David N Nyamu v Insurance Training And Education Registered Trustees & another [2017] KECA 719 (KLR)
The bottom line
#Kenya's Court of Appeal ruled an employer's mixed signals made a termination unfair, but old employment law meant the employee won only Kshs.64,257 in medical expenses.
What this practically means
#Executive summary
#Key legal issues
#Nature of the employment contract
The contract was permanent and pensionable, not a fixed term contract, notwithstanding the presence of termination clauses
A fixed term contract requires clear commencement and termination dates. The appointment letter of 30th January 1997 had no such dates. The appellant had completed probation, been placed on a pension scheme and received pension benefits at termination, so probation provisions ceased to apply. The existence of premature termination options does not by itself convert a contract into a fixed term one.
Terminability and reasonable notice
Both employer and employee had a reciprocal statutory right to terminate on reasonable notice; one month's notice was reasonable in the circumstances
Section 14(5) of the repealed Employment Act provides a reciprocal right to terminate on reasonable notice, regardless of what the contract says. In assessing reasonable notice the courts consider factors including the position held by the employee. Deeming the notice to be one month where none is provided was rejected in Barclays Bank of Kenya Ltd v Joseph Mwaura Njau as unnecessarily restrictive. One month's notice here was reasonable.
Whether the termination was wrongful and unfair
Although the respondents may have been contractually entitled to terminate by notice, their inconsistent conduct - compulsory leave pending review, then termination citing restructuring, then reverting to contractual termination - made the termination wrongful and unfair
The compulsory leave letter promised that the appellant would be advised of the next course of action after review, but the termination letter cited major restructuring and never referenced the review outcome. No misconduct or poor performance was alleged. The termination was involuntary and through no fault of the appellant, yet the office was not abolished as in redundancy, since his job was taken by a subsequent employee. The inconsistency left the reason for termination unclear and the employer was obliged to explain.
Remedies for unfair termination under the repealed law
General damages were unavailable for a pre-2008 cause of action; special damages for the unexpired term were unsustainable; only the proved medical claim of Shs.64,257/- was awardable
Under the repealed Employment Act no general damages were awardable even for distress and mental anguish, as Sonye v Siaya Teachers held. Section 49 remedies introduced by the Employment Act 2007 did not apply retrospectively. A permanent employee cannot claim the unexpired term to retirement. However, the failure to present medical claim forms was reasonably inferred to be non-deliberate given the manner of termination, so reimbursement was warranted.
Extent of the counterclaim
Only the admitted indebtedness of Shs.1,414,498.35 was proved; the car loan of Shs.459,708/- was payable directly to NIC Bank
The appellant admitted in submissions and testimony to owing Shs.1,456,681.28. The respondents' own witness confirmed the respondents were only guarantors of the motor vehicle loan, that NIC Bank had not approached them for payment, and that their claim from the appellant was Shs.1,414,498.35. The trial judge's decree for the full Shs.1,916,389.28 lacked justification.
Legal principles established
#- Employment causes of action accruing before 2nd June 2008 are governed by the repealed Employment Act Cap 226 and the repealed Trade Disputes Act Cap 234 through saving provisions, not the Employment Act 2007
- Section 14(5) of the repealed Employment Act confers a reciprocal right on employer and employee to terminate an employment contract on reasonable notice
- A contract is not a fixed term contract merely because it contains options for premature termination; a permanent and pensionable contract runs to retirement pending premature termination
- An employer whose conduct sends mixed signals about the reason for termination must explain the reasons for the intended termination; inconsistent conduct renders the termination wrongful and unfair even if the employer was contractually entitled to terminate by notice
- No general damages were awardable in suits based on termination of employment contracts under the repealed Employment Act
Court orders
#- 1.The appeal partially succeeds
- 2.The appellant is awarded Kshs.64,257/- in unpaid claims for medical expenses
- 3.The counterclaim is allowed only to the extent of Shs.1,414,498.35 (reduced from Shs.1,916,389.28 awarded by the trial court)
- 4.Each party bears its own costs
- On appeal from
- High Court of Kenya at Nairobi
- HCCC No. 1177 of 2006
- Jurisdiction invoked
- First appeal to the Court of Appeal under Rule 29(1) of the Court of Appeal Rules against the judgment of the High Court in the exercise of its original jurisdiction
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "David N Nyamu v Insurance Training And Education Registered Trustees & another [2017] KECA 719 (KLR)", Case Analysis (2017). Civil Appeal No. 134 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/719/eng@2017-02-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.