compensation excessive for just over one year's service, applied the Section 49(4) factors, and reduced the award to two months' gross salary (Kshs. 400,000), giving a total of Kshs. 777,762.60 with interest from 24 February 2012. Costs in the lower court were awarded to the respondent; each party bore its own costs of the appeal.

Key legal issues

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01

Whether valid reasons existed for terminating the respondent's employment

Holding

The termination was unfair; the reasons oscillated between poor performance and absconding, neither of which was proved, and no hearing was accorded.

Reasoning

The employer's stated reasons shifted from poor performance to absconding from duty, but no evidence established either. The respondent's position was assigned to another, she was locked out, and offered a non-existent junior position. Section 43 requires the employer to prove reasons; failure makes the termination unfair. Section 41(1) required a hearing, which was not given. The probation exemption under Section 42 did not apply as the six-month probation had lapsed.

p. 6
02

Whether the claim was sustainable given less than 13 months' continuous employment under Section 45(3)

Holding

Yes; the express 'Breach of Contract' clause preserved a right of action, and parties may contract more favourable terms than the statute.

Reasoning

While the period of employment fell short of the 13 months required by Section 45(3) for a statutory unfair termination complaint, clause 6 of the contract expressly gave a party breaching the contract a right to sue for damages. The Court held that Section 45(3) does not bar parties from agreeing more favourable terms, so the respondent could sustain her claim contractually.

p. 7
03

The appropriate remedy under Section 49 of the Employment Act

Holding

The award of 10 months' salary was excessive and was reduced to the equivalent of 2 months' gross salary (Kshs. 400,000) in addition to the conceded 3 months' salary in lieu of notice.

Reasoning

The trial judge gave no basis for selecting 10 months. Section 49(4) factors - length of service, expected duration, alternative opportunities, compensation received - must be considered. Comparing precedent awards (3 months for 6 years' service; 8 months for 30 years' service), 10 months for just over one year's service was disproportionate. Compensation of 2 months' gross salary plus 3 months' notice pay was held reasonable.

p. 8

Legal principles established

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  • Before terminating employment an employer must both give valid and provable reasons and accord the employee a hearing; failure to prove reasons renders termination unfair.
  • Once the contractual probation period lapses, the employer cannot rely on Section 42 of the Employment Act to avoid the requirements of reasons and a hearing.
  • Nothing in Section 45(3) prevents parties contracting for more favourable terms for the employee, allowing an unfair termination claim to be sustained contractually even where 13 months' continuous employment is not met.
  • The power to award remedies under Section 49 of the Employment Act is discretionary and must be exercised judiciously, with reasons given and Section 49(4) factors taken into account.
  • On a first appeal the Court of Appeal must review the evidence and draw its own conclusions, mindful that it did not see or hear the witnesses.

Court orders

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  1. 1.Set aside the award of Kshs. 2,000,000.00 made by the lower court and substituted an award of Kshs. 400,000.00 being the equivalent of 2 months gross salary
  2. 2.Upheld the appellant's liability for the conceded balance of Kshs. 377,762.60 as ordered by the lower court
  3. 3.Total award in favour of the respondent of Kshs. 777,762.60 with interest at court rates from 24th February 2012 until payment in full
  4. 4.Appellant to pay the respondent's costs in the lower court
  5. 5.Each party to bear its own costs of the appeal

Authorities

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Legislation

  • Employment ActSection 41(1)
  • Employment ActSection 42
  • Employment ActSection 42(3)
  • Employment ActSection 42(4)
  • Employment ActSection 43
  • Employment ActSection 45
  • Employment ActSection 45(1)
  • Employment ActSection 45(3)
  • Employment ActSection 47(5)
  • Employment ActSection 49(1)
  • Employment ActSection 49(4)
  • Employment Act, 2007Section 45(3)

Cases cited (6)

  • Selle vs. Associated Motor Boat Co Ltd [1968] EA 123
    [1968] EA 123
  • D.K. Njagi Marete vs. Teachers Service Commission [2013] eKLR
    [2013] eKLR
  • Mary Saru Mwandawiro vs. Kenya Ports Authority [2016] eKLR
    [2016] eKLR
  • Chukwuman vs. Shell Petroleum Development Co. Nig. Ltd (1993) 4 NWLR (Pt.289) 512
    (1993) 4 NWLR (Pt.289) 512
  • Land Securities Trillium Limited vs. Ms J Thornley [2005] UK EAT 0603-04-2006
    [2005] UK EAT 0603-04-2006 (20 June 2005)
  • Hema Hospital vs. Wilson Makongo Marwa [2015] eKLR
    [2015] eKLR
On appeal from
Industrial Court of Kenya at Nairobi
Industrial Court Cause No. 583 of 2010
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction over Industrial Court decisions

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "The Youth Agenda v Rita Kijala Shako [2017] KECA 331 (KLR)", Case Analysis (2017). Civil Appeal No. 127 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/331/eng@2017-09-22

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