Kiambu Unity Finance Co-operative Union Ltd v Warwathe & another (Civil Appeal 246 of 2018) [2024] KECA 663 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that the Employment Act 2007 cannot apply to employment disputes that arose before it took effect in June 2008.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the learned judge of the ELRC applied the law that at the material time governed the dispute, i.e. whether the Employment Act, 2007 could apply retrospectively to contracts entered into and terminated before its commencement
- 2.Whether the ELRC erred in applying principles of unfair termination under sections 43 and 45 of the 2007 Act
- 3.Whether the award of 6 months' salary as compensation was justifiable under the applicable law or under section 15 of the Trade Disputes Act
- 4.Whether the ELRC ignored evidence on record regarding payment of the appellant's contribution to the respondents' pension/provident fund
Key legal issues
#Retrospective application of the Employment Act, 2007
The 2007 Act could not apply retrospectively to employment contracts entered into and terminated before its commencement; it created new rights, obligations and liabilities unknown under cap 226.
The contracts were made in 1989 and 1992 and terminated in October 2004, while the 2007 Act commenced on 2nd June 2008 with no provision for retrospective operation. A statute creating new rights and liabilities not existing under the prior regime cannot govern antecedent contracts. The ELRC therefore misdirected itself by importing sections 43 and 45 of the 2007 Act into a dispute governed by cap 226.
Measure of damages for termination under the repealed Act
Under section 16 of cap 226 and clause 29(b) of the contract, termination was lawful upon three months' notice or payment in lieu; the appellant paid the notice period, so the award of compensation was contrary to law.
The termination clause permitted either party to terminate on three months' notice or payment of three months' basic salary in lieu. The appellant paid salary in lieu of notice, satisfying the contract and statute. The ELRC's evaluation of the genuineness of the termination reasons was an unnecessary misdirection, and the judge had no discretion to award compensation contrary to express statutory provisions.
Reliance on section 15 of the Trade Disputes Act
The Trade Disputes Act could not sustain the award because the dispute originated in the Chief Magistrates Court and did not meet the jurisdictional prerequisites of section 14(7).
Section 15 remedies were available only in disputes before the former Industrial Court referred to it by the Minister or brought by joint written application of the parties. The respondents filed in the Chief Magistrates Court and never invoked those mechanisms, so they could not invoke section 15 on appeal. The Court characterized this argument as having absolutely no merit.
Failure of the ELRC to consider evidence of payment of pension contributions
The ELRC failed to consider clear documentary evidence of payment, including cheques covering the appellant's pension contributions, rendering its decision unjust and perverse and justifying interference on second appeal.
Although a second appeal is confined to questions of law, the exception applies where a lower court failed to consider matters it should have considered. Cheques No. 002755 and 002756, with supporting calculations, showed the appellant's pension contributions had been paid. Ignoring this evidence would result in double payment to the respondents.
Legal principles established
#- The Employment Act, 2007 does not apply retrospectively to contracts of employment entered into and terminated before its commencement on 2nd June 2008; disputes over such contracts are governed by the repealed Employment Act cap 226.
- Under section 16 of the repealed Employment Act cap 226, reasons for termination of employment were not relevant so long as the terminating party gave the agreed notice or paid salary in lieu of notice; a court governed by that Act errs by evaluating the genuineness of reasons for termination.
- A first appellate court cannot exercise discretion contrary to the express provisions of the applicable statute; discretion arises only where the law offers a latitude of choices.
- On a second appeal the Court confines itself to matters of law, but may interfere where the two courts below considered matters they should not have, failed to consider matters they should have, or reached a perverse decision.
Court orders
#- 1.The appeal is allowed
- 2.The judgment of the ELRC dated 29th June 2015 is set aside
- 3.Substituted therefor is an order dismissing the respondents' Appeal No. 3 of 2015
- 4.The appellant to have costs of the appeal both in the ELRC and in this Court
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Employment and Labour Relations Court
- Appeal No. 3 of 2015
- Jurisdiction invoked
- Second appeal to the Court of Appeal under the employment appeals framework, restricted to matters of law only
Relief refused
#Respondents' claim for compensation for wrongful/unfair dismissal awarded by the ELRC
The ELRC applied the 2007 Act retrospectively and contrary to the applicable repealed Employment Act cap 226, and ignored relevant evidence of payment
Costs
The appellant will have costs of the appeal both in the ELRC and in this Court.
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.
the 2007 Act, having created new rights, obligations and liabilities which did not exist under the contract of employment regulated by the Employment Act, cap. 226, could not apply retrospectively
the reasons for termination of employment were not relevant so long as the party terminating gave three months' notice or paid three months' salary in lieu of notice
the learned judge could not exercise discretion contrary to the express provisions of the Employment Act cap 226, which was the applicable law
This Court, on second appeal, confines itself to matters of law unless it is shown that the two courts below considered matters they should not have considered or failed to consider matters they should have considered or looking at the entire decision, it is perverse.
Accordingly, we allow the same, set aside the judgment of the ELRC dated 29th June 2015 and substitute therefor an order dismissing the respondents' Appeal No. 3 of 2015. The appellant will have costs of the appeal both in the ELRC and in this Court. It is so ordered.
Issues in the judgment
#The judgment is dated and delivered 14th June 2024 but refers to the respondents' written submissions dated 11th February 2019, a five-year gap not explained in the judgment.
The appellant's second appeal case number is not stated anywhere in the judgment; only the respondents' appeal number below (Appeal No. 3 of 2015) appears.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Egala & 7 others v Attorney General (Civil Appeal 178 of 2020) [2026] KECA 1649 (KLR)[2026] KECA 1649 (KLR)31 Jul 2026followed
Cite this brief
#Cite this brief
Caselaw, "Kiambu Unity Finance Co-operative Union Ltd v Warwathe & another (Civil Appeal 246 of 2018) [2024] KECA 663 (KLR)", Case Analysis (2024). Court of Appeal (not expressly numbered in the judgment; respondents' appeal below was ELRC Appeal No. 3 of 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/663/eng@2024-06-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.