HUDSON MUKHWANA V NATIONAL HOSPITAL INSURANCE FUND [2012] KEELRC 270 (KLR)
The bottom line
#Kenya's Industrial Court ruled NHIF wrongfully retrenched an employee without notice, awarding him over Kshs. 1 million.
What this practically means
#Executive summary
#Key legal issues
#Whether the Claimant's retrenchment was wrongful
The retrenchment was wrongful and unfair because the stated reason (loss of confidence) was an afterthought and the statutory notification procedure was not followed.
The court found the audit report exonerated the Claimant of the payroll fraud allegations and that the attempt to return him to the Ministry of Health failed. The Respondent then cited loss of confidence as the reason for retrenchment, which the court held was an afterthought. The Claimant was never notified in writing of the intended retrenchment as required by Section 40(1)(b) of the Employment Act and was not heard, violating his right to be heard.
What remedies the wrongfully retrenched Claimant is entitled to
Severance pay at 15 days' salary per completed year of service plus compensation equivalent to 12 months' salary, and a certificate of service.
Relying on Section 16A(f) of the repealed Employment Act and Section 40(1)(g) of the current Act, the court awarded severance pay for 12 completed years. Given the wrongful manner of retrenchment, the court invoked Section 12(3) of the Industrial Court Act and Section 49 of the Employment Act to award compensation of 12 months' gross salary, distinguishing the Court of Appeal authorities denying general damages as arising under the old Industrial Court Tribunal regime.
Legal principles established
#- An employer retrenching an employee must comply with the procedural requirements of Section 40(1) of the Employment Act (previously Section 16A of the repealed Employment Act), including written notification of the intended redundancy to the employee and the labour officer.
- Failure to notify the employee and accord him a hearing before retrenchment renders the retrenchment wrongful and unfair.
- The Industrial Court as currently constituted under Section 162(2) of the Constitution has jurisdiction to award damages for wrongful termination under Section 12(3) of the Industrial Court Act and Section 49 of the Employment Act, up to twelve months' gross salary.
Court orders
#- 1.Declaration that the retrenchment of the Claimant by the Respondent was wrongful and unfair.
- 2.Payment of severance pay of 15 days salary for each completed year, calculated at 12 years x 57,890 / 2 = Kshs. 347,340.
- 3.Payment of compensation equivalent to 12 months salary calculated at 57,890 x 12 = Kshs. 694,680.
- 4.Total award of Kshs. 1,042,020 to the Claimant.
- 5.Issuance of a certificate of service to the Claimant.
- 6.Costs of the suit to be paid to the Claimant.
- Jurisdiction invoked
- Section 162(2) of the Constitution; Section 12(3) of the Industrial Court Act (file referred from the High Court by order of Justice Waweru dated 29th October 2009)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "HUDSON MUKHWANA V NATIONAL HOSPITAL INSURANCE FUND [2012] KEELRC 270 (KLR)", Case Analysis (2012). Industrial Court Cause No. 765 of 2009 (originally HCCC No. 905 of 2002, High Court at Milimani). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/270/eng@2012-10-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.