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ELRCPartially AllowedCause 681 of 2012· [2012] KEELRC 129 (KLR)

SIMON MUGUKU GICHIGI V TAIFA SACCO SOCIETY LIMITED [2012] KEELRC 129 (KLR)

Industrial Court of Kenya
15 November 2012
LNLINNET NDOLO
2,085 words in judgment
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The bottom line

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A Kenyan court ruled an employer cannot fire a 14-year employee for vague 'performance' reasons without a hearing, even if the employee signed a discharge note.

What this practically means

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Executive summary

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The Claimant, formerly Chief Executive Officer of the Respondent Sacco, claimed unfair termination of his employment effected by letter dated 6th January 2012 citing his 'performance in various matters'. He sought a declaration of unfair termination, reinstatement, 12 months' salary as compensation, a Certificate of Service and costs. The Respondent's witness confirmed the termination decision was taken at a Board meeting of 6th January 2012 and that the Claimant was paid three months' salary in lieu of notice, but could not prove delivery of a Certificate of Service and was not present at the Board meeting. The Court held that under Sections 41, 43 and 45 of the Employment Act, 2007, an employer must prove a valid reason and follow fair procedure, including affording the employee an opportunity to be heard, particularly in performance-related terminations. After 14 years of service, the vague performance allegations, absence of documented performance assessment, and lack of a hearing rendered the termination unfair. The Court disregarded the Claimant's discharge note, holding that a discharge cannot cure an employer's breach of the law. On remedies, reinstatement was declined following the common law principle in Section 49(4)(d) and Muleya v COMESA; instead, the Claimant was awarded 10 months' gross salary (Kshs. 107,000 per month) as compensation, taking into account the extra two months' salary paid in lieu of notice, with the Provident Fund contribution excluded as deferred earning. The Court declared the Claimant entitled to a Certificate of Service and awarded him costs. The claim therefore partially succeeded.

Key legal issues

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01

Whether termination for poor performance without a hearing was unfair

Holding

The termination was unfair; the Respondent failed to prove a valid reason and fair procedure under Sections 43 and 45 of the Employment Act

Reasoning

The termination letter cited vague 'performance in various matters'. After 14 years of service, the employer was obliged to specifically point out any performance deficiencies and support improvement, with clear targets and appraisals. The Claimant was not given an opportunity to be heard before the Board. Employment rights are constitutionally protected under Article 41, so knee-jerk dismissals are impermissible.

p. 3
02

Effect of the discharge note signed by the Claimant

Holding

The discharge note was disregarded as it could not cure the employer's non-compliance with the law

Reasoning

The Court took judicial notice that discharge notes are a common employer requirement but held parties must act within the law. An employer cannot circumvent statutory obligations through a discharge executed by the employee; where the law is not followed, no discharge can cure the irregularity.

p. 4
03

Whether reinstatement should be ordered and quantum of compensation

Holding

Reinstatement refused; 10 months' gross salary awarded as compensation

Reasoning

Section 49(4)(d) of the Employment Act incorporates the common law principle against specific performance in contracts of service except in exceptional circumstances. Following Muleya v COMESA, damages are the accepted remedy. The 10-month award factored in the 3 months' salary paid in lieu of the contractual 1 month's notice; the Provident Fund contribution was excluded as deferred earning.

p. 4

Legal principles established

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  • An employer must afford an employee an opportunity to be heard before terminating employment, particularly on grounds of poor performance
  • A discharge note cannot cure an employer's failure to follow the law in terminating employment
  • Damages, not specific performance, are the general remedy for breach of a contract of service

Court orders

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  1. 1.Declaration that the termination of the Claimant's employment was unfair within the meaning of Section 45 of the Employment Act, 2007
  2. 2.Refusal of the prayer for reinstatement
  3. 3.Award of the equivalent of 10 months' salary based on the last gross salary of Kshs. 107,000 as compensation for unfair termination
  4. 4.Order that the Claimant is entitled to and be issued a Certificate of Service
  5. 5.Costs of the case awarded to the Claimant

Authorities

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Legislation

  • Employment Act, 2007Section 43(1)
  • Employment Act, 2007Section 45(2)
  • Employment Act, 2007Section 41(1) and (2)
  • Employment Act, 2007Sections 42(1), 44(3) and (4)
  • Employment Act, 2007Sections 49 and 50; Section 49(4)(d)
  • Constitution of Kenya, 2010Article 41

Cases cited (3)

  • Isaac Matongo Mogoi Vs. Municipal Council of Nakuru and Another
    HC Misc Case No. 810 of 2005
  • Kenya Science Research International Technical and Allied Workers Union (KSRITAWU) Vs Stanley Kinyanjui and Magnate Ventures Ltd
    Industrial Court Cause No. 273 of 2010
  • Muleya Vs. COMESA and Another
    East Africa Law Reports 2003 2 EA 623 (COMESA)
Jurisdiction invoked
Industrial Court jurisdiction under the Employment Act, 2007 and Sections 41, 43, 45, 49 and 50 (unfair termination claim)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (24)

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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, "SIMON MUGUKU GICHIGI V TAIFA SACCO SOCIETY LIMITED [2012] KEELRC 129 (KLR)", Case Analysis (2012). Cause 681 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/129/eng@2012-11-15

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