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ELRCPartially AllowedCause 609 of 2011· [2012] KEELRC 146 (KLR)

GRACE GARAMA V TELKOM KENYA LIMITED [2012] KEELRC 146 (KLR)

Industrial Court of Kenya
26 October 2012
MOMaureen Onyango
1,436 words in judgment
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The bottom line

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A Kenyan court awarded a Telkom Kenya employee 12 months' salary because, even with a valid reason to fire her, the company skipped the mandatory fair-hearing steps.

What this practically means

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Executive summary

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The claimant, employed by the respondent since 1983 and rising to Sales Supervisor, was terminated on 27th October 2009 for failing to meet monthly sales targets set from June 2009. She claimed declarations that the summary dismissal and termination were wrongful, illegal and unfair, damages, salary to retirement, retirement benefits, a certificate of service, leave allowances and severance pay. The court framed two issues: whether the termination was justified and whether the claimant was entitled to the prayers sought. The court found a valid reason for termination under Section 45(2)(a) of the Employment Act, as the failure to meet targets was confirmed by letters of 1st and 23rd September and 19th October 2009. However, the procedure was unfair: the standard letters referred to unspecified severe disciplinary action, never informed the claimant of the intention to terminate, and no hearing was held as required by Section 41. The termination was therefore held unfair. On remedies, severance pay was refused as it applies only to redundancy; retirement benefits were referred to the pensions manager as a separate legal entity; salary to retirement was rejected as unproved; and leave days of Kshs.8,935.81 were awarded. The court held that separate compensation for wrongful dismissal and unfair termination is not contemplated by the Employment Act and, given 26 years of service and no prior warnings, awarded maximum compensation of 12 months' salary, Kshs.536,148.48. Judgment was entered for the claimant in the total sum of Kshs.545,084.29, with a certificate of service to be issued forthwith and costs to the claimant.

Key legal issues

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01

Validity of the reason for termination

Holding

A valid reason existed - failure to meet agreed sales targets, confirmed by the letters of 1st, 23rd September and 19th October 2009.

Reasoning

The court applied Section 45(2)(a) of the Employment Act, under which an employer must prove a valid reason. The undisputed facts showed the claimant missed her monthly sales targets for July, August and September 2009, and letters to that effect were produced. The court accordingly found the reason valid and fair, being related to the employee's capacity.

p. 2
02

Fairness of the procedure followed

Holding

The termination was procedurally unfair because the claimant was never informed of the intention to terminate nor heard as required by Section 41.

Reasoning

Section 41 requires the employer to explain the reasons for contemplated termination and to hear any representations, with a colleague or union official present. The standard letters referred only to unspecified severe disciplinary action and did not mention termination. No formal hearing was held. The court therefore found the termination unfair despite the valid reason.

p. 2
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Entitlement to compensation

Holding

Maximum compensation of 12 months' consolidated salary awarded under Sections 49(1) and 50 of the Employment Act.

Reasoning

Having found the termination unfair, the court awarded compensation under Section 49(1) read with Section 50. Considering the claimant's 26 years of service, her reasonable expectation of working to retirement, and the absence of any prior warning or complaint other than performance in the last three months, the maximum of 12 months' salary was held fair. Compensation of Kshs.536,148.48 was computed.

p. 4

Legal principles established

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  • Termination is unfair where the employer fails to follow the procedure in Section 41 of the Employment Act, including explaining reasons and hearing the employee's representation.
  • The Employment Act does not contemplate separate compensation for wrongful dismissal and unfair termination.

Court orders

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  1. 1.Judgment given to the claimant in the sum of Kshs.545,084.29
  2. 2.The respondent to issue a certificate of service to the claimant forthwith
  3. 3.The claimant shall also get costs of this case

Authorities

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Legislation

  • Employment ActSection 44(2)
  • Employment ActSections 28(1)(a), 45(5)(a), (c), (f) and 51
  • Employment ActSection 45(2)
  • Employment ActSection 41
  • Employment ActSections 49(1) and 50
  • Retirement Benefits Act
  • Industrial Court Act2011
Jurisdiction invoked
Industrial Court Act 2011

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "GRACE GARAMA V TELKOM KENYA LIMITED [2012] KEELRC 146 (KLR)", Case Analysis (2012). Cause 609 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/146/eng@2012-10-26

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