National Social Security Fund v Grace K. Kazungu & another [2018] KECA 55 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed NSSF wrongly retired two managers but cut their payouts, ruling that paying notice salary cannot excuse breaking mandatory notice rules.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether from the evidence on record a finding can be made that the appellant wrongfully terminated the contracts of employment of the respondents
- 2.If affirmative, whether the trial judge erred in awarding the quantum of damages and compensation as he did
- 3.Whether the 2010 Constitution applies retroactively to conduct predating its promulgation
Key legal issues
#Whether termination under the 50-year retirement rule without the six months' notice required by Regulation 5.8(b) was wrongful despite payment in lieu of notice
Termination was un-procedural and wrongful; payment in lieu of notice cannot waive compliance with the mandatory six months' notice
Regulation 5.8(b) required either party to give six months' notice of intention to retire under the 50-year rule. The appellant gave only seven days' notice. The Court held the regulation is peremptory and must be observed to the letter; payment of salary in lieu of notice cannot cure a flagrant violation, as that would give one party an upper hand in the employment relationship. The trial court's finding of wrongful termination was upheld.
Whether the 2010 Constitution applied retroactively to the 2010 terminations
The 2010 Constitution is not retroactive and could not found the trial court's awards based on Articles 10, 22(1) and 23(3)
The trial judge had held Articles 10 and 22(1) of the Constitution bound the appellant regarding terminations effected on 4th January 2010, before promulgation on 27th August 2010. The Court of Appeal affirmed that the 2010 Constitution is not retroactive, though it found discrimination was nevertheless established on the facts.
Whether discrimination was established despite the constitutional non-retroactivity
Discrimination was proved: the respondents were denied the election option extended to comparable employees
The Court found the respondents were not given the equal opportunity extended to another employee (Mrs. Edwina Ombado) to elect to serve until age 60 or retire under the 50-year rule. Discrimination in employment occurs when an individual receives unequal treatment based on a trait unrelated to job performance, and an employer must prove the action complained of was fair.
Whether the quantum of damages awarded by the trial court was justified
Both the 60 months' discrimination award and 7 months' unfair termination award were set aside and replaced with six months' salary for each head
The trial judge gave no explanation for arriving at seven months' compensation and no analysis of comparable awards; an appellate court may disturb quantum where the judge took into account an irrelevant factor, left out a relevant one, or the amount is inordinately high or low. Comparative labour jurisprudence supports an average of six months' salary compensation for wrongful and unfair termination.
Whether damages for discrimination could be awarded where not specifically prayed for
Discrimination damages could stand because the issue was left to the court for decision, notwithstanding absence from the pleadings
While a court cannot grant a remedy neither pleaded nor prayed for, a court may base its decision on an unpleaded issue if it appears from the course of the trial that the issue was left to the court. The respondents submitted discrimination was pleaded at paragraph 7:2(b)(vi) and canvassed at the hearing; the Court nonetheless substituted a reduced award.
Legal principles established
#- Payment of salary in lieu of notice cannot cure or waive the obligation to comply with a mandatory notice requirement in an employer's regulations
- A court cannot grant a remedy that has neither been pleaded nor prayed for, save where the issue was left to the court for decision at trial
- A trial court must give reasons and justify awards of compensation for unfair termination by reference to statutory parameters and comparable awards
- The 2010 Constitution is not retroactive in its application
- Employees are expected, under Section 49(1) of the Employment Act, to reasonably mitigate their losses
Court orders
#- 1.The award of damages and compensation by the Employment and Labour Relations Court in the judgment dated 21st February 2013 set aside
- 2.1st and 2nd respondents awarded six months' gross salary as compensation for wrongful and unfair termination (Ksh. 2,157,636/= for 1st respondent; Ksh. 1,514,994/= for 2nd respondent)
- 3.1st and 2nd respondents awarded six months' salary as compensation for discrimination (Ksh. 2,157,636/= for 1st respondent; Ksh. 1,514,994/= for 2nd respondent)
- 4.Total awards: Ksh. 4,315,272/= to 1st respondent and Ksh. 3,029,988/= to 2nd respondent, subject to statutory deductions and taxes
- 5.Interest on total sums at court rates from 21st February 2013
- 6.Appellant to bear costs of the suit before the Employment and Labour Relations Court
- 7.Each party to bear its/her/his own costs in this appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Industrial Court (now Employment and Labour Relations Court) at Nairobi
- Industrial Court Cause No. 703 of 2010
- Jurisdiction invoked
- First appeal to the Court of Appeal under the applicable appellate statutory framework (judgment styled 'Being a first appeal, it is our duty to analyze and re-assess the evidence on record')
Relief refused
#Payment of six months' salary in lieu of notice
Respondents had already been paid six months' salary in lieu of notice
60 months' salary as compensation for discrimination as awarded by the trial court
The award was without explanation and justification
Seven months' salary as compensation for unfair termination as awarded by the trial court
No justification or analysis of comparable awards for the seven-month award
Costs
The appellant shall bear the costs of the suit before the Employment and Labour Relations Court; each party is to bear its/her/his own costs in this appeal.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Payment of salary in lieu of notice cannot cure or waive the obligation to comply with Regulation 5.8 (b). To hold otherwise would mean that a party can flagrantly violate the Regulation and make payment in lieu thereof.
At the outset, we affirm that the 2010 Constitution is not retroactive in its application.
Discrimination in employment occurs when an individual receives unequal treatment based on a trait unrelated to the performance of his/her job.
It is now settled that employees are expected, under Section 49 (1) of the Employment Act, to reasonably mitigate their losses.
(g) Each party is to bear its/her/his own costs in this appeal.
The upshot of our analysis is that this appeal partially succeeds. The award of damages and compensation by the Employment and Labour Relations Court in the judgment dated 21st February 2013 be and is hereby set aside.
Issues in the judgment
#Internal inconsistency in the salary figures used for the 2nd respondent's awards: earlier in the judgment his gross salary is stated as Ksh. 252,499/=, but the trial court's award arithmetic uses 127,499
Arithmetic error in the final orders: the multiplication shown (359,606 X 6) does not equal the stated total of 2,157,636
Irregular citation of Stavu v South African Airways: the case name reads 'Stavu Obo Members' and the citation parenthesis is unbalanced
Inconsistent reference to the regulation in the final orders as 'Regulation 58 (b)' rather than 'Regulation 5.8 (b)'
The appellant's ground (vi) complains the judge erred in allowing claims for payment in lieu of notice, but the trial court's recorded awards contain no such award; the Court of Appeal nonetheless addressed the point
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "National Social Security Fund v Grace K. Kazungu & another [2018] KECA 55 (KLR)", Case Analysis (2018). Civil Appeal No. 117 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/55/eng@2018-12-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.