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Court of AppealPartially AllowedNot stated in the judgment

Population Services Kenya v Wetende & 2 others (Civil Appeal 3 of 2021) [2024] KECA 450 (KLR)

Court of Appeal of Kenya
12 April 2024
HOHannah OkwenguHOH.A. OmondiJNJoel Ngugi
5,522 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed the employees were unfairly terminated but cut their compensation from 10 to 4 months' salary, penalising employers who can't prove poor performance.

What this practically means

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Executive summary

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This is a first appeal from the Employment and Labour Relations Court at Kisumu, where Population Services Kenya lost claims by three former Trade Development Managers (Jeremiah Makore Wetende, Michael Karani Gakuya and James Mwangi Muchiri) whose employment was terminated on 7th June 2016 for alleged poor performance in 2015. The trial judge found the termination violated Sections 43 and 45 of the Employment Act and awarded each respondent 10 months' salary. The Court of Appeal, comprising Okwengu, Omondi and Ngugi JJA in a single joint judgment, discerned two issues: substantive and procedural fairness of the termination, and the award of compensation. On liability, the appeal failed. The initial participatory appraisals scored all three respondents above the required average and they received bonuses and congratulatory letters; the subsequent downward review to 2.9, instigated by a senior manager, was done without their participation and without justification. There were no prior warnings despite the Human Resource Manual requiring employees to be regularly informed of shortcomings, and the disciplinary hearing was convened on the next working day after an email sent on a Friday. The appellant therefore failed to discharge the burden of proving both substantive justification and procedural fairness. On quantum, the Court identified several misdirections: the judge wrongly took account of the website publication of the terminations (a defamation matter belonging to a separate tort claim); wrongly treated the respondents' service as continuous from prior employment with PSI when each had entered a new contract on 1st January 2014, giving service of about two and a half years; wrongly considered the failure to issue certificates of service; and failed to account for the two months' ex gratia payment already made. The Court set aside the award of 10 months' salary and substituted 4 months' salary, in addition to the ex gratia payment. Each party was ordered to bear its own costs of the appeal, the appellant having only partly succeeded. The judgment binds subordinate courts and tribunals on the employer's burden of proof and the principles governing appellate interference with compensation awards.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the learned trial judge erred in law in finding that there was substantive and procedural unfairness in the termination of the respondents' employment
  2. 2.Whether the learned judge erred in the award of compensation

Key legal issues

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01

Whether the termination of the respondents' employment for poor performance was substantively and procedurally fair

Holding

It was not. There was no justification for the downward review of the appraisals, no evidence of poor performance or prior warnings, and insufficient time to prepare for the disciplinary hearing.

Reasoning

The initial participatory appraisals rated the respondents above 3.0 and they received bonuses and congratulatory letters. A review instigated by Timothy lowered the scores to 2.9 without participation by the respondents and without any evidential basis. No warning letters existed despite the Human Resource Manual requiring employees to be kept regularly informed of shortcomings. The disciplinary hearing was convened on the next working day after an email sent on a Friday. The burden under Sections 43 and 45 of the Employment Act was not discharged.

p. 8
02

Whether the award of 10 months' salary as compensation should stand

Holding

The award was reduced to 4 months' salary because the trial judge took into account extraneous matters and failed to consider relevant factors under Section 49(4).

Reasoning

The judge wrongly treated the website publication as an aggravating factor in what was not a defamation suit; wrongly treated the respondents' service as continuous from prior employment with PSI when each had entered a new contract on 1st January 2014 (service of about two years and six months); wrongly considered the failure to issue certificates of service, which is governed by Section 51 with its own penal sanction; and failed to account for the two months' ex gratia payment already received.

p. 9

Legal principles established

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  • An employer who terminates employment for poor performance must prove valid reasons related to the employee's conduct, capacity or compatibility, or the employer's operational requirements, and must accord the employee an opportunity to be heard
  • An appellate court will not disturb an award of damages unless it is so inordinately high or low as to represent an entirely erroneous estimate, or the judge proceeded on wrong principles or misapprehended the evidence in a material respect
  • In assessing compensation under Section 49(4) of the Employment Act, the court must consider the length of service under the actual contract of employment, the reasonable expectation of continued employment, and any ex gratia payments already made
  • Humiliation from an employer's website publication of the reason for termination cannot be taken into account as an aggravating factor in a claim for unfair termination, as it belongs to a separate defamation claim

Court orders

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  1. 1.Appeal allowed to the limited extent of the award of compensation
  2. 2.Award of 10 months' salary as compensation for unlawful and unfair termination set aside and substituted with an award of 4 months' salary
  3. 3.The 4 months' salary award is in addition to the two months' ex gratia payment already made to the respondents by the appellant
  4. 4.Each party to bear their own costs in the appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

HO
majority

Wrote the judgment

HO
majority
JN
majority
On appeal from
Employment and Labour Relations Court at Kisumu
Not stated in the judgment
Jurisdiction invoked
First appellate jurisdiction over the Employment and Labour Relations Court (the Court was 'mindful of our obligation as a first appellate Court to reconsider and re-evaluate the evidence')

Relief refused

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Appellant's challenge to the finding of substantive and procedural unfairness (liability)

The appellant failed to discharge the burden of proof on both substantive justification and procedural fairness

p. 8

Respondents' full 10-month compensation award

The trial judge misdirected himself by taking into account the website publication (a defamation matter), the length of prior employment, and the failure to issue certificates of service, and failed to consider the ex gratia payment

p. 9

Costs of the appeal by either party

The appellant only partly succeeded

p. 10

Costs

Each party shall bear their own costs in the appeal

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

Thus, the appellant failed to discharge the burden of proof with regard to both substantive justification and procedural fairness, and accordingly its appeal in regard to liability fails
p. 8Burden of proof on employer in unfair termination
We find that there was no justification for the review of the respondents’ appraisal that had been done for the year 2015. Nor did the appellant demonstrate that the downward review of the respondents’ performance appraisal was fairly done with the participation of the respondents.
p. 8Downward review of performance appraisal
An appellate court will not disturb an award of damages unless it is so inordinately high or low as to represent an entirely erroneous estimate.
p. 9Appellate interference with damages
The upshot of the above is that the appeal is allowed to the limited extent of the award of 10 months’ salary awarded by the learned Judge as compensation for unlawful and unfair termination, being reduced to an award of 4 months’ salary.
p. 10Final orders
The appellant, having only partly succeeded, each party shall bear their own costs in the appeal.
p. 10Costs order

Issues in the judgment

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minor

The judgment states the disciplinary hearing was on 30th May, 2016 in the narrative but the Human Resource Director's evidence records it as 30th May, 2019

minor

The judgment quotes Section 43(1) of the Employment Act in a passage that also refers to Section 45 and includes the Section 43(2) content on genuine belief, with a typographical closing quote placement

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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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, "Population Services Kenya v Wetende & 2 others (Civil Appeal 3 of 2021) [2024] KECA 450 (KLR)", Case Analysis (2024). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/450/eng@2024-04-12

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