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Court of AppealPartially AllowedCivil Appeal No. 127 of 2016· [2018] KECA 840 (KLR)

NEC Corporation v Samuel Gitau Njenga

Court of Appeal
16 February 2018
EGE. M. GithinjiHOH. M. OkwenguJMJ. Mohammed
4,410 words in judgment
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The bottom line

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Kenya's Court of Appeal threw out a Shs 3.3 million discrimination award for lack of proof, but confirmed employees can claim bonus arrears within three years of leaving a job.

What this practically means

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Executive summary

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The Court of Appeal allowed the appellant's appeal and partially allowed the respondent's cross-appeal against the judgment of Nzioki wa Makau, J. of the Employment and Labour Relations Court, which had awarded the respondent Shs. 3,358,992 for discrimination based on a single incident in which Japanese staff were accommodated in a 5-star hotel while other staff were placed in lesser accommodation during a 2008 South Africa conference. The Court held that the hotel accommodation claim was never pleaded as a special claim, was not a term of the contract of service, was unsubstantiated (the respondent's name did not appear on the hotel booking schedule), and caused him no personal detriment. It further held that a standalone constitutional discrimination claim unrelated to the contract of service belongs to the High Court sitting as a constitutional court, and that a large compensatory award by the ELRC must be supported by disclosed reasons; absent reasons, the award was arbitrary. On the cross-appeal, the Court upheld the genuineness of the redundancy, finding the employer had complied with section 40(1) and justified the grounds under sections 43 and 47(5) of the Employment Act. It held that claims for arrears of contractual benefits accrue at termination and are not time barred if filed within three years of termination, entitling the respondent to bonus arrears up to 2008 totalling Shs. 1,500,848. Claims for enhanced salary under an alleged 'NEC Global Scheme of Service', promotion, car replacement and retirement benefits in addition to severance pay all failed. Each party was ordered to bear its own costs.

Key legal issues

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01

Proof of employment discrimination

Holding

The finding of discrimination on hotel accommodation was not sustained: the claim was not pleaded, was not a term of employment, was unsubstantiated and caused no personal detriment

Reasoning

The pleaded claim concerned remuneration, promotion, terminal benefits and a car. Hotel accommodation was merely illustrative of general discrimination. The respondent's name was not on the hotel booking schedule, the schedule was unexplained, and training, travel and accommodation were not terms of employment but business-motivation tools. No personal loss or detriment was shown.

p. 3
02

Jurisdiction of ELRC over standalone constitutional discrimination claims

Holding

The ELRC may determine constitutional issues arising out of or incidental to employment disputes, but standalone discrimination claims belong to the High Court sitting as a constitutional court

Reasoning

Section 5 of the Employment Act prohibits discrimination but creates an offence without providing compensation; statutory remedies attach only to breach of a contract of service. A standalone hotel-accommodation discrimination claim is not incidental to the contract and should proceed under the Constitution (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules, 2013 before the High Court.

p. 4
03

Fairness of redundancy termination

Holding

The redundancy was genuine and fairly effected; the employer complied with section 40(1) and justified grounds under sections 43 and 47(5)

Reasoning

Functions were transferred to South Africa; the AFIS and broadcasting role was left vacant and new hires took different jobs. No complaint of procedural unfairness was raised. The burden of justifying grounds rests on the employer and was discharged; the ground of cross-appeal on unfair termination fails.

p. 5
04

Limitation for arrears of contractual benefits

Holding

Time under section 90 of the Employment Act runs from termination of employment for claims of arrears of benefits withheld during employment

Reasoning

The employment was continuing until 31 March 2011 and the respondent had continuously claimed bonus. Holding otherwise would lead to absurdity, such as inability to reclaim a company car assigned years earlier. All accounts and liabilities are settled at termination; suits by employees while employment subsists would not promote good labour relations.

p. 5
05

Entitlement to arrears of bonus

Holding

The 1997 contract entitles the respondent to bonus at twice basic wage yearly; arrears awarded up to 2008 only, totalling Shs. 1,500,848

Reasoning

The 2009 contract omitted bonus, but the 2009 company regulations, part of the terms of service, retained it at the employer's discretion and unpegged from salary. The bonus for 2009 and 2010, being discretionary under the regulations, was discounted, leaving Shs. 1,500,848 for the pre-2009 contractual period.

p. 5

Legal principles established

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  • A claim of discrimination in hotel accommodation unconnected to the contract of service is a standalone constitutional claim for the High Court, not the ELRC
  • Claims for arrears of contractual benefits accruing during employment may be brought within three years of termination of employment
  • An employer making a large compensatory award for constitutional discrimination must disclose the rationale for its decision
  • An employee terminated on redundancy is not entitled to retirement benefits over and above statutory severance pay

Court orders

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  1. 1.Appeal allowed; judgment of the trial court awarding the respondent Shs. 3,358,992 on grounds of discrimination set aside
  2. 2.Cross-appeal allowed; judgment entered for the respondent for Shs. 1,500,848 with interest at court rates from the date of judgment of the trial court
  3. 3.No orders as to costs

Authorities

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Legislation

  • Constitution of KenyaArticle 27(5)
  • Employment ActSection 5(3), 5(4), 5(5), 5(6), 40(1), 43(1), 43(2), 45, 46, 47(5), 49(1)(c), 90
  • Repealed Constitution of KenyaSection 82(3)
  • Industrial Court ActSection 12(3)
  • Limitations of Actions ActSection 4(1)
  • The Constitution of Kenya (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules, 2013

Cases cited (4)

  • Mohammed Fugicha v Methodist Church of Kenya & 3 Others
    [2016] eKLR

    Principle of relative equality: to treat equally what are equal and unequally what are unequal

  • Flanney v Halifax Estate Agencies
    [2000] 1 All ER 373

    Duty of a court to give reasons for its decision as a function of due process

  • GMV v Bank of Africa Kenya Limited
    [2013] eKLR

    Compensation for discriminatory termination; not every rights violation deserves a separate award of damages

  • Attorney General & Another v Andrew Maina Githinji & Another
    [2016] eKLR

    Cited by respondent's counsel for when time begins to run (cited by party)

On appeal from
Employment and Labour Relations Court at Nairobi
ELRC No. 1708 of 2011
Jurisdiction invoked
First appellate jurisdiction over the ELRC; appeal and cross-appeal from part of the judgment and decree of 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 (6)

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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, "NEC Corporation v Samuel Gitau Njenga", Case Analysis (2018). Civil Appeal No. 127 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/840/eng@2018-02-16

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