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ELRCPartially AllowedCause No. 4 of 2013· [2013] KEELRC 122 (KLR)

Timothy Anyika Munyaka v M/s Nairobi Pacific Hotel Limited [2013] KEELRC 122 (KLR)

Industrial Court of Kenya
19 September 2013
MMM. Mbaru
2,903 words in judgment
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The bottom line

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A Kenyan court ruled that even oral employment contracts require written termination notices with stated reasons, awarding the employee compensation but rejecting most other claims.

What this practically means

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Executive summary

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The claimant, employed orally in January 2007 as General Manager of the respondent hotel, sued for unfair termination and non-payment of terminal dues totalling Kshs.4,038,499.70, including house allowance, overtime, public holiday and rest day pay, leave travelling allowance, severance pay, notice pay and 12 months' compensation. The respondent admitted the employment but asserted the claimant voluntarily retired on 18th October 2012 by mutual agreement, that his pay was consolidated, and that as a senior manager he was not eligible for overtime. The court framed three issues: the circumstances of termination, its fairness, and the remedies available. It held that although the contract was oral, termination had to be in writing with stated reasons under sections 35 and 41 of the Employment Act; the respondent produced no written notice or reasons, and the claimant's letters of 24th September 2012 referring to a termination discussion went unanswered. On the balance of probabilities the court found the claimant was terminated orally without written notice, an omission of mandatory provisions amounting to an unfair labour practice. Most heads of claim were declined for lack of proof or clarity, including overtime, public holidays, rest days, leave travelling allowance and severance. The court declared the termination unfair and awarded notice pay of Kshs.30,000, pay for 18 days worked in September 2012 of Kshs.23,845, and two months' compensation of Kshs.60,000, with each party bearing their own costs.

Key legal issues

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01

Whether the termination of the claimant was fair

Holding

The termination was unfair because no written notice or reasons were issued as required by sections 35(1) and 41(1) of the Employment Act

Reasoning

Both parties agreed the contract was oral. The court held that termination of even an oral contract must be in writing with reasons stated. The respondent alleged voluntary retirement but produced nothing in writing. The claimant's letters of 24th September 2012 referred to a termination discussion on 18th September 2012 and went unanswered. On the balance of probabilities the court believed the claimant that he was terminated orally without written notice, contrary to mandatory provisions, amounting to an unfair labour practice.

p. 4
02

Entitlement to house allowance

Holding

Not awarded separately; in the absence of an agreed amount for housing, the court factored it into the compensation for unfair termination

Reasoning

There was no written contract indicating how the housing benefit was to be enjoyed. The claimant was in management and the benefit should have been subject to agreement. He was not unionised to claim 15% of basic salary, and his rate of Kshs.4,500 had no justification, so the court addressed it within the compensation assessment.

p. 4
03

Compensation for unfair termination

Holding

Two months' pay awarded as compensation, taking into account mitigation

Reasoning

The claimant was unfairly terminated and never given housing or a housing allowance, which was a legitimate expectation. However, he had moved on to other employment, including with the respondent's competitor Arizonas Hotel during his leave days, and had made efforts to mitigate, so compensation was limited to two months' pay (Kshs.60,000).

p. 5

Legal principles established

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  • Even where employment is under an oral contract, termination must be in writing stating the reasons, per section 35 of the Employment Act
  • Omission of a mandatory provision on termination procedure operating to the detriment of an employee constitutes an unfair labour practice

Court orders

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  1. 1.A declaration that the claimant was unfairly terminated by the respondent from his employment
  2. 2.Compensation awarded at Kshs.60,000.00
  3. 3.Notice pay at Kshs.30,000.00
  4. 4.Pay for 18 days worked in September 2012 at Kshs.23,845.00
  5. 5.Each party to bear their own costs

Authorities

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Legislation

  • Employment Actsection 8
  • Employment Actsection 9
  • Employment Actsection 10
  • Employment Actsection 35(1) and section 35(6)
  • Employment Actsection 40
  • Employment Actsection 41(1) and (2)
  • Employment Actsection 42(1)
  • Employment Actsection 44(3) and (4)
  • Employment Actsection 27(2)
  • Employment Actsection 74(1)(i)
Jurisdiction invoked
First-instance jurisdiction of the Industrial Court over employment and labour relations disputes

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Timothy Anyika Munyaka v M/s Nairobi Pacific Hotel Limited [2013] KEELRC 122 (KLR)", Case Analysis (2013). Cause No. 4 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/122/eng@2013-09-19

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